In section 3 of the Crown Estate Act 1961 (general provisions as to course of management), after subsection (1) insert—

‘(1A) The Commissioners must transfer all net revenue profit generated from the Crown Estate’s activities in Wales to the Welsh Government on an annual basis.’”—

The new clause would require that the Crown Estate Commissioners transfer all profit generated by the Crown Estate in Wales to the Welsh Government on an annual basis.

Brought up, and read the First time.

I beg to move, that the Clause be read a Second time.

The new clause would require the Crown Estate commissioners to transfer all profits generated by the Crown Estate in Wales to the Welsh Government on an annual basis. Although figures for the profits generated in recent years by the Welsh Crown Estate are not available, the figures from across the whole Crown Estate show that overall profits have increased dramatically. Since 2021, there has been a 408% increase in Crown Estate profits and therefore the profits from Wales have likely seen a similar level of increase.

Even if one accepted the Government’s argument that devolution of the management of the Crown Estate would involve too much risk, that does not justify profits generated on assets in Wales not remaining in Wales. Therefore, will the Government outline whether they support the principle that all profits generated through Welsh natural resources should be kept in Wales, as is the case with Scotland?

Some argue that Wales would not benefit financially from the devolved Crown Estate given the impact on the devolved Welsh budget. However, the Scottish model already demonstrates how profits from the Welsh Crown Estate could interact with the devolved Welsh budget. In Scotland, all profits from the Scottish Crown Estate are paid into the Scottish Consolidated Fund and redistributed for public spending. These profits interact with the Scottish block grant adjustment mechanism, which was agreed with the Treasury under the 2016 Scottish fiscal agreement.

The mechanism removes a portion of the block grant as the profits from the Scottish Crown Estate increase, to avoid Scotland gaining twice over. That is due to the Scottish budget benefiting from a Barnett share of the expenditure in England, supported by Crown Estate revenues arising from England, Wales and Northern Ireland. Crown Estate Scotland has estimated that net revenue profits in 2023-24 will be £113.5 million. The current reduction to the Scottish block grant under the adjustment mechanism will be £10 million, which should result in an estimated usable revenue from the Crown Estate Scotland for the Scottish Government of £103.5 million.

If Wales followed a similar approach to Scotland, it would likely gain additional revenues from the Crown Estate and would have only a small proportion removed from its block grant in return. That would occur through a Welsh block grant adjustment mechanism to be negotiated between the Welsh Government and the Treasury. Will the Government look at opening discussions with the Welsh Government on retaining profits in Wales and establishing a fair block grant adjustment mechanism to account for rising profits over time? It would be up to the Welsh Government to decide what to do with the money from the Crown Estate.

Plaid Cymru has proposed targeting investment into deprived communities in rural Wales and our deindustrialised valleys, and using the money to develop a Welsh sovereign wealth fund. However, that is not within the scope of the new clause. I hope the Government will listen and agree to the new clause, thereby endorsing the principle that profits generated in Wales should remain in Wales.

Do you wish to say anything, Mr Wild?

Well—

It is not compulsory.

I am up now. I will not detain the Committee long. We did not support new clause 5, so it follows that we do not support new clause 6, although it raises a thought in my mind. The east of England, which is home to the largest offshore wind sites in Europe, is perhaps not getting its fair dibs. That is probably something I need to reflect on for another time.

Indeed.

I thank the hon. Member for Ynys Môn for tabling new clause 6, which would require that the commissioners must transfer all net revenue profit generated from the Crown Estate’s activities in Wales to the Welsh Government on an annual basis. As The Crown Estate’s operations are not divided into business units for each nation, calculating the exact net profit figure attributable to Wales is not straightforward, because most of the associated costs cannot easily be disentangled from the Crown Estate’s overall costs and would, in places, require subjective judgment.

Furthermore, as I set out earlier, given that the Crown Estate takes a long-term approach to investments, it is anticipated that its investments in Wales could take up to 10 to 15 years to see an appropriate return. Therefore, if net profits were transferred to the Welsh Government now, they are likely to be zero or negligible. I hope that explanation was helpful and that the hon. Member feels able to withdraw the new clause.

I am unsure how the Minister can say that we would not receive any profits when the Government cannot work out what profits Wales generates. It feels a bit difficult to understand that argument.

I am fighting the corner for fairness for Wales. We have lost all our natural resources and that has been feeding the UK machine. Unfortunately, we are seeing poverty on the rise and deindustrialisation in communities. The new clause would see the profits that are generated given back to those communities, to be spent in those communities and on their future.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 2, Noes 9.

Question accordingly negatived.