James Murray MP: speeches

Speeches

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I have only a few minutes left, so I will not. I have also participated in several meetings with farming bodies since the autumn Budget 2024, and I am meeting farming bodies again shortly to discuss their concerns further. At the same time, it is important to recognise that other organisations have called for the reliefs to be abolished or restricted. Commentators have highlighted that the reliefs currently contribute to an inheritance tax system that means that the very largest estates pay lower effective tax rates than smaller estates. As the Institute for Fiscal Studies has set out since the Budget, the changes we announced will still leave farmland much more lightly taxed than other assets. I want to address as many of the points that Members made during the debate as possible, but it is worth saying first that it is important to see the changes in the context of wider support for farmers and the rural community. The Budget committed £5 billion to farming over the next two years, including the biggest budget for sustainable food production in our history. It committed £60 million to help farmers affected by the unprecedented wet weather last year, and we are protecting farms and rural businesses by committing £2.4 billion over the next two years to rebuild crumbling flood defences. We will also continue to provide existing support for the farming industry in the wider tax system. That includes, for example, the exemption from business rates for agricultural land and buildings, and the ongoing entitlement for vehicles and machinery used in agriculture to use red diesel, as the hon. Member for Dumfries and Galloway (John Cooper) mentioned. On the point made by the right hon. Member for Orkney and Shetland (Mr Carmichael) about the inheritance tax treatment of Scottish agricultural leases, the Government are aware of the issue and officials have already discussed it with their counterparts in the Scottish Government. There is an existing provision in the Inheritance Tax Act 1984 that deals explicitly with the Scottish agricultural leases. Section 177 of the Inheritance Tax Act means that Scottish agricultural leases passed down on death are not included in the value of the estate.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I thank the right hon. Gentleman for his further intervention. In understanding how the reliefs are reformed, the important point is to focus our conclusions on the data on claims. In understanding how many estates are likely to be affected by the changes, the data that matters is the data on claims. That is why the information that I was setting out around where the bulk of the relief currently goes is based on claims data. In a moment I will come to some other statistics that were referred to in the debate.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  Earlier in the debate, we heard that the average return on capital is 0.5%, but I am sure that the right hon. Gentleman will be aware that 10% of farms in England have made a return on capital of 10%, so it is perhaps a more complicated picture than the one presented earlier. Similarly, farm business income, which is net profit, shows a wide variation. In designing the reforms, we obviously considered the fact that those who have assets on which they currently claim agricultural or business property relief still need to have generous relief. That is inherent in the design of the reforms that we are proposing: there is full 100% relief for the first £1 million of assets—above other nil-rate bands, spousal transfers and so on—and then effectively an unlimited 50% relief thereafter.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I will make a little progress, and then take interventions in a second. The data that I just referred to on where the relief currently goes—I was going to address in a moment the data on how many estates making claims we think will be affected in 2026-27—is based on actual claims, so we believe it is the right data on which to base the reforms.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  What has driven the Government in making the decision to reform agricultural and business property relief is the overwhelming priority of fixing the public finances in a fair and sustainable way. That is why the statistics to which I just referred, about how agricultural and business property relief have come to be used in recent years, are important for understanding the context in which we decided that the time for reform was now.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I thank my hon. Friend for her intervention. She is absolutely right about the importance of repairing the public finances and supporting public services, for her constituents in North Warwickshire and Bedworth and indeed for all of our constituents across the country. I noted that, in her contribution earlier, my hon. Friend made a point about what this Government are doing to support the profitability of the farming sector. She may have seen that, at the Oxford farming conference in January, the Secretary of State for Environment, Food and Rural Affairs set out the Government’s long-term vision. That includes reforms to use the Government’s own purchasing power to make sure that we are buying more British food, planning reforms to speed up the delivery of infrastructure, and work to ensure supply chain fairness, which will help people involved in the farming industry and more widely, across her constituency and those of other Members here today. As I said, the decision that we took to reform agricultural property relief and business property relief was one of the difficult but necessary decisions that we needed to take on tax, welfare and spending to restore economic stability, to fix the public finances and to support public services, including an NHS in crisis. We have taken those decisions in a way that makes the tax system fairer and more sustainable. The reforms to agricultural property relief and business property relief mean that, despite the tough fiscal context, the Government will still maintain significant levels of relief from inheritance tax beyond what is available to others. The Government recognise the role that these reliefs play, particularly in supporting small farms and businesses, and, under our reforms, they will continue to play that role. The case for reform is underlined by the fact that the full, unlimited exemption, as introduced in 1992, has become unsustainable. Under the current system, the benefit of the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates. According to the latest data from HMRC, and as hon. Members have mentioned, 40% of agricultural property relief benefits the top 7% of estates making claims—that is 117 estates claiming £219 million-worth of relief.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I will take interventions in a moment, but let me make a little progress. Based on the statistics I have just set out, which show where the bulk of the benefit from agricultural property relief and business property relief has been going, we felt it was appropriate to reform how those reliefs operate. That is why the Government decided to change how we target agricultural property relief and business property relief from April 2026. As I have said, we are doing so in a way that maintains significant tax relief for all estates, including for small farms and businesses, while making sure that we repair the public finances. Under the reforms that we have announced, all individuals will, of course, be able to access the general nil-rate bands and spousal exemptions that apply within the inheritance tax system. On top of those allowances, any business and agricultural property within people’s estates will benefit from 100% relief on a further £1 million of combined assets, except in cases of shares designated as “not listed” on the markets of recognised stock exchanges. Beyond the £1 million of full relief, a further 50% relief will apply with no limit. That means that any inheritance tax paid will be at a reduced effective rate of up to 20%, rather than the standard 40%.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I will make some progress and turn to the impact that the reforms will have on taxpayers, because there has been a lot of discussion of the impacts, and of the numbers that various Members have highlighted during the debate. As the Government have set out in recent months, in ’26-27 up to 520 estates claiming agricultural property relief, including those that also claim business property relief, are expected to pay more as a result of this change. That means that around three quarters of estates claiming agricultural property relief, including those that also claim business property relief, will not pay more tax as a result of the changes.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I am about to come to some of the statistics to which the hon. Gentleman and others referred. I do not have much time, so I will make a little progress before answering some of those questions. On the point of how the nil-rate band and spousal exemption allowances work together, anything beyond the nil-rate band, the spousal transfers and the 100% full relief will receive unlimited 50% relief, and heirs can spread any payments due over 10 years, interest free. That is a benefit not seen anywhere else in the inheritance tax system.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I thank the right hon. Gentleman for his intervention, but let us consider those who will still have generous protection from inheritance tax under the reformed system that we have announced. I point the right hon. Gentleman towards the fact that the reliefs in the reformed system, when taken together with the spousal exemptions and the nil-rate bands, will mean that, depending on people’s individual circumstances, up to £3 million can be passed on by a couple to their children or grandchildren, free of any inheritance tax.

• 10 Feb 2025 · Inheritance Tax Relief: Farms · Hansard source

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  I will make some progress. The Liberal Democrat spokesperson, the hon. Member for Glastonbury and Somerton (Sarah Dyke), asked how the figures were arrived at. The figure to which I referred—520 estates likely to be affected in ’26-27—comes from taking the historical data and projecting it forward using economic determinants. She may have seen the letter sent by the Chancellor to the Treasury Committee in November, which set out how that calculation was done. I suggest that all Members read that letter to understand the basis for that 520 number. The statistics also show how many estates claiming business property relief are likely to be affected. Around three quarters of estates claiming business property relief alone, excluding those only holding alternative investment market shares, will not pay any more inheritance tax in 2026-27. The Office for Budget Responsibility has been clear that it does not expect this measure to have any significant macroeconomic impacts. I recognise the disagreement over this policy, but Ministers and officials have been listening carefully to the views of the farming sector and rural communities. Ahead of the Budget, there was media speculation that the Government were going to abolish the reliefs altogether. In reaction to that speculation, the Treasury received and considered several representations from the farming sector with views on retaining the reliefs. I responded to a debate on the matter in this very room on 17 October.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  My hon. Friend is absolutely right. A priority of the Government is to ensure not only that there is economic growth at a national UK level, but that all regions and nations of the UK benefit from such economic growth and the increase in productivity. We want to ensure that people right across the country are better off and have more money in their pocket through greater investment and growth in their local areas. He makes an important point. To return to the definition of “sustainable development”, I will briefly address the point made about that by the hon. Member for South Cambridgeshire. I assure her that that definition will be published on Royal Assent of the Bill, at that point. It was, however, a deliberate decision not to specify specific targets or objectives such as net zero on the face of the Bill, given that the Crown Estate is already required to “maintain and enhance” the value of the estate responsibly. Referencing specific targets would risk complicating the Crown Estate’s existing clear commercial objective. As I have already noted, the Crown Estate is required to pay its entire net profits to the UK Consolidated Fund every year, worth more than £4 billion over the past decade. That supports the UK Government’s spending on policy priorities, including net zero and, indeed, regional economic growth. On national security interests specifically, it is important to be clear that the Government are responsible for ensuring that national security interests are managed effectively at a UK-wide level. It would not be appropriate to require the Crown Estate to have a specific regard in that matter. As I have noted, while the Crown Estate has goals under which its strategy can align with wider national policy objectives, the 1961 Act provides the Crown Estate with independence and autonomy. The Government believe that it should continue to operate in that way, as a commercial business independent of Government. This requirement would encroach on that independence by drawing the Crown Estate into interests managed directly by the Government. The Government believe that the Crown Estate’s existing duties give it a clear focus, leading to a consistently significant return to the Exchequer to support the funding of public services and priorities. The duty to have due regard to the requirements of good management, alongside the new requirement to keep under review the impact of its activities on the achievement of sustainable development, are already sufficient to cover the concerns of my hon. Friend the Member for Great Grimsby and Cleethorpes. I hope that the amendment will be withdrawn. I turn to amendments 6 and 8, tabled respectively by the hon. Members for Ynys Môn and for South Cambridgeshire. Amendment 6 would require the commissioners, in complying with proposed new subsection (3A) of the 1961 Act on sustainable development, to “set and publish sustainable development objectives in relation to their activities…take all reasonable steps to meet these objectives, and…have regard to the relevant environmental legislation for the UK, England, Wales and Northern Ireland in relation to making these objectives.” It would further specify that the relevant environmental legislation includes the Climate Change Act 2008, the Environment Act 2021, the Well-being of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016. Amendment 8 would require any “framework document” published by the Chancellor of the Exchequer, the Crown Estate or the commissioners to define “sustainable development”, and that that definition include a reference to a “climate and nature duty”. It further specifies that such a climate change duty would mean a duty to achieve any of the targets set out under part 1 of the Climate Change Act 2008, or under sections 1 to 3 of the Environment Act 2021. The Government understand the intention behind amendments 6 and 8, but a key purpose of the 1961 Act was to repeal various detailed statutory provisions that had built up over the 150 years previously, which were hampering the effective management of the estate. By focusing the commissioners’ duties on enhancing the estate’s value and the returns generated, the commissioners have a clear objective for which they can be held to account. It is an important principle that giving an organisation too many objectives will make it far less effective than giving it clear and focused priorities. As I have already noted, the Crown Estate is a commercial business, independent from Government, that operates for profit.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  I thank the hon. Members for their comments. To reiterate, the Crown Estate already works with communities, charities, businesses and the Government to ensure that its skills initiatives are sensitive to market demand and to emerging technologies. It is important that the Crown Estate retains this flexibility in how its skills initiatives are funded and delivered, so that it can contribute to skills training in the best possible way and, importantly, as I have referred to several times, without conflicting with its statutory duty to maintain and enhance the value of the estate. As we know, the Crown Estate already pays its net revenue surplus into the Consolidated Fund. That is a total of more than £4 billion in the last decade, and local communities already benefit from investment by the Crown Estate. I point hon. Members to the partnership between Great British Energy and the Crown Estate; they will work together to co-ordinate agencies and stakeholders to create jobs and ensure that communities reap the benefits of clean, secure, home-grown energy. I repeat my encouragement of the hon. Member for South Cambridgeshire not to move her new clause, as I believe the Bill and the existing measures and statutory requirements achieve the outcomes that are best for this country. Question put and agreed to. Clause 3 accordingly ordered to stand part of the Bill. Clause 4 Annual reports Question proposed, That the clause stand part of the Bill.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  As I mentioned, the definition of “sustainable development” will be published on Royal Assent. Perhaps we can return to any questions that the hon. Member may have on that definition at that point. The fundamental point that I am seeking to make is about ensuring that the Crown Estate can operate effectively. By having clear and focused priorities, it will operate more effectively than having too many objectives, which end up meaning overall that it will perform less well in the public interest. As I have noted, the Crown Estate is a commercial business. It is independent of Government and operates for profit. Although it has goals that, under its own strategy, can align with national policy objectives, fundamentally, the 1961 Act grants the Crown Estate independence and autonomy. The Government have accepted the amendment to require the commissioners to keep under review the impact of their activities on the achievement of sustainable development. However, expanding the Crown Estate’s core purposes in legislation, in particular with additional duties or objectives that may unnecessarily complicate or conflict with the achievement of the core commercial objective, would risk undermining that core objective being achieved. Any actions that undermine the core commercial objective risk undermining the very funding that is used to support environmental and other policy objectives. The Government believe that the Crown Estate should continue to operate in this way—as a commercial business, independent of Government—because it has shown itself to be a trusted and successful organisation, with a proven track record and effective management. As I noted, the Crown Estate is already a trailblazer in its efforts to tackle climate change and support the environment, and it is required to pay its profits into the UK Consolidated Fund each year. Furthermore, I confirm that the requirement under amendment 8 for any framework document between the Treasury and the Crown Estate to define sustainable development has already been agreed by the Government. As confirmed on 5 November on Report in the other place, the public framework document that exists between the Treasury and the Crown Estate will be updated in the light of that amendment to clarify that “sustainable development” means regard for the impact of the Crown Estate’s activities on the environment, society and the economy. It will also make it clear that that regard includes, where relevant, consideration of relevant legislation, such as part 1 of the Climate Change Act 2008, which deals with the targets set for 2050, and section 56 of the Climate Change Act and sections 1 to 3 of the Environment Act 2021, which also deal with specific environmental targets. The framework document will also make it explicit that the Crown Estate will include in its annual report a report of its activities in relation to sustainable development. For those reasons, I trust that hon. Members will be able to withdraw their amendments.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  I rise to speak to amendment 9 and new clause 10. Amendment 9, tabled by the hon. Member for South Cambridgeshire, would mean that in satisfying proposed new subsection (3A) of the 1961 Act, which states, “The Commissioners must keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom”, the commissioners must assess the adequacy of protections against coastal erosion in areas affected by their offshore activities. I very much understand the concerns reflected in the amendment, but protections against coastal erosion are not the responsibility of the Crown Estate, and therefore the amendment is not relevant to the Bill. The UK has dedicated statutory bodies under each devolved Administration with responsibility for ensuring adequate protection against coastal erosion. The Crown Estate always collaborates and complies with the relevant statutory authority for any assessment of the impact of offshore activity on coastal erosion, and the potential for coastal erosion should be considered as part of marine licensing, which is considered by the relevant regulator, depending on the jurisdiction. However, the statutory responsibility falls on the relevant body in each devolved area. The Crown Estate becomes involved in coastal defence only when the statutory bodies responsible for coastal erosion wish to construct defences. In such cases, the Crown Estate typically grants leases to those bodies for defence works. Although the Crown Estate is not responsiblefor coastal erosion, the Government are committed to supporting coastal communities and are investing ausb record £2.65 billion over two years in building, maintaining and repairing our flood and coastal defences. Shoreline management plans are developed and owned by local councils and coastal protection authorities to provide long-term strategic plans that identify approaches to managing coastal erosion and flood risk at every stretch of the coastline. Shoreline management plans have recently been refreshed with updated action plans, following several years of collaborative work between the Environment Agency and coastal groups. The Environment Agency has published the updated national coastal risk map for England, which is based on monitoring coastal data, the latest climate change evidence and technical input from coastal local authorities. There are also strong safeguards to manage the flood and coastal risk through the planning system. I hope that on that basis the hon. Member for South Cambridgeshire feels able to withdraw her amendment. I turn to new clause 10, which would require that in relation to any decisions made about marine spatial priorities, the Crown Estate must ensure the decisions are co-ordinated with the priorities of the Marine Management Organisation and must consult any communities or industries impacted by the plans, including fishing communities. I can confirm to the Committee that the Crown Estate and the Marine Management Organisation already have well-established ways of working together to ensure effective collaboration for marine spatial planning and prioritisation. The Crown Estate’s collaboration with the Marine Management Organisation and other relevant statutory bodies is governed by the Marine and Coastal Access Act 2009, which establishes the framework for marine planning and licensing in the UK, and requires the Crown Estate to have regard to marine policy documents such as marine plans in its decision making. It is also governed by the habitat regulations, which require the Crown Estate to conduct plan-level habitat regulation assessments for leasing or licensing activities. Furthermore, the Crown Estate and the Marine Management Organisation jointly agreed a statement of intent in 2020, which is reviewed periodically to provide a focus on priorities and opportunities for alignment, as well as longer-term ambitions. The statement of intent complements a memorandum of understanding agreed in February 2011, which sets out a framework to encourage co-operation and co-ordination between parties in relation to the sustainable development of the seabed and rights managed by the Crown Estate, based on active management, shared information and effective marine planning and management by both parties. In addition to the Crown Estate’s relationship with the Marine Management Organisation, there are also various regulatory requirements on developers leasing areas of the seabed from the Crown Estate to engage with the Marine Management Organisation through a number of routes. Those include through marine licensing; developers must obtain marine licences from the Marine Management Organisation for activities that could impact on the marine environment. The process involves consultation with statutory bodies and adherence to marine plan policies. As part of a marine licence application, developers must also conduct environmental impact assessments for projects that could significantly affect the environment, which includes consultation with the Marine Management Organisation and other relevant authorities to ensure compliance with environmental regulations. Developers are also encouraged to engage with local communities, statutory bodies and other stakeholders throughout the planning and development process to address concerns and ensure compliance with marine plans. This new clause therefore duplicates existing regulatory requirements and practice. I hope the hon. Member for South Cambridgeshire feels able to withdraw her amendment.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  It is a pleasure to serve on the Committee with you as Chair, Ms Furniss. I will turn to the amendments in a moment, but I will first briefly address why clause 1 should stand part, and what it would achieve in amending the Crown Estate Act 1961. The clause amends the 1961 Act to clarify the powers of the commissioners and remove certain statutory restrictions in respect of borrowing. Those changes are central to the aims of the Bill, which are to modernise the Crown Estate and to remove limitations on investments, to ensure that it can meet its core statutory duties. Those duties—which it is right for the Crown Estate to pursue in the national interest—are to maintain and enhance the value of the estate and the returns obtained from it. The Crown Estate is a commercial business, independent from Government, that operates for profit and competes for investment. However, limitations placed on it by the Crown Estate Act 1961 currently risk its ability to compete and invest most effectively, meaning that it is less able to deliver returns for the public purse than it might otherwise be. The clause therefore makes two main changes. First, the clause clarifies the investment powers of the Crown Estate commissioners by expressly conferring powers that are currently implicit in the 1961 Act. That ensures that the commissioners have the power to do anything that is designed “to facilitate, or is conducive or incidental to,” discharging their statutory duties, including their core duties to maintain and enhance the value of the estate. The clause also removes restrictions on the commissioners’ powers to invest. Through those broader investment powers, the Crown Estate will have greater flexibility to invest in new growth opportunities—for example, in digital technologies, to support the acceleration of offshore energy through digital mapping of the seabed. These broader powers will also unlock the Crown Estate’s ability to under de-risking activities, such as surveys and grid co-ordination, which will increase the frequency of offshore wind leasing and support the clean energy mission. Secondly, clause 1 inserts a proposed new section into the 1961 Act that would grant the Crown Estate the power to borrow out of the national loans fund via the Treasury, or otherwise subject to Treasury consent. It also authorises the Treasury to provide financial assistance to the commissioners. That change will unlock the Crown Estate’s ability to compete more effectively, by enabling it to borrow as its competitors currently can. The clause has been carefully drafted to include the requirement for Treasury consent prior to the Crown Estate accessing debt. That strong safeguard will ensure that borrowing is carefully considered and controlled. Furthermore, as borrowing will be from Government at commercial rates, the interest paid by the Crown Estate will outweigh the cost to Government of the borrowing. Any borrowing undertaken by the Crown Estate will be for investment in activities that will drive increases in its revenues, thereby also increasing the profits it generates and provides to the Government, which will help to provide funding for our public services. That will be a net benefit to the public finances, and builds on the Crown Estate’s long track record of delivering significant returns to the public purse year after year. As the shadow Minister mentioned, that has totalled more than £4 billion in the last decade. I will now turn to amendments 4 and 7, which were tabled by the hon. Members for North West Norfolk and for South Cambridgeshire respectively. The amendments would place a legislative limit on borrowing, through regulations, but it is the Government’s view that limits on borrowing are best set outside of legislation. For that reason, a limit will be set in the memorandum of understanding between the Treasury and the Crown Estate, with the cap set at no more than a 25% net debt-to-asset value ratio. That document has been made available in draft to aid the House in its scrutiny. The primary safeguard built into the Bill is the requirement for Treasury consent. We are also retaining the requirement for the Crown Estate to maintain and enhance the value of the estate, while having “due regard to the requirements of good management”, as set out in the 1961 Act. Taken together, those elements provide clear guardrails and strengthen the important fiduciary duty of the commissioners not to take decisions that could endanger the estate or compromise its core duties. To underscore the point—given that the two Opposition Members raised questions about this—the Bill is clear that any borrowing undertaken by the Crown Estate can only be from the Treasury or otherwise with Treasury consent. The Treasury will, of course, ensure that any borrowing is consistent with our wider fiscal rules. Therefore, in addition to the requirement to secure Treasury consent, the draft memorandum of understanding between the Treasury and the Crown Estate sets out additional guardrails. For instance, it says that the borrowing should “target a sustainable range”, and is “not to exceed 25%” of the “Loan to value ratio (defined as the ratio of net debt to asset value” As with any public sector borrowing, the Treasury will ensure that this is consistent with managing public money principles, to ensure value for money from the taxpayer. On that basis, I hope hon. Members will not press their amendments.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  With your permission, Ms Furniss, I will briefly add to the comments that I made in the previous debate, because the shadow Minister asked about the appointment of the chair. On 23 December, the Government announced Ric Lewis as our preferred candidate for chair of the Crown Estate. The Government also confirmed that the appointment would be subject to a parliamentary pre-appointment hearing. Under paragraph 9.2 of the governance code on public appointments, political donations should be publicly disclosed if the successful candidate has made a significant donation or loan to a party in the last five years. That will happen if the appointment is confirmed, following the Treasury Committee’s report, and a subsequent announcement is made. Thank you for your patience, Ms Furniss. Amendment 1, which was tabled by my hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell), and to which other hon. Members have spoken, would require the Crown Estate commissioners, in reviewing the impact of their activities on the achievement of sustainable development, to have specific regard to the UK’s net zero targets, to regional economic growth and to ensuring resilience in respect of managing uncertainty, risk and national security interests. I was glad to meet my hon. Friend on Tuesday to discuss the amendment. The Government understand the motive behind it, but it is important first to set out the context for clause 3. I will be brief, as I realise that we will debate clause 3 stand part later. The Government and the Crown Estate welcomed the addition of clause 3 on Report in the other place, as a clarified and enhanced accountability on the Crown Estate to deliver environmental, social and economic outcomes. The Crown Estate is already a trailblazer in its efforts on tackling climate change and supporting the environment, which I will address in more detail later. Clause 3 will require the commissioners to keep under review the impact of their activities on the achievement of sustainable development in the UK. It is important to note that the public framework document that governs the relationship between the Crown Estate and the Treasury will be updated in the light of clause 3 to include a definition of sustainable development and to confirm that the Crown Estate will continue to include specific information on its activities in its annual report. The Crown Estate Act 1961 established the Crown Estate as a commercial business, independent from Government, that operates for profit and competes in the marketplace. It is analogous to a private sector commercial operator. The commissioners operate under a clear commercial objective, as set out in the Act, to “maintain and enhance” the value of the estate. At the same time, the Crown Estate can and does focus on activities that closely align with wider national interests, including on the environment, net zero, our nation’s energy needs and sustainable economic growth. As a public body, the Crown Estate seeks to work with the grain of prevailing Government policy. In addition to its core commercial objective, the Crown Estate operates under a duty in the 1961 Act to have “due regard to the requirements of good management.” This obliges the Crown Estate to maintain and enhance the value of the estate responsibly. Good management practices include maintaining a strong governance structure, adhering to best practices in risk management, and fostering a culture of accountability and transparency. It is important for the Bill to stand the test of time as new, relevant areas of concern on the environment, society and the economy emerge over the coming decades. These currently include net zero and regional economic growth, which are given regard by the Crown Estate and should be covered in its annual report. The general term “sustainable development” was chosen because it is broad and captures the widest range of relevant concerns across the environment, society and the economy, now and as priorities in those areas evolve over time.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  Clause 3 amends the Crown Estate Act 1961 to require the commissioners to keep under review the impact of their activities on the achievement of sustainable development in the UK. I have referred to various aspects of clause 3 as part of our earlier debate, so I will try to be brief. As hon. Members know, this clause was added as an amendment in the other place, based on productive debates that reflected the important role that the Crown Estate has in stewarding our natural environment. As I noted earlier, the Government believe that the Crown Estate’s existing duties give it a clear focus, leading to a consistently significant return to the Exchequer to support the funding of our public services. At the same time, the Crown Estate can, and does, focus on activities which also closely align with wider national interests, including on the environment, net zero, our nation’s energy needs and sustainable economic growth. As a public body, the Crown Estate seeks to work with the grain of prevailing Government policy. That said, it is right that the public and private sectors make every contribution they can to achieving our climate change targets, and the Crown Estate should continue to be a national trailblazer in that regard. The Crown Estate has committed to becoming a net zero carbon business by 2030, aligning with the 1.5° target, and will prioritise activities that help to enable a reduction in national carbon emissions, such as building net zero homes, transitioning its holdings to sustainable agricultural practices and working in partnership with the Government to meet the national renewable energy targets. Regarding the biodiversity targets in the Environment Act, the Crown Estate is committed to delivering a measurable increase in biodiversity by 2030. It will publish its delivery plan to meet that goal later this year, which will include commitments to restore habitats in line with targets in the Environment Act. The Crown Estate also published its approach on nature recovery last autumn, where it committed to delivering increased biodiversity, to protecting and restoring freshwater, marine and coastal systems and to increasing social-wellbeing benefits from nature. However, the reforms introduced by this Bill are not intended to alter the fundamental statutory basis of the Crown Estate as a commercial business independent from Government. The commissioners operate under a clear commercial objective, as set out in the 1961 Act: to maintain and enhance the value of the estate. As I have already noted, the Crown Estate operates under a duty in the 1961 Act to have due regard to the requirements of good management. Alongside its core commercial objective, the duty obliges the Crown Estate to maintain and enhance the value of the estate responsibly. It is the Government’s view that these existing statutory requirements and this clause are the best approach. New clause 11, tabled by the hon. Member for South Cambridgeshire, would require the commissioners to assess plans for benefits to local communities and, in the case of offshore activities, coastal communities before making any investment decisions. It would also require the commissioners to transfer at least 5% of the Crown Estate’s net profit to the local communities impacted by its activities. At present, local communities benefit from onshore and offshore developments through the economic advantages that such developments bring, including job creation and increased business for local suppliers, and individual developers also contribute to local initiatives. The Crown Estate has also specifically designed the leasing process for its offshore wind leasing round 5 opportunity in the Celtic sea such that developers must make commitments to deliver social and environmental value as part of the development of their new wind farms. Those commitments will be monitored, reported on and enforced throughout the lifetime of the relevant round 5 developments. The Crown Estate is committed to proactively working with the local communities and partners to enable employment and skills opportunities. For example, it has allocated £50 million through the supply chain accelerator to stimulate green jobs and is developing a green skills pipeline, from a GCSE in engineering skills for offshore wind, seed-funded by the Crown Estate and developed with Cornwall college, to a post-16 “Destination Renewables” course with Pembrokeshire college. The Crown Estate is also partnering with the employment charity Workwhile to create green construction apprenticeships. The Crown Estate already works closely with communities, charities, businesses and the Government to ensure that its skills initiatives are sensitive to market demands and emerging technologies and to keep them relevant and effective. The Government consider it important that the Crown Estate retains that flexibility in how its skills initiatives are funded and delivered, to ensure that it can contribute to skill training in the best possible way and, importantly, without conflicting with its statutory duty to maintain and enhance the value of the estate. On that basis, I hope that the hon. Member for South Cambridgeshire feels able to withdraw her new clause. It is the view of the Government that the existing statutory requirements and this clause are the best approach going forward. I commend clause 3 to the Committee.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  Clause 4 requires the commissioners to include in their annual report a summary of their activities and of any effects or benefits resulting from their activities under any partnership between them and Great British Energy, which I referred to in our debate on the previous clause. This requirement will only apply in relation to a year in which such a partnership was in operation. Following productive debate in the other place on the new partnership between the Crown Estate and Great British Energy announced last year, this clause was added by the Government. The Crown Estate is keen to ensure that details of this partnership are publicly available on an ongoing basis, and the Government agree it is sensible to require the Crown Estate to include the relevant detail in its existing annual report. That is the intention behind clause 4. New clause 4, tabled by the hon. Member for North West Norfolk, would require the Chancellor to lay before Parliament any partnership agreement between the Crown Estate and GB Energy. As I am sure the hon. Member will appreciate, partnership agreements are highly commercially sensitive. It is therefore right that any agreement is not made public or laid before Parliament, as to do so would likely prejudice the commercial interests of the Crown Estate or GB Energy and risk the aims of the partnership, which are to speed up the process of delivering clean energy and to invest in clean energy infrastructure. The Department for Energy, Security and Net Zero will set out further detail on GB Energy in due course. I hope the hon. Member feels able not to move his new clause as a result. Clause 4 is a sensible change to the Bill that reflects the desire to ensure that relevant information related to the nationally significant partnership between GB Energy and the Crown Estate is made publicly available. I commend the clause to the Committee.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  I will turn to amendment 5 in a moment, but I will begin by briefly setting out what clause 2 seeks to achieve. The clause makes changes to the Crown Estate’s governance to bring the Crown Estate’s constitution in line with best practice for modern corporate governance. The clause makes three changes, which I will deal with in turn. First, the clause increases the maximum number of commissioners on the Crown Estate’s board from eight to 12. That will provide the Crown Estate with the flexibility it needs to satisfy best practice standards for modern corporate governance. For example, the change will allow the Crown Estate’s board to include a wider combination of executive and non-executive members, both to reflect its increasingly diverse and wide-ranging activities and to enable it to adopt appropriate committee structures. However, I assure the Committee that although we are increasing the number of commissioners, we are not changing the way in which they are appointed to the role, except for the new commissioner roles introduced by clause 6. The exact number and the respective roles of the commissioners within that new maximum will remain subject to the public appointments process. As such, additional commissioners will be appointed by the King on the recommendation of the Prime Minister, as is usual practice. That also includes the new commissioners with special responsibility that we will consider in our debate on clause 6, for which there will also be a process of consultation with the relevant devolved Government. The chair will face additional pre-appointment scrutiny, as the Financial Secretary confirmed in the other place. Secondly, the clause removes the requirement for the second Crown Estate commissioner, a post currently held by the chief executive, to be deputy chair. This change will align the Crown Estate with best practice standards that set out that the roles of chair and chief executive should not be exercised by a single individual. Thirdly, the clause will require the salaries and expenses of the commissioners to be paid out of the return obtained from the Crown Estate, rather than out of money provided by Parliament, which is the current position. Changing the source of funding for commissioner salaries is intended to demonstrate more clearly the relationship between the relevant expenditure and Crown Estate income, while also reflecting the Crown Estate’s commercial functions. However, the pay of the chair and other non-executive commissioners will continue to be set by Treasury Ministers. In line with the UK corporate governance code, that will not include any performance-related element.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (First sitting) · Hansard source

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  The hon. Member asks about the amendment tabled by the hon. Member for North West Norfolk, to which I was just about to turn. If he will allow, I will address the amendment and that will answer at least some of the questions he raises in his intervention. Amendment 5 would require the commissioners to notify the Chancellor of the Exchequer of any proposed changes to the remuneration framework for the chief executive set out in the framework document and for such notification to be laid before Parliament by the Chancellor. I will set out the current arrangements on remuneration for the chief executive of the Crown Estate. How the chief executive is paid is a matter for the Crown Estate’s board in the first instance. However, the pay is set with reference to the agreement between the Treasury and at a level that is at the lower end of the Crown Estate’s comparable peers, reflecting the national significance of the organisation. The framework document between the Crown Estate and the Treasury is clear that the Crown Estate “will share any planned changes to the remuneration framework with HM Treasury to seek their agreement.” I think that very much delivers on the spirit of the amendment. The Crown Estate’s annual report and accounts already include as a matter of course a comprehensive report on remuneration and details of the chief executive’s pay. Taken together, those arrangements already deliver on the essence of the amendment and I hope that, with that explanation, the hon. Member for North West Norfolk will feel able to withdraw the amendment. The primary intention of the Bill is to modernise the Crown Estate and ensure that it is best able to operate in a modern, commercial environment. These changes are central to that aim.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (Second sitting) · Hansard source

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  I will come in just a moment to some of the scenarios that the new clause might cover. As I said, the new clause ensures that the Crown Estate commissioners must obtain consent from the Treasury before they permanently dispose of any part of, or the Crown Estate’s interests in or rights and privileges in relation to, the territorial seabed. To be clear, that does not mean that the Crown Estate could never be permitted to dispose of a seabed. To answer my hon. Friend’s question, national or local interests may be best served by such a sale, including, for example, to another part of the public sector to enable local infrastructure development. Any such sale could, under these measures, take place only with the agreement of Ministers, and it is right that they are decision makers on such sales. I should also make it clear that the clause would not fetter the Crown Estate’s existing right to agree licences or leases in relation to the seabed, which by definition do not represent a permanent disposal of the asset. The ability to agree long-term licences and leases for the seabed will continue to be an important feature of the Crown Estate, to attract significant investment needed for offshore clean energy developments. New clause 3, tabled by the hon. Member for North West Norfolk, seeks to limit the ability of the Crown Estate to dispose of assets without Treasury approval. Specifically, it would require the Crown Estate to seek consent for the disposal of assets totalling 10% or more of its total assets in a single year, and that the Treasury lay a report before Parliament within 28 days of being notified of disposals above that threshold. The Government’s view is that imposing a limit on disposals would undermine the flexibility needed to enable the Crown Estate to operate commercially and meet its core duties under the Bill. There may be instances where it makes commercial sense to dispose of high-value assets, particularly when the Crown Estate takes a long-term view of the business and its strategy. I recognise that the new clause would not prohibit disposals above the specified limit, but would require the Crown Estate to obtain Treasury approval. However, as I have set out for the Committee, the Crown Estate is an independent commercial business, and it is not the Government’s intention to materially alter its independence in such a way that the Treasury is required to approve its business decisions. However, I do understand that there may be concerns about the Crown Estate’s ability fundamentally to change the nature of the estate. I reassure the hon. Member that the core duty of the Crown Estate—to maintain an estate in land and to enhance and maintain the value of that estate—is unchanged by the Bill. I hope that that provides the appropriate reassurance and that he feels able not to press new clause 3. The Government are thankful for the constructive engagement of the Opposition on the matter of disposals. That has led to special protections being put in place for the seabed. I therefore commend new clause 2 to the Committee.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (Second sitting) · Hansard source

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  It is a pleasure to see you in the Chair, Mr Mundell. In his remarks, the shadow Minister essentially set out a similar question, rephrased in a number of different ways, about the publication of the partnership agreement between the Crown Estate and Great British Energy, and I would like to remind him of some of the points we discussed before lunch. The Crown Estate is keen to ensure that details of the partnership are publicly available on an ongoing basis, and the Government agree that it is sensible to require the Crown Estate to include the relevant detail in its existing annual reports. I would also emphasise—I do not know whether the hon. Gentleman feels that this is less important than we do—that partnership agreements are highly commercially sensitive. It is therefore right that any agreement is not made public or laid before Parliament, as to do so would likely prejudice the commercial interests of the Crown Estate or GB Energy and risk the aims of the partnership, which are to speed up the process of delivering clean energy and investing in clean energy infrastructure.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (Second sitting) · Hansard source

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  These are very straightforward matters to debate. Government amendment 3 removes the privilege amendment inserted by the other place. Clause 7 sets out the Bill’s extent, commencement period and short title in the usual manner for such legislation. I commend Government amendment 3 and clause 7 to the Committee.

• 6 Feb 2025 · Crown Estate Bill [ Lords ] (Second sitting) · Hansard source

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  New clause 7, tabled by the hon. Member for Ynys Môn, would require the Crown Estate to disaggregate reporting in its accounts to show capital and revenue figures for the activities of the Crown Estate in England, Wales and Northern Ireland. At present, the Crown Estate’s operations are not divided into business units by nation. It would therefore not be straightforward to disaggregate reporting in that way. It would be a complex task, requiring a series of highly subjective judgments to be taken. Although it is possible to identify gross revenues from each nation, reporting them without any representation of the costs associated would be entirely misleading. However, the Crown Estate does publish broader information relating to its activities in England, Wales and Northern Ireland as part of its annual report and accounts. The Government’s view is that it remains appropriate for the Crown Estate to continue its reporting on a whole-business basis. I hope that that explanation is helpful and encourages the hon. Member to withdraw her new clause.