UK Government firmly rejects devolving Crown Estate to Wales

Martin Shipton

A Treasury Minister has made it clear that the UK Government has no intention of devolving the Crown Estate to Wales, despite Welsh Labour’s support for such a move and an impassioned speech in the House of Lords from a former Labour Welsh Secretary.

Former Neath MP Lord Peter Hain told fellow peers that he was responsible for the 2006 devolution Act that led to the then National Assembly gaining full lawmaking powers.

In his speech he backed proposals from Plaid Cymru’s Lord Dafydd Wigley and Baroness Carmen Smith that would have seen Crown Estate revenues in Wales passed to the Welsh Government rather than to the UK Treasury.

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Confrontation

He said: “The Crown Estate is devolved in Scotland; surely there is no reason why the same powers should not be devolved to Wales, especially by a new Westminster Labour Government committed to partnership rather than confrontation with the devolved administrations. That was the essence of the Prime Minister’s message to the special summit of the nations and regions last Friday, and in visiting Scotland, Wales and Northern Ireland in July within days of moving into Downing Street.

“Taking control of the management of Crown Estate assets in Wales would allow the Welsh Government greater autonomy over the speed and direction of the development of Welsh-sited Crown Estate property. The Welsh Government would have the opportunity to better align the management of Crown assets in Wales with the needs of Welsh citizens. The management of Crown assets also generates significant revenue to the UK Exchequer. Devolution of the Crown Estate would better align revenues from Wales with the income available for the Welsh Government to deliver on their priorities for Welsh citizens.

“Marine planning is a holistic, statutory process for managing the UK’s seas including the seabed. Aligning Welsh marine planning with seabed leasing rounds for new developments, such as renewable energy, would help to ensure joined-up and plan-led decision-making.

“Currently, there are stand-alone leasing rounds for certain types of activity, such as offshore wind or marine aggregates extraction. These leasing rounds, which occur from time to time, take account of relevant government policy, but devolution of the Crown Estate to Scotland has allowed a reshaping of the process, whereby the marine planning process sets the overall policy direction with leasing rounds only progressed after it has set national strategic policy. This ensures that marine management is better joined up and delivered.

"Taking control of the management of the seabed would allow Welsh Government Ministers both to better implement their policy decisions and priorities for the marine area and to ensure that all relevant interests can be reflected in a way that is simply not as possible with a top-heavy, centralised and London-centric agenda.”

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Expert group

Lord Hain said the final report of the Independent Commission on the Constitutional Future of Wales had recommended that: “The Welsh and UK Governments should establish an expert group to advise urgently on how the devolution settlement and inter-governmental engagement in relation to energy could be reformed to prepare for rapid technical innovation in energy generation and distribution, to ensure that Wales can maximise its contribution to net zero and to the local generation of renewable energy. The remit of the group should include advising on the options for the devolution of the Crown Estate, which should become the responsibility of the devolved government of Wales as it is in Scotland.”

Lord Hain said that Huw Irranca-Davies, Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, told the Senedd on July 17 2024: “We really welcome the opportunity to collaborate now with the UK Government on the proposals and the progression towards the devolution of the Crown Estate in Wales, which remains our aspiration.” There are details that have to be worked out on that as well, but I think the positive engagement that we’ve seen so far from the UK Government on maximising the benefits of the way that the Crown Estate operates currently within Wales bodes well for the future”.

Limits

The Welsh Government added: “Our longstanding position is that the Crown Estate should be devolved to Wales in line with the position in Scotland. We have been clear that the current devolution settlement for energy limits our ability to deliver policy in Wales in a way that reflects our policy priorities and the needs of future generations. We welcome ... the broader emphasis on improving intergovernmental relations given the interactions between UK government policy and devolved policy with respect to energy and climate change.”

Lord Hain told the House of Lords: “Welsh Labour’s case is that devolving the Crown Estate is vital so that profits from leasing land for energy projects can be retained in Wales as they are in Scotland.

“I understand that it has been argued in the past, on behalf of the previous Conservative Government, that introducing a ‘new entity’ - as they described it - to manage the Crown Estate in Wales would ‘fragment the market, complicate existing processes, and likely delay further development offshore, undermining investment in Welsh waters’.

“Frankly, that reflects old, centralised, conservative, anti-devolution Whitehall thinking. I hope that there will be fresh thinking from this new Labour Government, although I fully recognise that the impossible financial predicament inherited from the bankrupt Tory Government means that finding the money to devolve management of the Crown Estate to Wales at this time would be very difficult.

“I also understand that this matter is not currently a priority, given all the other matters on health, education and local government that certainly are. I hope, therefore, that my noble friend the Minister, when he replies, will give me some encouragement that discussions will now take place with Welsh Labour First Minister Eluned Morgan and her colleagues on their firm desire to see powers over the Crown Estate devolved to Wales in the future, as they have long been in Scotland.”

No hope

But Lord Livermore, the Economic Secretary to the Treasury, gave no hope in his response that Crown Estate revenues would be devolved to Wales.

He said: “I fully recognise that there are now two Labour governments in the UK. While I believe that there is greater benefit for the people of Wales and the wider UK in retaining the Crown Estate’s current form, I shall of course continue to discuss these issues with the First Minister and the Secretary of State for Wales to ensure that Wales sees the full benefits of the Crown Estate and other forms of investment.

“Devolving the Crown Estate to Wales would most likely require the creation of a new entity to take on the role of the Crown Estate in Wales. This by definition would not benefit from the Crown Estate’s current substantial capability, capital and systems abilities … This would indeed further fragment the UK energy market by adding an additional entity and, as a consequence, it would risk damaging international investor confidence in UK renewables and disrupting the National Energy System Operator’s grid connectivity reform, which is taking a whole-systems approach to the planning of generation and network infrastructure.

“That reform aims to create a more efficient system and reduce the waiting times for generation projects to connect to the grid. The cumulative impact of these effects would likely delay the pathway to net zero by decades.

“Furthermore, the Crown Estate’s marine investments are currently made on a portfolio-wide basis across England and Wales. To devolve to Wales would disrupt these existing investments, since they would need to be restructured to accommodate a Welsh-specific entity. Let me give two examples. The first is the Crown Estate’s £50m supply chain accelerator, which will match-fund early stage projects related to offshore wind leasing round 5, and the £50m investment in the offshore wind evidence and change programme, which brings together government bodies, the industry and key stakeholders from across the UK to better understand environmental impacts of offshore wind.

“To devolve the Crown Estate at this time would also risk jeopardising the existing pipeline of offshore wind development in the Celtic Sea planned into the 2030s. The Crown Estate’s offshore wind leasing round 5 is spread across the English and Welsh administrative boundaries in the Celtic Sea. It was launched in February this year and is expected to contribute 4.5 gigawatts of total energy capacity, or enough to power four million homes. In addition to energy, the extensive jobs and supply-chain requirements of round 5 will also likely deliver significant benefits for Wales and the wider UK.

“Lumen, an advisory firm to the Crown Estate, has estimated that manufacturing, transporting and assembling the wind farms could potentially create around 5,300 jobs and create a £1.4bn boost for the UK economy.

"As I have said, devolution would also delay UK-wide grid connectivity reform. The Crown Estate is using its data and expertise as managers of the seabed to feed into the National Energy System Operator’s new strategic spatial energy plan.

“For Wales, the Crown Estate is working in partnership with the energy system operator to ensure that its current pipeline of Welsh projects, the biggest of which is the round 5 offshore wind opportunity in the Celtic Sea, can benefit from this coordinated approach to grid connectivity up front. Introducing a new entity, which would have control of assets only within Wales, into this complex operating environment, where partnerships have already been formed, would not make commercial sense.

“Secondly, the Crown Estate’s assets and interests in Wales, as compared to its assets in England, are of a fundamentally smaller magnitude, which would very likely not be commercially viable if the costs were unsupported by the wider Crown Estate portfolio. The Crown Estate, in its present form, has the ability to take a longer-term approach to its investments and spread the costs of those investments across its entire portfolio. A self-contained, single entity in Wales would not have the same ability, nor would it benefit from the expertise that the Crown Estate has developed over decades in delivering offshore wind at scale.

“A devolved entity would be starting from scratch, midway through a multimillion-pound commercial tendering process, at a time when the Crown Estate is undertaking critical investment in the UK’s path towards net zero.”