Good corporate governance is at the heart of how we do business.
The Crown Estate is constituted as a statutory corporation under the Crown Estate Act, 1961 (the 1961 Act). It is a body established in perpetuity under the 1961 Act as a trust estate. Independent of government and the Sovereign, it is overseen by its Commissioners, whose public function is to invest in and manage certain property assets which ultimately belong to the Sovereign (who exercises no control over those assets); and to remit its revenue surplus each year to the Exchequer.
The Treasury is The Crown Estate's sponsor department. The Exchequer Secretary to the Treasury is its sponsoring minister who answers for its affairs in Parliament when the need arises. The Crown Estate's usual working level contacts are the Treasury Officer of Accounts team. The Treasury and The Crown Estate share the common objective of ensuring that The Crown Estate fulfils its duty under the 1961 Act. To achieve this, The Crown Estate and the Treasury work together, in recognition of each other's roles and areas of expertise, providing an effective environment for The Crown Estate to achieve its objectives through the promotion of partnership and trust. The Crown Estate has been classified as a non-financial public corporation by the Office for National Statistics.
As a non-financial public corporation, we are unique in that we have an independent commercial mandate derived from the 1961 Act and thus we seek to apply the standards that are most appropriate to the various elements of our business in pursuit of applying best practice. We also recognise that governance is not just about best technical practice and having the right principles, processes and structures in place; we know that good governance is as much about our culture and behaviours.
The Crown Estate observes the Nolan principles of public life. Although it is not an instrument of government policy, as a public corporation, The Crown Estate follows the standards in Managing Public Money applicable to its status. The Crown Estate's Accounting Officer is its Chief Executive. As Accounting Officer, the Chief Executive is bound by the requirements of chapter 3 of Managing Public Money, with personal responsibility for leading the organisation in an ethical manner, seeking good value for money and securing the quality and integrity of its business.
Although The Crown Estate is not technically bound by the UK Corporate Governance Code 2018 (the Code), our Board has undertaken to comply with the Code where it can do so given The Crown Estate’s unique constitution. The Code serves as a benchmark for our corporate governance performance and its disclosure requirements serve as a means to demonstrate good governance practice to all of our stakeholders.
The primary statutory duty of the Commissioners is to maintain The Crown Estate as an estate in land and to maintain and enhance its value and the return obtained from it with due regard to the requirements of good management. Good management encompasses broad value creation, including a commitment to environmental and social value creation, in alignment with strong financial performance.
The Crown estate has the authority to perform all acts of the Crown’s ultimate right of ownership, subject only to any restrictions in the 1961 Act which include barring The Crown Estate from:
Investing in equities
Acquiring land outside the UK
Granting leases for more than 150 years
Each year, the net revenue profit of The Crown Estate is paid into the UK Consolidated Fund, where it is added to the funds arising from general taxation and is available to the Treasury to use for the benefit of the nation.
The assets managed by The Crown Estate are not the property of the government, nor are they part of the Sovereign’s private estate. The assets form part of the hereditary possessions of the Sovereign “in right of the Crown”; in other words, lands owned by the Crown as an institution not personally by the reigning Monarch, who has no control over the estate and no involvement in its management.
The concept of “the Crown” is distinct from the Sovereign. It encompasses the interests of both the Sovereign and the government and it is one of our oldest institutions.
In 1066, all land in England was deemed to belong to William the Conqueror “in right of the Crown”.
By the time George III ascended to the throne, the size of the estate had reduced and it was producing insufficient revenue and so he surrendered Crown revenues to the management of Parliament as part of a settlement for Crown Lands in 1760.
In the 1961 Act, Parliament charged the Commissioners with the function of managing and turning to account the land and other property, rights and interests vested in the Crown. On his accession, King Charles III formally surrendered the hereditary revenues to the government, as each Monarch has done since 1760. The 1961 Act requires the Commissioners to make to His Majesty a report on the performance of their functions in each year and to lay a copy of their report before Parliament.
Appointments, structure and duties
The Crown Estate takes guidance from the Commissioner for Public Appointments and Governance Code on Public Appointments when appointing Crown Estate Commissioners, who are alternatively known as Board Members.
All Board appointments reflect the diversity of the society in which we live, taking account of the need to include a balance of skills and backgrounds that are relevant to The Crown Estate’s business.
In accordance with the Crown Estate Act 1961, The Crown Estate’s Commissioners are appointed by the Sovereign under the Royal Sign Manual on the recommendation of the Chancellor of the Exchequer to the Prime Minister from candidates identified by a selection panel on which the Treasury is represented.
Each Board Member of The Crown Estate is appointed for a period of up to four years. In general, appointments as Non-Executive Board Member or as Board Counsellor may be renewed up to a further four years. In exceptional circumstances, appointments as Non-Executive Board Member may serve on the Board, as a Board Member, for a further two years and for not more than ten years. A Non-Executive Board Member, after serving eight years on the Board, may be appointed as a Board Counsellor for up to two years.
The Board is led by its Chair, supported by its Chief Executive. With the exception of the Chief Executive, all Board Members are currently Non-Executives. The Board is assisted by co-optees known as Board Counsellors, who (at the discretion of the Chair) attend Board meetings in a non-voting capacity. The Crown Estate’s Chief Financial Officer also attends in a non-voting capacity.
The Chair of the Board leads the Board in providing support and challenge to The Crown Estate’s Chief Executive and the executive team. The Chair’s leadership responsibilities include formulating the Board’s objectives; ensuring that the Board complies with any direction given in writing by the Exchequer Secretary or the Secretary of State under and in accordance with the Act; promoting the efficient and effective use of staff and other resources; delivering high standards of regularity and propriety; and representing the views of the Board to the general public.
The Chief Executive discharges the role of Board Member, as Second Commissioner, alongside his executive duties. His executive role encompasses developing and implementing strategy, overseeing operations and ultimate responsibility for risk management, people and culture. The Chief Executive, as Accounting Officer, ensures that The Crown Estate operates effectively and to a high standard of probity in accordance with the requirements of paragraph 3.3 of Managing Public Money.
The Board constitutes committees that are necessary for it to fulfil its functions. They ensure focus and challenge around those areas at the heart of the delivery of The Crown Estate’s purpose and strategy. Currently, the Board has an Audit Committee (whose responsibility includes risk), a Remuneration Committee, a Nominations Committee and a Sustainability Committee. They each consist of Independent Board Members, except the Remuneration Committee which may have up to one Board Counsellor.
The terms of reference of each committee sets out its responsibilities and the authority delegated to it by the Board. The latest versions can be found below.
The Crown Estate also has the Value Creation Committee and the Group Leadership Team. The Value Creation Committee shapes and approves value creation proposals and reports into the Board. The Group Leadership Team brings together The Crown Estate’s leadership to help the Chief Executive shape and deliver all aspects of what The Crown Estate does and seeks to do.
The Board operates to high standards of corporate governance. It reports on its performance in its annual report and reviews its own performance every year.
The Treasury is charged with general oversight of The Crown Estate's business.
As The Crown Estate's sponsor department, the Treasury and its sponsoring minister, the Exchequer Secretary, answers for its affairs in Parliament when the need arises. The Treasury is charged with general oversight of The Crown Estate’s business.
Our Framework Document sets out the broad governance framework within which The Crown Estate and the Treasury operate. It sets out:
The Crown Estate’s core duties and powers under the Crown Estate Act, 1961
the governance and accountability framework that applies between the roles of The Crown Estate and the Treasury
how the day-to-day relationship works in practice, including in relation to governance and financial matters, building upon the framework established by the Act.
The Crown Estate updates the Treasury with regular information, including the quarterly performance update supplied to the Board (comprising both financial and non-financial performance), information about significant business developments, details of the approved Business Plan and key targets, and information about any unusual or innovative proposals.
The Crown Estate discusses with the Treasury its revenue targets for three years ahead and reviews them with the Treasury annually. The targets take account of the likely development of the income stream from The Crown Estate’s business units, as well as market and general economic conditions.
Currently (and until agreed otherwise to reflect changed market conditions), The Crown Estate measures its performance against:
the revenue targets agreed with the Board and discussed with the Treasury
an appropriate real estate market total return benchmark (MSCI) and bespoke milestones for its Marine business unit
sustainability targets updated from time to time as appropriate.
The Crown Estate’s staff are not civil servants. They are employees of The Crown Estate. The remuneration policy and framework for The Crown Estate’s staff is the responsibility of the Board’s Remuneration Committee, whose approach to remuneration packages is that they should:
promote the long-term interests of The Crown Estate, having regard to the duties of the Commissioners
be sufficient to attract and motivate high calibre individuals and skills
be structured to link remuneration of all employees to performance in line with The Crown Estate’s strategy and performance
be aligned with the objectives set out in the framework document
deliver value for money
take account of Managing Public Money principles
The current remuneration framework set by the Remuneration Committee and agreed by the Treasury is aligned to a structure that is common practice in private sector commercial organisations and consists of three broad elements: base salaries; annual performance bonuses; and a long-term incentive plan for the most senior, highest potential and value creating roles. Remuneration payable to The Crown Estate’s Commissioners is set by the Treasury.