King Charles has asked that profits from a Crown Estate wind farm deal, which would have generated a multimillion pound surge in royal revenues in the next few years, be redirected instead to the “wider public good”.
Six new offshore wind energy lease agreements, which came into effect on Thursday, were set to generate more than £8bn for the Crown Estate, the monarchy’s multibillion-pound legacy portfolio of land and property holdings, over the next decade.
Under a new arrangement for royal finances brought in by former prime minister David Cameron’s government, a quarter of profits from the Crown Estate go to the royal family. The rest accrues to the Treasury.
Because the Crown Estate includes ownership of the seabed out to 12 nautical miles, this means that the royal family, as well as the government, would have been the beneficiary of a huge windfall generated from the 2021 auctioning of seabed licences for offshore wind farms.
Critics likened this to being effectively a tax on renewable energy from which the royal family would have profited.
“In view of the offshore energy windfall, the keeper of the privy purse has written to the prime minister and chancellor to share the King’s wish that this windfall be directed for wider public good,” said Buckingham Palace.
This would lead to an “appropriate reduction in the proportion of Crown Estate surplus that funds the sovereign grant”, the palace added.
Under the terms of the sovereign grant, at present set at £86.3mn a year, the royal family has been benefiting since 2018 from an additional 10 per cent of the Crown Estate’s annual profits towards the refurbishment of Buckingham Palace. This was on top of the 15 per cent of profits originally agreed.
By taking the lucrative option fees and rents from wind farms out of the equation, the King, who highlighted the cost of living crisis during his first Christmas speech as monarch, has headed off what could have become a lightning rod for critics of the monarchy at the start of his reign.
“It’s right he has done this. He would have got hammered for it if he hadn’t because there would have been a huge windfall for the royal family,” said Norman Baker, the former Liberal Democrat minister who has written extensively on royal finances.
The 2021 auction of seabed licences attracted unprecedented interest including from oil majors tapping into Britain’s booming offshore wind sector, the largest in the world.
Under the terms of the licensing, option fees worth hundreds of millions of pounds annually are payable to the Crown Estate for three to 10 years when they are replaced by a “rent” of 2 per cent of a wind farm’s turnover.
The combined option fees bid for the six projects auctioned in 2021 were set to be worth almost £8.8bn over 10 years.