King Charles's Sovereign Grant funding is derived from the vast royal estates. Photo . Jonathan Jackson / via AP
The King has turned down the opportunity to boost palace funding, opting instead to donate millions of pounds worth of wind farm profits to the nation.
The monarch has declared that the Crown Estate’s profits from six highly lucrative offshore wind projects should go straight into Treasury coffers, with none of it siphoned off for the royal household.
The Sovereign Grant he receives to fund his official duties is based on the profits of the estate, a £15 billion (NZ$29 billion) land and property empire run as an independent business.
It comes after the Crown Estate announced a landmark energy deal that will generate gross revenues of £1 billion (NZ$1.9 billion) a year for at least three years.
The six projects, three of which are located off the North Wales, Cumbria and Lancashire coast, with three in the North Sea off the Yorkshire and Lincolnshire coast, will generate enough renewable electricity to power more than seven million homes.
A Buckingham Palace spokesman said: “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, rather than to the Sovereign Grant, through an appropriate reduction in the proportion of Crown Estate surplus that funds the Sovereign Grant.”
It means a likely reduction in the percentage of Crown Estate profits allocated to the Sovereign Grant for the first time since the current system was introduced by George Osborne more than a decade ago as a means of funding the Royal family’s official duties. The actual amount given to the Royal Household however will not decrease.
By turning down the chance to increase royal funding, the King has proved that, as he declared at his Accession council last September, he wants Crown Estate revenues to be “for the benefit of all”.
His Majesty is said to favour a “slimmed down” monarchy and during the first few months of his reign he has repeatedly expressed concern about the cost of living crisis, using his first Christmas broadcast to recognise the difficulties experienced by those struggling to “pay their bills and keep their families fed and warm”.
The latest auction for leasing rights to the seabed prompted fierce bidding from energy companies, including giants BP and Total.
The Crown Estate will receive around £1 billion (NZ$1.9 billion) annually during the construction phase of the project, which could take up to 10 years. After that it will receive an annual rent partly based on the wind farm’s revenues.
Wind farm operators that have benefited from historic government subsidies have been accused of profiting from the energy crisis as the amount they are paid for their power is pegged to record high gas prices.
Dan Labbad, CEO of the Crown Estate, said: “The UK’s offshore wind achievements to date are nothing short of remarkable, and this next generation of projects point to an even more exciting and dynamic future.”
Graham Stuart, minister for energy and climate, added: “Offshore wind is at the heart of our goal to secure clean, affordable and resilient energy supply for all in the UK, while bringing major business, investment and job opportunities along with it.”
The Royal Household will continue to receive a slice of the profits from leasing the seabed to earlier wind farm developments dating back 20 years, which are worth millions.
Crown Estate profits are passed to the Treasury, which then gives a percentage back to the Royal household in the form of the Sovereign Grant. That percentage is reviewed every five years but currently stands at 25 per cent, which equated to £86.3 million (NZ$165 million) in 2021/22.
The grant was increased from 15 per cent at the last review, in 2017/18, to support the ongoing refurbishment of Buckingham Palace, with the intention of returning to 15 per cent in 2027/8.
However, a review by the Royal Trustees - the Prime Minister, the Chancellor and the Keeper of the Privy Purse - is currently under way and its decision will come into effect in April.
The trustees’ most recent annual report, published last March, noted that the Crown Estate’s net surplus was due to increase significantly due to additional revenues from offshore wind developments, which would be a relevant consideration for the review.
The estate’s net profit for the last financial year was £313 million (NZ$600 million).
The percentage given to the Royal household is calculated two years in arrears, meaning that the grant for this financial year will be based on Crown Estate profits from 2020/21.
The Royal family’s official duties were previously funded by the Civil List, a fixed annual allowance voted on by parliament and reviewed every 10 years.
In 2011, Osborne, then Chancellor, decided to link the funding of the monarchy to the revenues from the Crown Estate and introduced the Sovereign Grant. However, if Crown Estate revenues continue to soar, the King may yet have to intervene again.