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Profits from land and property holdings of the British monarchy’s multibillion-pound legacy portfolio rose 42 percent, providing a welcome boost to UK public finances following King Charles’ decision to reduce royalties from offshore wind farms.
The Crown Estate, which owns up to 12 nautical miles of seabed around Britain, said on Thursday it made a profit of £442.6mn in the last financial year, up £129.9mn on the previous year.
The increase is largely explained by option fee income from six offshore wind farm licenses that took effect in January. This offset the overall decline in the value of its property portfolio.
Strong wind speeds and relatively shallow waters have helped the UK develop a large offshore wind industry over the past 20 years, with around 14 gigawatts of installed capacity, second only to China.
Offshore wind provided around 11 per cent of the UK’s electricity in 2021 and this is set to grow as the government aims to reach 50 gigawatts of capacity by 2030.
The six lease agreements announced in January include projects off the coast of Yorkshire and Cumbria, to be developed by companies including BP and TotalEnergies. The marine portfolio, which includes such leases, now accounts for more than a third of the overall value of the Crown Estate.
“Our enhanced revenue from this . . . Offshore Wind Leasing Program reflects the tremendous amount of groundbreaking work we have undertaken over the past two decades, working in partnership across many sectors, to create the world’s leading offshore wind market,” said Crown Estate Chief Executive Dan Labad.
The estate has contributed £3.2bn to the Treasury over the past 10 years, during which the value of its portfolio has grown to £16bn, he added.
Former prime minister David Cameron shook up the way the monarchy is financed in 2011, replacing fixed annual spending known as the civil list – which was set by the Treasury and overseen by Parliament – with a sovereign grant.
The latter consisted of 15 per cent of the profits of the Crown Estate, which from 1760 was administered entirely for the benefit of the State. In addition, another 10 per cent of Crown Estate profits were given by former Chancellor George Osborne. Renovation of Buckingham Palace.
The changes, partly as a result of a boom in the UK’s offshore wind farm industry, have led to a huge increase in the amount paid to the monarchy by the Treasury, from £7.9mn in 2011 to £86.3mn.
Six new wind farm leases were set to generate more than £8bn for the Crown Estate over the next decade. Campaigners for reform of the monarchy, including former Liberal Democrat minister Norman Baker, have described the royal family’s 25 per cent share as an effective tax on renewable energy.
However, King Charles announced in January that he would redirect his share of wind farm profits to the “greater public good”.
Neither the Treasury nor the Crown Estate has clarified how wind farm profits will now be split, nor has the government announced potential changes to the sovereign grant since King Charles took the throne.
There were less favorable signs for the wider UK property market, with the Crown Estate saying the value of its retail properties outside London fell by almost twice as much as high-end properties in the capital.
The value of regional properties fell 11.8 per cent to £1.5bn in the year to the end of March due to negative market sentiment on out-of-town retail parks. London’s wealth also fell by 6.5 per cent to £7.2bn.