Watchdog calls for clarity on use of £755m ScotWind cash

The Scottish government must be much more transparent about how it plans to use the £755m generated by the leasing of offshore wind farm options, Scotland's public spending watchdog has said.

The Auditor General for Scotland's report said ministers had drawn down £96m of the ScotWind funds so far and expected to spend a further £507m by 2031, but it has not been clear about how it will use the cash.

Opposition parties said the government had pledged to set up a "ScotWind wealth fund", but was instead using the money to plug gaps in Scotland's finances.

The Scottish government said it recognised the importance of providing clarity and would do so during the annual budget-setting process.

ScotWind is the name given to the leasing of Scotland's seabed to companies who want to build offshore wind farms.

The seabed around Scotland, owned historically by kings and queens, is managed by Crown Estate Scotland, with the profits going to the Scottish government.

In April 2022, Crown Estate Scotland announced the winning bidders for 17 sea areas around Scotland's coast, including some large ones around Orkney, as well as areas off Lewis and Islay.

Later that year, three more sea areas were added off Shetland. Total takings from the auction were £755m.

This is a one-off payment, to be followed, in 10 years or so, by smaller annual leasing profits.

The ScotWind windfall could have been more if conditions had not been applied.

Crown Estate Scotland chose bids that looked most credible rather than selling to the highest bidder in an open auction.

It aimed to secure decades' worth of lease payments, rather than maximising immediate returns.

South of the border, Crown Estate UK took a different "open pricing" approach which led to significantly higher than anticipated fees.

The auditor general's report found the Scottish strategy could deliver substantial long-term benefits if developers proceed with projects and sign full leases but he warned that the economic impact could be significantly lower if companies abandon their options.

Stephen Boyle, Auditor General for Scotland, said: "Whether that decision represents value for money will be determined in the coming years."

"If developers sign long-term leases before their option periods end, then annual payments will continue to benefit Scotland for the next 60 years.

"However, if they give up their options the capped option pricing model will result in limited wider economic benefits and substantially reduced public revenues."

Boyle added: "What is now important is that the Scottish government is much more transparent about their plans for how the ScotWind funds will be used across this parliamentary term and beyond."

Energy Minister Stephen Gethins said ScotWind was a success story that will bring in an estimated £80m-£110m in annual income over the 60-year lifetime of the project.

"This vindicates the decision to focus on project delivery and attracting investment, rather than upfront revenues," he said.

The minister added: "I recognise the importance of providing clarity on how offshore wind revenues will be managed, and we will continue to do so through our annual budget setting process."

Gethins confirmed the government's commitment to set up a ScotWind Wealth Fund by the end of the current parliamentary term.

Scottish Labour energy spokesman Daniel Johnson said: "The SNP sold off our seabeds on the cheap and then spent years frittering away the proceeds plugging their own budget gaps.

"With hundreds of millions of pounds on the table, the SNP must set out how it will put this money to good use."

Scottish Conservative energy spokesman Liam Kerr said SNP ministers had an "aversion to transparency".

"They have repeatedly used these funds to plug other gaps in Scotland's finances which are facing a £5bn blackhole thanks to two decades of SNP economic mismanagement."

He added: "John Swinney needs to be upfront about his plans otherwise his Scotwind Wealth Fund election pledge will look like another headline grabbing policy that will not be delivered."

Scottish Liberal Democrat finance spokesman Liam McArthur said his party had been critical of the SNP selling off Scotland's seabed on the cheap, using the money to plug budget gaps and tossing around plans for a so-called wealth fund which never seems to get off the ground.

"This report is rightly sceptical of how the government has acted," he said.

"If Scotland's renewable energy wealth is truly to serve the Scottish public, the government need to massively improve governance and transparency."