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 already drawn down £96m of the ScotWind funds 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 the £96m it had spent was a "one-off" and it had committeed to set up a wealth fund during this parliament.

Auditor General for Scotland Stephen Boyle told Radio Scotland Breakfast that originally the money from ScotWind was intended to support environmental or climate activities.

"But what we have seen over the past few years is the monies have been used instead to support the Scottish government balancing its budget," he said.

"We think that needs to be set out much more transparently about how these substantial amounts of money will be used and what will be achieved from them."

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.

The auditor General 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."

Energy Minister Stephen Gethins told BBC Scotland the government had taken a more long-term approach, with an estimated £80m-£110m in annual income over the 60-year lifetime of the project.

He contrasted this with the revenues from oil and gas which were not "reinvested" by the UK government unlike Norway which has built up a huge wealth fund.

Gethins confirmed the Scottish government's commitment to set up a ScotWind Wealth Fund by the end of the current parliamentary term and said the £96m they had already spent was a "one-off".

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."

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."