Sam Bidwell is a Parliamentary Researcher, and Director of the Centre for Commonwealth Affairs.
Two nations, both alike in dignity, in the cold North Sea where we lay our scene.
Throughout the 1980s, Britain and Norway both benefitted from record North Sea oil profits, furnishing state coffers with billions of pounds of additional revenue.
With characteristic prudence, the Norwegians used the opportunity to create the Statens Pensjonsfond Utland, a fund for the surplus wealth created by the country’s petroleum industry. The country’s combined sovereign wealth fund reported $84 billion profits in the first quarter of 2023, roughly equivalent to the cost of HS2.
Its British counterpart, by contrast, paid out nothing – largely as a feature of its nonexistence. Margaret Thatcher instead used Britain’s oil revenue to offer tax breaks, and to bankroll her ambitious domestic reforms. The UK may have missed on billions of pounds as a consequence, a sobering example of the short-term thinking that has characterised the past few decades of British politics.
Yet hope is not lost; another national asset could still be harnessed to deliver long-term dividends. The little-understood Crown Estate is ripe for reform, and should be turned into a true British sovereign wealth fund.
Despite misconceptions, the Crown Estate is not the King’s private property. It is a property portfolio, totalling assets worth some £15.6 billion, held by the monarch “in right of the Crown”, and regulated tightly by Parliament; the King cannot buy or sell these assets on a whim, and nor is he responsible for their day-to-day management.
More accurately, one might describe the Crown Estate as a collection of assets, held and managed independently of Government, which splits its profits between the public purse and the Royal Family.
Driven by far-sighted investment in offshore wind, the Estate turned over profits of £443 million in its last financial year; 75 per cent of that profit is automatically transferred to the Treasury, the result of a centuries-long negotiation between King and Parliament, last revisited by Parliament in 2011.
Though the Estate is managed by the semi-independent Crown Estate Commissioners, it’s easy to see echoes of His Majesty’s vision. In Hertfordshire, the Crown Estate underpins the Hemel Garden Communities project, a planned development of up to 11,000 new walkable, sustainable homes, 40 per cent of which will be designated as affordable. The comparisons to the King’s most famous pet project, Poundbury, write themselves.
With this good work in mind, the Crown Estate’s mandate should be made bigger and bolder.
The Government should work with the King to implement two key reforms which would enable it to generate greater profits and to pursue a more ambitious development programme. In effect, these steps would allow the Estate to act as a British sovereign wealth fund, generating an annual cashflow for the benefit of the country as a whole.
First, it should be freed up to invest its earnings abroad. Tethered to its existing holdings in the UK, there is an upper limit on what the Crown Estate can reasonably expect to earn; it should be encouraged to seek sensible long-term investments elsewhere. With its current focus on property management, it might choose to dabble in the fast-growing property markets of East Asia, or to shift its emphasis to infrastructure development in the Middle East.
In time, a reformed Crown Estate may opt to diversify, following the Norwegian model and purchasing stocks in the world’s leading tech companies.
Remember, three-quarters of Crown Estate profits are earmarked for the Treasury. When profits are up, the public – not the King – benefits most, with more money to spend on public services and key infrastructure.
Second, the Government should work with local authorities to boost the Estate’s domestic portfolio. Councils should be encouraged (gently) to sell their real estate assets to it, providing a short-term cash injection for under-funded councils, while bolstering the Crown Estate’s long-term ability to maximise profits.
English councils alone own around 1.3 million acres of land, much of which lies undeveloped or underdeveloped. Local councils have proven to be woefully ineffective at utilising their land; the stories of Middle England district councils captured by NIMBYism are many and varied.
Instead, let’s turn the land over to an institution with a record of sensible, long-termist development, boosting the earning capabilities of our nascent sovereign wealth fund in the process.
However, these sales should come with strings attached; increasing the Crown Estate’s domestic holdings also provides an opportunity to alleviate our housing crisis. As part of these sales, the Estate should be obliged to commit to ambitious house-building targets, replicating the success of Hemel’s Garden Communities from Bodmin to Blyth.
Thousands of new affordable homes here in Britain, underpinning a series of prudent, money-spinning investments abroad. Charles III might not be the merry monarch that his namesake ancestor was – but get this right, and his subjects may still have cause to line the streets in celebration.
Sam Bidwell is a Parliamentary Researcher, and Director of the Centre for Commonwealth Affairs.
Two nations, both alike in dignity, in the cold North Sea where we lay our scene.
Throughout the 1980s, Britain and Norway both benefitted from record North Sea oil profits, furnishing state coffers with billions of pounds of additional revenue.
With characteristic prudence, the Norwegians used the opportunity to create the Statens Pensjonsfond Utland, a fund for the surplus wealth created by the country’s petroleum industry. The country’s combined sovereign wealth fund reported $84 billion profits in the first quarter of 2023, roughly equivalent to the cost of HS2.
Its British counterpart, by contrast, paid out nothing – largely as a feature of its nonexistence. Margaret Thatcher instead used Britain’s oil revenue to offer tax breaks, and to bankroll her ambitious domestic reforms. The UK may have missed on billions of pounds as a consequence, a sobering example of the short-term thinking that has characterised the past few decades of British politics.
Yet hope is not lost; another national asset could still be harnessed to deliver long-term dividends. The little-understood Crown Estate is ripe for reform, and should be turned into a true British sovereign wealth fund.
Despite misconceptions, the Crown Estate is not the King’s private property. It is a property portfolio, totalling assets worth some £15.6 billion, held by the monarch “in right of the Crown”, and regulated tightly by Parliament; the King cannot buy or sell these assets on a whim, and nor is he responsible for their day-to-day management.
More accurately, one might describe the Crown Estate as a collection of assets, held and managed independently of Government, which splits its profits between the public purse and the Royal Family.
Driven by far-sighted investment in offshore wind, the Estate turned over profits of £443 million in its last financial year; 75 per cent of that profit is automatically transferred to the Treasury, the result of a centuries-long negotiation between King and Parliament, last revisited by Parliament in 2011.
Though the Estate is managed by the semi-independent Crown Estate Commissioners, it’s easy to see echoes of His Majesty’s vision. In Hertfordshire, the Crown Estate underpins the Hemel Garden Communities project, a planned development of up to 11,000 new walkable, sustainable homes, 40 per cent of which will be designated as affordable. The comparisons to the King’s most famous pet project, Poundbury, write themselves.
With this good work in mind, the Crown Estate’s mandate should be made bigger and bolder.
The Government should work with the King to implement two key reforms which would enable it to generate greater profits and to pursue a more ambitious development programme. In effect, these steps would allow the Estate to act as a British sovereign wealth fund, generating an annual cashflow for the benefit of the country as a whole.
First, it should be freed up to invest its earnings abroad. Tethered to its existing holdings in the UK, there is an upper limit on what the Crown Estate can reasonably expect to earn; it should be encouraged to seek sensible long-term investments elsewhere. With its current focus on property management, it might choose to dabble in the fast-growing property markets of East Asia, or to shift its emphasis to infrastructure development in the Middle East.
In time, a reformed Crown Estate may opt to diversify, following the Norwegian model and purchasing stocks in the world’s leading tech companies.
Remember, three-quarters of Crown Estate profits are earmarked for the Treasury. When profits are up, the public – not the King – benefits most, with more money to spend on public services and key infrastructure.
Second, the Government should work with local authorities to boost the Estate’s domestic portfolio. Councils should be encouraged (gently) to sell their real estate assets to it, providing a short-term cash injection for under-funded councils, while bolstering the Crown Estate’s long-term ability to maximise profits.
English councils alone own around 1.3 million acres of land, much of which lies undeveloped or underdeveloped. Local councils have proven to be woefully ineffective at utilising their land; the stories of Middle England district councils captured by NIMBYism are many and varied.
Instead, let’s turn the land over to an institution with a record of sensible, long-termist development, boosting the earning capabilities of our nascent sovereign wealth fund in the process.
However, these sales should come with strings attached; increasing the Crown Estate’s domestic holdings also provides an opportunity to alleviate our housing crisis. As part of these sales, the Estate should be obliged to commit to ambitious house-building targets, replicating the success of Hemel’s Garden Communities from Bodmin to Blyth.
Thousands of new affordable homes here in Britain, underpinning a series of prudent, money-spinning investments abroad. Charles III might not be the merry monarch that his namesake ancestor was – but get this right, and his subjects may still have cause to line the streets in celebration.