State sponsored theft?

Gwern Gwynfil

Many people accuse the incumbent Conservative government of presiding over one of the most kleptocratic and corrupt administrations the UK has seen since the end of WWII.

The multitude of PPE scandals, the vast sums siphoned to consultants, the rent farming of the UK state by multinational firms as well as domestic ‘outsourcers’ are well documented.

The family jewels have all been sold off, the business lobby is dominant, power and wealth has become consolidated in a very small sector of society whilst the vast majority decline rapidly in relative wealth. Consider that the whole of the UK, once London is excluded, is one of the poorest modern developed nations in the world.

For perspective, 150 years ago, the British empire was responsible for roughly 25% of global wealth and economic activity. The equivalent figure today is 2% (and declining). As total relative wealth declines, the state and the wealthy will naturally seek to maximise their own personal gain.

This is structural and systemic. Recent figures suggest that gross Scottish tax receipts for the UK treasury are getting fairly close to twice the annual budget of the Scottish Parliament. For Wales, around £35Bn is collected whilst a little over £20Bn is returned to be allocated by Welsh Government.

Meanwhile Wales continues to be the poorest part of an increasingly poorer UK state.

British Energy?

The Labour leader, Keir Starmer, almost certainly the next Prime Minister of the UK, has announced plans to build a British energy company based on offshore wind. He announced this in Wales because Wales has a lot of offshore wind potential.

As with so much value over the centuries, Starmer means to ensure the extraction of wealth from Wales in the great tradition of Empire, so that the centre can maintain its grip and control. In today’s world that means ensuring wealth keeps flowing to the wealthy elites.

The periphery feeding the ravenous beast of Westminster whilst the edges go hungry. In Wales, many of our children quite literally go hungry.

Is this unjust hyperbole I hear you ask? I think not. It has gone on too long and with too much intent. Infrastructure has been built to reflect this active policy of extraction. Our energy is sucked out of Wales by the grid and taken to service others.

To such an extent that, although we produce twice as much electricity as we use, we pay some of the highest prices in the UK for our own energy.

Despite having an abundance of renewable energy in Wales we can’t even use this to power homes and businesses in the south because we have so few grid connections integrating our own nation. We have been built over the centuries to service our neighbour. This makes energy use across south Wales some of the most fossil fuel dependent in the UK.

The Welsh Crown Estate

Offshore wind is built on land licensed by the Crown Estate. This is still managed directly by the UK treasury here in Wales. To clarify, the Welsh seabed and foreshore does not belong to Wales, it is not in the gift of Welsh Government, it is held by the UK Treasury.

There is huge support for the Crown Estates to be given back to Wales. The most recent poll suggested that 74% of the population believed it should be in Welsh hands.

This is not surprising when you consider that the Crown Estate is nothing more than a residual feudal hangover which ultimately dates from the 13th century conquest of our lands. No place for the spoils of ancient wars in the modern world.

There is a lot of active campaigning in Wales to make this happen. UK Labour and Labour in Welsh Government are talking about it, setting up meetings and discussions, paving the way for this to be done. It will happen when it is politically helpful and useful for Labour. At some point Wales will be given back what is rightfully ours just as Northern Ireland and Scotland have had theirs returned in the past.

Why the hold out in the case of Wales?

Show me the Money

Simply put, there is a great deal of value to be extracted from the Welsh assets before they are returned. The big payoff for offshore wind developments is in the annual ‘option to lease’ agreements prior to development.

These can be worth hundreds of millions a year, usually for 3 years before developments are given the green light and rents are in place. Ground rents are significant, a fully operatinal wind farm will usually pay 2% of annual income or a fixed fee per MWh generated.

It’s a fraction of the revenue generated by the operator of course. These rents are also a tiny fraction of the initial capital sums paid for options. The gold is in these early, up front payments.

The next few years will see a lot of fields being developed off the coast of Wales. I predict that the Treasury will extract the bulk of these capital payments before ‘negotiations’ to return the Crown Estate assets to Wales come to fruition.

Our assets will be stripped of the bulk of their value before being tied up in 60 year leases which Wales will have to manage.

HM Treasury stripping out value for its own benefit before offloading the much less valuable leased assets.

The Crown Estate will be devolved in Wales. I am sure of this. It will be too little too late. Like the coal industry and the clean up of the old spoil heaps, Wales will have responsibilities and control only after missing out on the bulk of the wealth creation.

This is not good enough. The Estate should be returned in full, unconditionally and without reservation.

Today. Not tomorrow or at some yet to be determined point in the distant future.

Capital value, extracted since 1999 and the formation of the first Welsh Government, should be apportioned with a significant percentage returned to Wales. This too should happen today. Returning anything less than all of the cash already extracted would be an insult to Wales and all of its people.

To coin a phrase:
Give unto Caesar that which is Caesar’s,
Give unto God that which is God’s,
Give unto Cymru that which is Cymru’s.