DEFIANT ministers at Westminster have put themselves on a collision course with the SNP over who should control millions of pounds generated by the Crown Estate in Scotland.

Today, Danny Alexander, the LibDem Chief Secretary to the Treasury, will announce a new fund that will use Crown Estate profits to help coastal communities.

Charities and community groups are expected to benefit from the specially created fund that will receive half the organisation’s marine revenues in Scotland, currently £4 million a year but likely to rise to around £40m by 2021.

However, the move is likely to prove controversial as it bypasses First Minister Alex Salmond’s call for all Crown Estate revenue in Scotland to be devolved to Holyrood.

Mr Alexander, the most senior Scot in the Cabinet, admitted he had not engaged with the Scottish Government on the fund.

Finance Secretary John Swinney responded by accusing the Treasury of try-ing to “buy off Scotland’s coastal communities by offering them only 50% of their own resources” and said “this paltry announcement does not go nearly far enough”.

Mr Alexander is expected to say during a speech in Stornoway the move will help environmental schemes and boost often fragile economies around Scotland’s coastline.

Ahead of the speech, he said: “There will be a direct benefit to coastal communities from what is likely to be a significant growth area in years to come, as offshore renewables especially become a more important part of our energy generation.”

The fund, which will begin from next April, will be UK-wide. However, in Scotland it will encompass two parts -- one covering the Highlands and Islands and the other covering the rest of the country.

It will be administered by the Big Lottery Fund. There will also be advisory committees for each part of the UK, which will counsel on which projects should benefit.

Mr Alexander said: “As a Highlander, I feel it’s important we enable coastal communities to share in the benefit of offshore developments in their areas. I hope this will be a fund that will grow over the years and enable a real difference to be made in these places.”

Asked if the move was designed to spike SNP plans, he said: “No, not at all. This is some- thing I have been committed to for some time. I started discussing the work here last summer. This is an attempt to set out a policy I care about and the UK Government is committed to. The SNP have put forward a proposal and we are considering it but this is a better way forward for the communities in Scotland.”

Last night there was delight in the Highlands and Islands that finally there was to be some movement on Crown Estate monies.

The leader of Highland Council, Dr Michael Foxley, who has campaigned vociferously for reform of the Crown Estate for more than 25 years, said: “I am extremely pleased the principle has now been established that local communities should benefit from the revenue obtained by the use of marine resources in the Highlands and Islands.”

Angus Campbell, leader of Western Isles Council, said it was a very welcome beginning to the reform of the Crown Estate, but went on to say: “However, I do not believe that a challenge fund controlled by the Lottery is the way these funds should be administered. Local communities should control and disburse income that is generated in their waters, not have to go through a bidding process to get what should rightfully be theirs.”

Mr Swinney said: “Those communities need to benefit from all of the money raised from Crown Estate revenues in Scottish waters -- not just the half the UK Government is offering. This is Scotland’s money, and devolving full responsibility for the Crown Estate and its revenues to the Scottish Parliament is vital if Scotland is to make the most of our vast offshore renewable energy potential.”