RED PENNIES: Who Really Pays The Royal Bills?

The Queen, Royal Finances, Taxpayers and The Sovereign Support Grant.

Late June is the time of the year which sees the Royal Household release its annual Statement of Accounts, and how the Sovereign Support Grant (SSG) has been spent. The 2018/2019 statement has continued to acknowledge the change to further  SSG funding in regard to the approved £369M refurbishment of Buckingham Palace over the next eight years. The funds allocated for the extensive repairs have been titled as “Reservicing”. The approved works at Buckingham Palace will continue to be met by the SSG which is based on the profits of the Crown Estate and not derived from revenue of the tax generating efforts of the government.

The 2018/2019 financial year saw the Palace, not the Queen, receive a core Sovereign Support Grant payment of £49.3 million to carry out official programming for the Head of State – a rise of £3.6 million over the 2017/2018 fiscal year. This rise in expenditure was based on the rise of funding provided to the Palace due to the Sovereign Support Grant equation (two years in arrears) which was based on 2016/2017 Crown Estate revenues of £328.8 million. The total expense for the year of Her Majesty as Head of State came to £67 million, with additional funding generated to offset expense by letting out properties and rooms for events. Income supplementing the grant amounted to £17.8  million (up 3% from £17.3 million in 2017/18). A further payment of £32.9m was given to Buckingham Palace from Crown Estate profits for repairs known as the “Reservicing” scheme.

In total, the 2018/2019 expenditure of Buckingham Palace has amounted to £82.2, an increase of £6.1m over the £76.1m reported in 2017/2018. Despite proper accounting, accountability and self-sustainability, this is the time of year where anti-monarchist organisation ‘Republic’ pipes up, demonstrating the use of its forked tongue, demanding the ‘unjust’ and ‘expensive’ institution of Monarchy be dismantled in favour of an elected Head of State to create a United Republic of Great Britain and Northern Ireland.

Does the taxpayer really fund the Monarchy?

Numerous publications and media outlets that report on Royal finances around this time of year, state that The Queen is paid for by the British taxpayer, but this is not correct. This article will explain why (much to Republic’s displeasure) that our Monarchy is extraordinary value for money when compared with other Presidencies and Monarchies across the globe. The Palace (not The Queen) receives a Sovereign Support Grant payment each year, out of which Her Majesty pays for the upkeep of the Palaces she inhabits (Windsor and Buckingham) and her 400+ members of staff. Though the fiscal report of 2018/2019 does show a sizeable increase in expense for the official duties of Her Majesty, the 2017/2018 report had shown a moderate increase. In 2016/17 The Palace received £42.8 million for Her Majesty to carry out her official work as Head of State as opposed to the fiscal reports of 2014/15 and 2015/16, which had shown a £0 increase in Palace funding for those two years. In 2016/2017 a slight increase in spending was undertaken. This increase went towards property maintenance, payroll costs and an additional £0.9 million transferred into the Sovereign Grant Reserve. The Sovereign Grant Reserve received a transfer deposit of £15.2m to help offset expenses associated with Palace Reservicing. The regular monitoring of performance with respect to Royal finances has led to a real efficiency savings of 10% from 2009 to 2013, and through overall reductions in staff costs, travel and hospitality over the years, the real reduction in costs is 50% over the past 20 years. This certainly sounds like good value for money to us, but let us carry on!

Since Royal finances can be a little complicated, here is a brief explanation of how it is worked out to the figure that Her Majesty receives in the form of the SSG. ‘The Queen receives 15 per cent of the profits from the Crown Estate, but from funds two years in arrears,’ says the Telegraph. The Crown (not the Monarch) is the legal owner of the Crown Estate, and so currently The Queen is its proprietor. However, she does not run the estate. 

Most importantly, the Government does not own the Crown Estate either – it is run by an independent board, The Crown Estate Commissioners, who decide how the estate and its properties are managed; they do not consult The Queen.

All profits from The Crown Estate are deposited into (given over) to H.M. Treasury, and the Palace receives its monetary payment directly from the Chancellor of The Exchequer. This payment The Palace receives is 15% of the amount the Crown Estate already pays in to cover this expenditure. It is important to understand that a deposit has been made into H.M. Treasury before any payments are made to the Palace in the form of the SSG. Therefore, it seems clear that the Chancellor and H.M. Treasury are merely acting as intermediaries for this transaction, to show that the Government is (minimally) involved in the funding of The Palace, and that the movement of funds is being properly regulated according to law. This, therefore, means that the Monarchy does not cost the taxpayer a single red penny!

Acknowledging the cost of repairs to Buckingham Palace, a 10% rise in the SSG was approved by Parliament in early 2017, to pay for the £369 million of repairs needed at Buckingham Palace. This means the Royal Purse will receive a total of 25% of Crown Estate profits which started from 2017 and will last until 2027.  Of course, this formula could be made less confusing and easier to administer, if the Crown Estate would deduct the SSG payment from its profits and turn the funds directly over to The Palace before the remaining profits are given to H.M. Treasury. This would alleviate the participation of the Chancellor of the Exchequer and help greatly to reduce the misconception that public funds are being used to fund the Monarchy and its activities.

In fact, The Palace pays tax on this 15% income payment, therefore adding to the tax revenue collected for public benefit. In addition to the taxes already paid by The Queen, The Palace (Privy Purse) also pays tax on the income provided by the Duchy of Lancaster which also helps to off-set official Palace expenditure. This arrangement means that 85% of profits from the Crown Estate are gifted to the Treasury, and is disseminated into public spending departments such as the N.H.S., and the welfare system. This past fiscal year, the amount given by The Crown Estate to H.M. Treasury, less the £82.2m payment to Buckingham Palace including repairs, was a whopping £246,600,000 to be spent for the benefit of the people. Without this payment to the treasury, the government would have to find other means to offset such a disappearance of funds from its budget. More than likely such efforts to remedy this situation would see the government levy taxes on the public. Over the last ten years, The Crown Estate has paid more than £2.6 billion into the Treasury for public use. This pales in comparison to the money which is allocated to fund the official expense of the Monarchy.

In 2010, the Telegraph admitted that the Civil List’s (old Royal Finance system also linked to the profits of the Crown Estate) ‘£35.1 million is dwarfed by the £226.5 million profit passed to H.M. Treasury by the Crown Estate’.

The Crown Estate and its workings are not widely known by the British public. Here is a little more on the Crown Estate and its unique status as a public body, taken from its website:

  • ‘Firstly, we are a net contributor to the nation’s finances, each year sending our profit to the Treasury for the benefit of the nation.
  • Secondly, whilst we work with the grain of government policy, we are not a delivery vehicle for government policy. So we are not a quango in this sense.
  • Thirdly, we are a fully independent organisation with a separate legal identity and accounts. The Treasury is our sponsor department, but we are separate from them. Our role is set out in the Crown Estate Act 1961 and not by the government of the day.’

The Queen herself (as a private individual) receives a personal income from The Duchy of Lancaster, an estate which dates back centuries. While the Duchy does not pay tax, the income receivable by the Privy Purse is taxable, after the deduction of official expenditure – thus The Queen is still paying into the Treasury, and not taking a taxpayer’s penny out of it as many like to think. The Queen has paid tax on this income since 1993. However, it must be made clear that The Queen does not take a salary for her work as Monarch.

The cost of official travel for the Royal Family undertaken for official working duties is also taken from the SSG payment – this was reported at £4.6 million, a decrease of £100,000 over the costs from 2017/2018.

The total cost of travel factored into this expense is for all members of the Royal Family on official business, including travel between residences e.g Windsor to Buckingham Palace Private holidays and outings etc. are not included in this figure. The Royal Train was used on five occasions in 2018/19 and is used only by The Queen, Prince Philip and Prince Charles. It normally costs between £800,000 and £900,000 a year to run, and a Palace official offered, “although not the cheapest way” of travelling for the senior Royals, it was better in terms of safety, security and convenience for them. Of course, this prevents the need for a police convoy the entire journey which adds to travel expense, and it appears to be ‘greener’ than road travel, being described as having a ‘strong’ environmental aspect as the Royal train runs on bio-diesel. Every journey by a member of the Royal family is authorised by The Queen, and she may veto expensive travel. Royals usually travel business class, not first.

Despite The Prince of Wales being targeted unfairly due to his travel record for the 2018/2019 year, most of his travel was at the direction of the Foreign and Commonwealth Office, as he is one of the best overseas ambassadors the government has. Such invitations to travel on behalf of the government are still partially funded by the Sovereign Support Grant and not through the tax generated funds of the government. In all 3,200 official visits were undertaken by the Royal family throughout 2018/2019 including overseas travel.  Keeper of the Privy Purse, Sir Michael Stevens stated, “The year under review has been another busy period for the Royal Household with The Queen undertaking 140 official engagements in the United Kingdom, including the Commonwealth Heads of Government meeting at Buckingham Palace and the visit of the President of the United States to Windsor. In addition, the programme of other Members of the Royal Family who support The Queen helped the Royal Family deliver over 3,200 official engagements across the UK and overseas.”

With regard to subsidy, The Duke of Edinburgh is the only other member of the Royal Family (besides The Queen) to directly receive money for official expenditure; a parliamentary annuity (generated from the Sovereign Support Grant and not through tax generated funds) of £359,000 per annum. Under the Civil List, other members of the Royal Family were given allowances for their work. By 2002 there were eight recipients of parliamentary annuities, receiving a combined total of £1.5 million per annum. After 1993 and prior to 2012, when the SSG replaced the Civil List, The Queen voluntarily refunded the cost of these annuities to the Treasury. Today, Her Majesty spends over £1,254,000 of her own money to support members of her family carrying out engagements on her behalf. This expense is met from her personal income and not the SSG.

Sir Alan Reid, Keeper of the Privy Purse (in control of Royal finances), said in 2014 that figures have shown that Royal funding had fallen by eight per cent in the last two years, when maintenance costs of Palaces were removed. Her Majesty is known to prefer simple living; if she had the choice, she would probably live in a smaller house, like Sandringham. However, as Sovereign, it is tradition to live at Buckingham Palace, and grand historic buildings such as these require upkeep. Of course, upkeep and maintenance on such important and historic buildings is expensive! Regardless whether or not our Head of State resided in these buildings, they would still have to be looked after and kept in proper working and functional order as historically significant establishments. But since Her Majesty resides in the Palaces, she is expected to pay for the upkeep of the occupied palaces using money she is paid from the Sovereign Grant’.

It was initially estimated that £50 million was needed to secure the buildings, with Palace spending on property maintenance rising by £4.2 million in 2014; this included removing asbestos from Buckingham Palace and renewing the lead roof of the Royal Library at Windsor Castle. It was further reported that staff were using buckets to protect art and antiquities from the water coming in. The SSG report in 2014/2015 had since increased this estimate to £150 million in urgent repairs – for Buckingham Palace alone. £13.3 million was spent on maintenance of buildings in 2014/15 a decrease of £0.2 million (1.5%); £2.2 million has therefore been transferred to the Sovereign Grant Reserve for future use of repairs and maintenance. 2% less was spent on staff in 2013/14, and 7% less was spent on travel, to help pay for these necessary repairs, as the SSG would not cover all the work needed for the repair of these buildings. Last year the Sovereign Support Grant had shown an increase in property maintenance to £16.3 million before it was agreed by Parliament that a new assessment of needed repairs would be undertaken with works approved to the total of £369 million.

Prof Matthijs of Ghent University praised the British Monarchy in 2012 as one of the most open about its finances. Nadine Dorries, MP, has said: ‘What I am totally against is this out-and-out yearly attack of the Royal Family because of who they are. ‘They are great for Britain, the British people love them. I actually felt quite embarrassed listening to Margaret Hodge reel off the list of repairs that need doing to the royal buildings that we have not funded as a country, because what the Royal Family does for us is beyond explanation.’

Not convinced by this argument? Not only does the Royal Family work hard, they are great value for money, and here are the figures to prove it:

In 2009, the Polish President cost his people 153 million złotych (£26.1 million).  In a similar role to The Queen, the President heads the armed forces, but has a say in foreign policy, and nominates the head of the central bank. The president can initiate and veto new legislation, too. Poland is a smaller nation, with a population of around 38 million, just over half that of the UK, and costs 2/3 of that of our Monarchy.

The German President holds a similar role to The Queen – he has emergency powers to be used in a time of political crisis, and is the figurehead of the German Republic. In 2010, the President employed 167 members of staff; the President had two state-funded homes (Villa Hammerschmidt in Bonn, and Schloß Bellvue in Berlin), a plane for his sole use, a helicopter, and three cars and a chauffeur. Presidents are also paid a salary of €199,000 per year (£140,000). The total cost of the Presidency was, officially, €4.6 million (£3.26 million) in 2010. But this figure does not include the €18 million (£12.7 million) the Bundestag sets aside for personnel and administration costs. A 2012 figure shows that the office of the president costs taxpayers €30 million (£21.2 milllion), and €32 million in 2014. Former German Presidents are also supported by the State after they leave office, for the rest of their lives – this costs the German taxpayer another €2 million per year (£1.4 million). Can you name the current German President?

The Crown spent £18.7 million from the 2014/2015 SSG on payroll. She pays almost 3 times as many staff (who get accommodation in central London and meals, do not forget) from the money she is allocated, not from a Government budget. The SSG of 2015/2016 showed a slight increase in payroll costs to £19.5million.

The Austrian President, a similar figurehead of a much smaller nation, earns €328,000 per year (£232,000). Staff and ‘other expenses’ cost an additional of €7.6 million euros (£5.3 million) in 2012, which include ‘entertainment expenses’.  Do you know what the Austrian President looks like?

The Crown spent £2.1 million on Garden Parties, which recognise charitable work and organisations for their contributions, not for the Royals to have a good time. This number also includes banquets and other hosting events, again saving money for the Government.

President Sarkozy led something of a lavish lifestyle as Head of State. In 2010, French President Nicolas Sarkozy set an annual budget for his establishment at €110 million (£90 million). In 2012, Sarkozy had 121 cars in his garage, with insurance costs of £100,000 and fuel bills of £275,000 a year; he also has an Airbus A330, on which he spent £215 million to refit, having only commissioned it, along with two smaller aircraft, in 2009, to the tune of £240 million. Later in 2012, it was reported that the most expensive Head of State in Europe was Francois Hollande, with the annual cost of the Elysée Palace reaching £87.2 million.  Where is Mr. Sarkozy today?

In contrast to Sarkozy’s outlandish spending, The Queen has the Royal Helicopter, the Royal Train, and a small fleet of cars which is funded from the SSG. There are eight State limousines (two Bentleys, three Rolls-Royces and three Daimlers) and a handful of people carriers. Some of these State cars were gifted to The Queen, and so were not purchased from the Privy Purse. Most of the fleet is collectible and antique, as they were used by the Royal Family in the 1930s and 1940s. The Range Rovers Her Majesty drives and is seen in are funded from her personal income.

The Labour Union in Italy released figures in 2013 that revealed the Italian Presidency uses €228 million (£161.9 million) of public money, with most Italians believing their politicians are corrupt. What is also clear about The Queen as Head of State, is that people flock to see her. Crowds always line the route Her Majesty will take, and come with their Union Flags and cameras to get a glimpse of The Queen close-up. The German President (Joachim Gauck – we had to look it up too) certainly does not generate the same feelings of excitement that The Queen does. Despite all of the perks of continental Presidencies, not one of them carries with it the world-wide fame and recognition of our Queen.

The Dutch King and Queen receive a salary for their work, as does their daughter, The Princess of Orange (she is 11 years old). They are not subject to tax. King Willem-Alexander of the Netherlands earns a salary of €825,000 per year (£593,000), with a poll showing most think he should earn between €250,000 to €500,000. Queen Maxima also earns a wage for her Royal work, and The Princess of Orange is also entitled to a stipend. Any Dutch Royal that receives a stipend is exempt from taxes on the stipend and their assets. The Dutch Royals are further supported by the government, paying €5.72 million for the Royal household at the Hague, and they are paid €26.8 million (£19 million) to support their work and engagements on top of their salary.

Her Majesty, The Queen does not make a salary for the years of hard work she has performed for this nation. She and her family undertake thousands of engagements each year on behalf of the people of this nation. In 2014, there were 4,089 engagements carried out by 15 members of the Royal Family, as seen in the Court Circular.

The U.S. President is the Head of Government in America, as well as the Head of State. President Trump has decided to forego receiving a presidential sized pay-cheque of $400,000.00 per annum, to which there is surely a bigger benefit for him not to accept such a salary, which would relate to his income tax deductions over the next four years of his Presidency. On Federal Election Commission forms when running for President, Donald Trump reported his 2015 income to be in excess of $557 million. With such a sum being earned, The President would have little need for a government pay-cheque, however the expenses he has charged to the public purse are already astronomical in his first 100 days in office. Do you still think the Monarchy is expensive?

First Lady Melania Trump and their son Baron have decided not to move to Washington D.C. until after his term finishes, in favour of continual residence within their $100,000,000.00 million pent house apartment in Trump Tower, New York City. The cost of securing the building for the First Lady and Baron Trump, as well as the airspace around their residence is reported to be costing a whopping $5 million plus per month in New York alone. In addition to this expense, White House security guarding the President and the other members of his family in the nation’s capital pushes this figure further up the chart. President Trump has visited his Palm Beach Estate several times, where the cost of travel on Airforce One for weekend jaunts to play golf is costing the American taxpayer a fortune. As of February 2017, President Trump has cost the American taxpayer just over £11 million (£9.1m) with Palm Beach visits and the cost of his eldest son’s business trips. An additional cost to the local taxpayers of Palm Beach has reached $360,000.00 since the President first visited in late January. As of Easter this year, President Trump has visited his Florida home seven out of the thirteen weekends he has been President. In addition to the skyrocketing expense of the Trump Presidency, the President has conveniently installed members of his family and his trusted business circle as his closest advisers; complete with government mobile phones, security clearance, government offices and all the perks associated with belonging to the American government.

In the months leading up to the last American election, a recent expose stated that the Obama family had cost the US $1.4 billion dollars = approx £888,479,000 you can read this report here. Now assuming this to be true, and factoring in the difference in population of the US to the UK, this is equivalent to £176,959,000 being spent on the Head of State. ($1,4,000,000,000 = approx £888,479,000 . The US population is just under 5 times larger than that of the UK and so this figure was divided by 4.7 to get £188.8 million). Still think the Monarchy is expensive?

Not only this, but President Obama has the use of an armoured limousine, 35 military helicopters for his transport, two Air Force One planes (which he must take for official long-haul travel) and the use of Camp David, Maryland, as a secure second home. President Trump was furnished with a new convoy of armoured limousines costing around $15 million and a budget to redecorate areas of the White House for once he took up occupancy within the residence. Not only this, but Presidents since 2001 earn $400,000 per year, as well as having a $50,000 non-taxable expense allowance. His salary is, however, taxable. When retired, the President will take a pension of around $199,700 (£126,000), and can draw a Congressional pension too, if he served in Congress. They are provided with travel funds and franking privileges (letter stamping costs). The Presidential family are also entitled to protection by the Secret Service until the death of the former President. There are currently five former Presidents that are entitled to this income and treatment. The US President also uses Blair House, opposite the White House, to house foreign Heads of State should they visit Washington. The Queen, however, gives her foreign counterpart a room at Buckingham Palace, where there is already room, staff and provisions available, cutting the costs for the Government. Her Majesty does not have her own plane and when travelling long-haul, uses a chartered commercial aircraft from British Airways.

Now we move onto tourism, which is another area that republic insist would still be as high with an elected Head of State. WRONG. In 2014, visits to Buckingham Palace, Windsor Castle, Holyroodhouse, and Clarence House totalled 2.58 million paying visitors, which is a 6.6% rise on 2013. This brought in £54.99 million to the Royal Collection Trust, which goes to conserve treasures for the nation, such as Rubens’ Don Rodrigo Calderón on Horseback, which, following its restoration, will go on display at Windsor Castle for the public to view. The Royal Collection Trust also paid £4.4 million of this income to the Privy Purse, to help maintain the Royal Palaces, which we have already established required £50 million of work.

The Royal Family generated £9.3m in tourism, from the sale of a reduced price ticket to Buckingham Palace (£18). Following the birth of Prince George in July 2013, London received 4.7 million visitors from July to September; this was an increase of 19.5% on the same period of 2012, when London was hosting the Olympics, perhaps the most famous sporting event in the world. 

£11.5 billion was spent in London in 2013. For the Royal Wedding in 2011, there were an extra 800,000 tourists in London compared to 2010, with an extra 350,000 visitors just in April, the month of the William and Catherine’s nuptials. 30.8 million foreigners visited the UK as a whole in the same year, an increase of 3.3%, which has been dubbed the Honeymoon effect: despite the wedding being long over, people have wanted to visit the places William and Kate did, such as Westminster Abbey.

But it does seem clear that the Royal connection to a place, generates untold riches. The Goring Hotel in Belgravia, is where Kate Middleton spent the night before her wedding, before becoming The Duchess of Cambridge. In 2011, the hotel saw a 15.4% rise in sales, and in 2013, finally made a profit of £1.12 million, having lost £1.29 million in 2012. In 2013, trips to London accounted for  half of all foreign visits to the UK. The Royal Family alone brought in £33 million in 2013, and it was estimated in 2011 that The Royal family generate close to £500 million every year for British tourism. Is the British Monarchy good value? Of course it is, it does not cost the British taxpayer one red penny!

All figures are correct, and reflect the exchange rate, at the time of publication.