FactCheck Q&A: Does the monarchy pay for itself?
FactCheck will be happily raising a glass to the Queen this weekend, if only because we’re getting an extra day off work this year thanks to Her Maj.
But we wouldn’t be worthy of the name if we didn’t put the royal family under a little bit of gentle scrutiny.
Republicans are pointing out that celebrating the jubilee could cost the country billions – but royalists claim the Windsors pay for themselves.
Do the numbers really add up?
How much does the monarchy cost the nation?
The official cost to the taxpayer in 2011 was £32.1m, comprising the Civil List and grants from government departments covering the cost of travel, communications and the like.
That cost fell from £33.9m in 2010, and is down 19 per cent over the last five years in real terms. But republicans say the real cost is much more, as we shall see.
The various different state funding streams will be replaced with one simpler – and smaller – Sovereign Grant of £31m from next year, and after that the grant will be calculated as a percentage of income received from the Crown Estate.
The what now?
The Crown Estate comprises some of the land that was historically the private property of the monarch, including the Windsor estate, various prime locations in central London and almost all of the UK’s seabed.
In 1760 George III began a tradition of surrendering income from the estate to the Treasury in exchange for the Civil List payment. At the time that was a good deal for George, as he had been paying the salaries of judges, ambassadors and civil servants from Crown Estate money and was struggling to make ends meet.
Now the arrangement looks like a bargain for the taxpayer. The Crown Estates brought in £230.9m to the Treasury last year and Queen only received £32.1m from the state, so on the face of it there’s a huge net gain for the taxpayer. That’s one reason why monarchists claim that the royal family pays for itself.
But the deal only looks good if you ignore the fact that parliament took over responsibility for paying for civil government from the king in 1760 as part of the deal.
In other words, if we decided the current arrangements were bad for the taxpayer and we wanted to turn the clock back to 1759, we would lose all that money from the Crown Estate. But in all fairness we ought to expect the Queen to start shelling out for half the cost of running the government.
Anti-monarchists like the pressure group Republic completely reject the Crown Estate argument by claiming that it is in effect already the property of the nation, so we shouldn’t see it as a benefit conferred by the monarchy.
If the monarchy was abolished tomorrow the income would stay in the hands of the Treasury, and the annual ritual of the Queen “surrendering” the money to parliament is nothing more than a formality, according to republicans.
In fact, the ownership of the Crown Estate is so obscure that it’s not that easy to say what would happen if we suddenly decided to scrap the monarchy.
It’s run like a business but there’s no shareholders. All profits go to the Treasury, but it’s not a government body. The land is owned by the monarchy but it’s not the private property of the Queen. Got that?
There’s no legal instrument guaranteeing that future revenue would pass to the state, although the trustees of the estate are ultimately subject to the will of parliament so presumably the Treasury would win out.
Is the real cost of the monarchy much higher?
Republic have published an alternative royal budget which puts the real annual cost to the taxpayer at £200m – more than five times the figure acknowledged by Buck House.
The group says we ought to include other small grants from government, the money spent by local councils on accommodating royal visits, the cost of security, and lost revenue from the Duchies of Lancaster and Cornwall.
Republic puts the cost to local authorities at £26m. That’s based on the spend published by one council (Romsey) in 2007 multiplied by the 444 royal engagements that took place across the country that year.
The cost of royal protection officers etc is impossible to calculate, as government won’t respond to freedom of information requests on the subject of security. Republic cites sources quoted in newspaper reports and estimates the cost at £100m.
Dai Davies, the former head of Scotland Yard’s royal protection squad, put the cost of protecting Prince Andrew alone at around £1m a year, so it’s safe to assume the cost for the whole family comes in at tens of millions.
Conceptually, it’s more difficult to see why revenue from the duchies of Lancaster and Cornwall – private estates owned by the Queen and the Prince Charles – has to be included in this list.
Although republicans may feel that the monarch and the Prince of Wales don’t deserve the income from these estates, the fact is that, unlike the Crown Estates, they own them.
There’s some controversy over the law of bona vacantia, which says that the estates of duchy residents who die without leaving a will pass to the Queen or Charles. Republic describe that as “nice little earner” for the royals – and a tax-free one.
Are the real benefits much higher?
The consultancy Brand Finance has done what it says is the first corporate-style valuation of the Windsor “brand”.
Essentially, it accepts the points made by Republic and includes the cost of security (estimated at £101m) and income from the duchies of Cornwall and Lancaster. It also includes the government’s estimate of the cost to the economy of this year’s extra jubilee bank holiday (£1.2bn).
Weighed against that is the supposed added value the royals provide to UK plc, mainly by encouraging tourism, although the report also explores the intriguing question of how much royal warrants – those little coats-of-arms printed on tins of Lyle’s Golden Syrup and the like – boost trade.
Brand Finance says the net value of the monarchy is £44bn, although the methodology that underpins this is obscure and most of the numbers are open to debate.
Do the royals pay their taxes?
The Queen famously volunteered to start paying income tax and capital gains tax in 1992. That’s on her personal income, which includes the Balmoral and Sandringham estates but doesn’t include the Crown Estate or royal palaces.
Prince Charles is also a top-rate income taxpayer, with most of his private income coming from the Duchy of Cornwall and its various businesses.
Buckingham Palace is a band H property, but because Westminster City Council charges less in council tax than most of its neighbours, the Queen only pays £1,369 – less than many middle-class homeowners in other parts of the capital.
Then again, she didn’t have to volunteer to pay that either, so perhaps we shouldn’t carp too much. Cheers!
By Patrick Worrall