Posts tagged ‘Duchy of Lancaster’

Oct 2, 2022

Levelling up, trickling down and a right royal payout

Who pays for the royal family? That shouldn’t be a question. After all nobody pays for my family. Or yours. And the royal family is one of the richest in the UK; estimates of their wealth vary from £28 billion to £67 billion, so obviously they can afford to pay their own way.

The Windsors own land. A lot of land – some is rural and some urban. It owns a share of London’s west end, including part of Regent Street. Beyond land they own much of the seabed surrounding the UK. These holdings, except now in Scotland, are bundled under the title Crown Estate and the family earn a percentage of profits made from enterprises in its Crown Estate. We’ll come back to this.

The royals cost us a lot of money. Their supporters argue they are worth it. These same supporters are often free and easy with figures suggesting the popularity of the royals such as the preposterous figure of 5 billion people said to have watched the late Queen’s funeral. Total fiction.

Figures are important. They certainly are to the royals. The bigger the better. Much like their names and titles the more the merrier which is why we have Charles III, the erstwhile Prince Charles of Edinburgh, Duke of Cornwall, Earl of Chester, Duke of Edinburgh, Earl of Merioneth, Baron Greenwich, Duke of Rothesay, Earl of Carrick, Baron of Renfrew. Lord of the Isles, Prince and Great Steward of Scotland, Prince of Wales. Titles that lay claim to places whose populations have no say in who flaunts them as idiosyncratic perks. Now that he is plain Mr King, Charles’ titles have magically and effortlessly been passed to his son, Prince William aka Prince of Wales etc – with all the insensitivity we associate with royal privilege.  

With the shift up the ranks, Charles loses his lucrative income from the Duchy of Cornwall which passes to William. The Duchy of Cornwall set up in 1337 by the English king Edward III now has assets worth north of £1.05 billion and surplus of £23 million. Nowadays there are taxes paid on this income, just not in the automatic way the rest of us are taxed. Royals are given a choice over whether to pay tax and at what rate. This also applies to inheritance tax. Royal privilege means their private holdings, such as Balmoral and Sandringham, are exempt from inheritance tax as are other privately held assets such as jewellery, the royal stud, rare art and stamp collections (the late Queen’s stamps are valued about £100 million) so can be passed down the generations in a way not possible for ordinary families.   

But don’t worry about Charles III’s lost Duchy income. There is another Duchy and this comprises the monarch’s main income from a vast portfolio of land, property and assets – the Duchy of Lancaster – it is also exempt from capital gains and corporation taxes. Nice perk if you can work it. And just to turn the screw on the disparity between us punters and royals – they benefit from bona vacantia – cash and property that belonged to people who died without leaving a will or whose heirs cannot be traced. These go to that worthy cause – the Crown. Back it 2000, The Guardian reported that the Queen profited by more than £2.1 million from the proceeds of the intestate. In the same article was an unsavoury revelation that her Duchy of Lancaster fund made a killing from the deaths of widows of soldiers killed in WWII.

The royals, some of them, are immensely rich. And some of them receive public money to carry out public duties and to cover their household expenses – which can come to a lot given the number of properties they elect to live in. Of course, questions have been raised over why tax payers have to fork out at all to boost the incomes of this mega rich family, especially during periods of austerity, such as now. The death of Queen Elizabeth might have created space to discuss the role, if any, for a monarchy in 21st century UK but the family’s seamless transference of roles didn’t allow for that. And that is obviously deliberate. There is so much that is concealed surrounding palace behaviour and its relationship to the state; negotiations over the family’s public funding and tax affairs is highly secretive and entitlement appears to run deep in the royal psyche. In the 1970s Prince Philip complained about the family’s financial hardship.  

We are in the red and we might have to move out of the house next year.

He didn’t say which of their several houses he was referring to but there was at the time a dispute between them and government over the possibility of absorbing the royals and their public personae within a government department to enable their public funding greater scrutiny. The Queen got all bolshy. Her spokesperson said,

It is not clear that the Queen would wish to continue to occupy Buckingham Palace on these terms. If the palace were in effect a government department she might well wish to live elsewhere in a private capacity and appear at the palace only for official functions.  

As with so many wealthy egos who threaten to leave this place or that – they’re doing it now in Scotland over independence – they rarely follow through their emotional blackmail. However, in 1971 the government did not call the bluff of the Windsors and maintained the traditional secrecy surrounding their finances.  

How did the royals get to this coddled position? It all began a long time ago, back in 1649 with another Charles, Charles II, at a time monarchy and government were more intertwined. For services rendered he was the first monarch to receive what was called the Civil List – a useful payment of £800,000 which is equivalent today to nearly £110 million. Annually. In addition, Charles got revenues from Crown Lands. I assume Crown Lands were property sovereigns won through battles fought mostly by poor people against someone else’s army of poor people. From the money supplied by the state the king was meant to pay salaries for the likes of judges, ambassadors, courtiers, state officers etc but not the very expensive game of war hence the term Civil List, distinguishing it from military and naval expenses which were funded through specifically raised taxes.

James II in 1685 received £1,500,000 a year on much the same terms as Charles. Like Charles he was expected to pay government expenses from the Civil List but neither of them did.

William and Mary came in, in 1689.  They were a bargain compared with the profligate James and Charles. They got £1,200,000. Out of this, £700,000 was set aside for the royal household only; the first time such a distinction was made.

In 1697 parliament fixed the king’s payment, in times of peace, at £1,200,000 per year (£170 million today) in the reign of William III. £700,000 (£99 million today) of this from the Civil List. The national debt was instigated under William III, with funds raised through the sale of state securities. Its popularity flourished. War now, pay later meant easier funding of war and at the end of the Napoleonic wars the national debt stood at 200% of GDP.  

Queen Anne in 1702 was paid the same amount as William and Mary but like the rest of her feckless family, Anne ran up debts. Not just any minor debts, she accrued debts of £1,250,000 (£198,000,000 today). Parliament, tax payers, picked up the tab, in effect paying for her twice over. Her excuse? William had given away so many Crown lands. Given away – not in terms we would understand, you understand, royals don’t give anything away.

George I in 1714 saw a ‘mere’ £700,000 (£105 million) go to him to cover his household expenses. This was raised from taxes on liquor. The Westminster government now included Scotland. A tax on malt (used to make whisky and beer) caused riots ending in deaths and transportations for beer and whisky were everyday drinks at a time drinking water was often contaminated and dangerous.

George II in 1727 couldn’t get by on his £800,000 so parliament paid his debts of £456,000 (£72 million) while he didn’t pay for much of anything he was supposed to. Because George II played fast and loose with public money and failed to part fund government George III in 1760 was forced to surrender some profits from the Crown Estate which were redirected to the Treasury. He still enjoyed income from Duchy of Lancaster holdings. He also benefitted from revenue from excise duties, the post office, wine licences and miscellaneous taxes which might have been renamed – the extravagant sovereign fund and an increased Civil List of £1,030,000. You do the maths.

George IV’s annual Civil List was set at £850,000 in 1820. In addition, he pocketed hereditary revenues of Scotland (£110,000) and Ireland (£207,000). And since that wasn’t enough for him, an additional £225,000 from the public purse.

By 1830 the Civil List was restricted to the cost of upkeep of the royal household, separating this from the monarch’s civil government responsibilities. William IV was given £510,000 annually while the revenues of Scotland and Ireland were now paid to the Exchequer instead of the king’s coffers; Scottish hereditary land revenues were switched from the management of the Barons of the Exchequer to the Commissioners of Woods, Forests, Land Revenues, Works and Buildings and their successors under Crown Lands (Scotland) Acts of 1832, 1833, 1835.

Victoria was next up, in 1837. She received £415,000 annually (£36 million today) with parliament specifying how the funds should be spent. It should be said that other members of the royal family also received public cash but here I’m mostly dealing with the sovereign.  In 1848 the revenue from the Duchy of Cornwall was £67,000 (£6 million). The Prince of Wales, whose revenue stream it was, was 7 years old. An additional award of £7,000 was provided by parliament for his education and maintenance – an annual amount that soared within two years to £39,000 (£4 million). The value of the Crown Estates greatly increased in value over Victoria’s reign.

Ever since accession of House of Hanover, kings of England, as a rule, never lived within their income, and a Sovereign of habits no less simple and unostentatious than GEORGE III, was repeatedly obliged to apply to Parliament to pay his debts. Instead therefore of continually paying sums of money to eke out an income of which a large part was derived from estates of which the rental was unknown, and which were possibly mismanaged, it was obviously an economical course for Parliament to take the landed property of the Crown into its own hands and to settle on the Sovereign for life at the beginning of a reign a revenue sufficient, according to contingencies, calculable at the moment, for a liberal Court expenditure.

(The Mall Gazette, 31 July, 1871)

Prime Minister, William Gladstone, explained in 1871 that the Crown Estates would be transferred to parliament in return for maintenance of the royal family which, he said, gave parliament a moral control over the royal family and was in the long term the most economical. Disraeli argued that the Crown provided as much as the Civil List so defraying their state private expenses but not for providing for the whole of the royal family which begs the question about the size of the royal family and its inability to live within its means.

Edward VII’s initial £470,000 in 1901 crept up to £634,000 by the time he died and was the Civil List paid to George V in 1910. Out of this sum £125,000 was allocated to royal household salaries, £125,800 for pensions and £193,000 for other household expenses.

Into the 1930s, that period of desperate poverty and hunger though not among the royals although George V did give up £50,000 as a token gesture towards what was happening outside his coddled circle.  

Edward VIII, the fascist king, in December 1936 was awarded a Civil List of £370,000. This was due to rise to £410,000 on his marriage. Just not marriage to a fellow fascist. When he was forced out his brother, George VI, got the £410,000 per year.

His daughter, Elizabeth, followed him, in 1952 with the Civil List initially set at £475,000.

The 1972 Civil List Act included provision for a review of royal payments every ten years – but only to allow for increases, not reductions – a result of more secretive negotiations between civil service and palace. So ended a tradition that the Civil List was negotiated once at the beginning of a monarch’s reign for their lifetime.

In 2000 PM Tony Blair told the Commons an agreement struck in 1990 was so generous that the Civil List account was £35 million in the black. But, of course, this did not result in a pause in payments to the palace – because, it was said, of the provisions of the 1972 Act. It transpired the Act never intended any such thing but incredibly the Blair government and the palace agreed on an additional £7.9million a year until 2010.

In 2012 the Civil List was abolished. Not so state benefits to the royals. It was now called the sovereign grant. The sovereign grant in 2020-21 amounted to £51.5 million; a figure calculated at 15% of profits of the Crown Estate. The Crown Estate was valued at £15 billion in 2021 but as royal spending knows no bounds additional claims on the Treasury occur such as £34.5 million for ‘reservicing’ of Buckingham Palace. To cover such costs the palace has been allowed to claim 25% profits until at least 2027 when it is envisaged the rate of income will return to 15%. These extras known as grants-in-aid for unexpected costs such as property maintenance and travel often amount to large sums of cash – in 2017 replacement doors at the orangery at Windsor Castle cost £1.2 million. Where royals are concerned there are always extra costs – policing for royal events, royal weddings, royal celebrations, foreign travel, military parades, RAF flypasts, local government costs during royal visits – it goes on.  

The official expenditure of the Queen 2021 -22 was £102.4 million, a mark-up of 17% from the previous year’s £87.5 million.

It’s costly being a royal. It’s costly not being royal. The sovereign’s personal fund of the Duchy of Lancaster was recently valued at £580 million generating around £20 million in profits annually. The Duchy Cornwall is worth about £960 million and generates something in the region of £20 million. The Queen began to pay tax on the Lancaster income only in 1993. Charles also volunteered to pay some tax. There are other taxes they do pay, VAT and council tax. Council tax on Buckingham Palace is £1,500. A lot of bang for the buck, so to speak.

Things are looking up for the Crown Estate with the surge in renewables on and offshore. Twenty-five percent of current and future profits or even 15% of profits amounts to a huge boost in income. The same applies to future gas and carbon storage to the tune of £billions. the sovereign’s rights to profits from wind and wave power is recent – granted by the Blair/Brown government in 2004.

In 2016 Crown Estate Scotland was created by an act of parliament devolving Crown Estate interests in Scotland from those in other parts of the UK. Crown Estate Scotland is run as a public corporation on behalf of the Scottish government. This means the crown’s economic assets in Scotland, including seabed, mineral and fishing rights have been transferred to Holyrood’s control and revenue is paid into the Scottish Consolidated Fund. They remain the property of the monarch but cannot be sold by him or her. However, the palace stuck their heels in over the majority of its Scottish holding worth 60% of the Crown Estate in Scotland – a 50% stake in Fort Kinnaird, a retail park in Edinburgh, which was retained by the queen and soon sold off privately for £167.25 million. The proceeds were used to buy Gallacher Retail Park in Cheltenham. Which is pretty bloody cynical and exposes the disdain this immensely wealthy family holds towards the well-being of Scots and Scotland depriving causes of much needed funds.  

King Charles III is worth an estimated £538 million and £25 – £38 billion in assets including the Crown Estate, palaces and those lucrative Duchies. So who pays for the royals? We all do. There is nothing certain in this world, except death and taxes – to misquote Benjamin Franklin – except in the case of royalty where death is certain, paying taxes – not so much.

https://www.pressandjournal.co.uk/fp/news/moray/1504741/uk-crown-estate-accused-of-167-million-cash-grab-from-scottish-purse/