When Prince Charles turned 65 back in 2013, the age at which Britons were then entitled to their state pension, he announced that he would give his £110 (NZ$209) per week to charity. It was not as if he was about to retire.
Now as King–a position for which he has waited his entire life–he hardly needs the money. The royal family’s wealth comes from a complex variety of sources: taxpayers, estates (known as duchies) and other privately held assets. Charles has made no secret of his plans to change the monarchy; he wants to reduce the number of working royals. What might his reign mean for the family finances?
Consider first how the monarchy is funded. Since the government replaced the old “civil list” system of grants with a single “sovereign grant” in 2012, the amount it has paid the royals to cover staff, travel and the upkeep of palaces has risen sharply, from £31 million at its introduction to £86m in 2021-22.
It is calculated as a share of the Treasury’s revenue from the crown estate, a collection of land and assets that includes Ascot racecourse, a big chunk of central London and much of the seabed around Britain. Although the monarch technically owns the crown estate, it is run independently and in effect belongs to the government. In 2021-22 its profits were £313m.
Separately, the family pockets the income from the duchies of Lancaster and Cornwall, made up of land, property and financial assets. As king, Charles has inherited the Duchy of Lancaster and passed the Duchy of Cornwall to Prince William, his heir. In 2022 the duchies’ assets are worth a combined £1.7b, and they made profits of around £47m between them. All this covers the royals’ private expenses.
When Prince of Wales, Charles bunged millions of pounds to William and his wife Kate. Meanwhile the queen bankrolled her other children, Anne, Andrew and Edward. Finally, although many of the palaces in which the royals live cannot be sold, they have other private property with which they can do as they please. The queen, for example, inherited two country estates, Balmoral in Scotland and Sandringham in Norfolk, from her father, George VI.
How will a new head of the family change these arrangements? Most European monarchies get by with a handful of working members (Norway’s has four), compared with the 12 who regularly perform official duties for Britain’s firm. Cutting their ranks may reduce the cost of security, but that is paid for by the Metropolitan Police and is separate from the sovereign grant. The exact cost is undisclosed but is estimated to be at least £100m per year. Staffing and travel costs, which are part of the grant, may fall too.
Do not expect a thrifty monarchy just yet. The terms of the grant are reviewed every five years; the latest review is due to conclude by April 2023. David McClure, the author of The Queen’s True Worth, calls the sovereign grant a “golden ratchet” and notes that the amount has never gone down. The grant was increased in 2016 from 15% of the crown estate’s profits to 25%, supposedly temporarily, to pay for a refurbishment of Buckingham Palace.
But the Covid-19 pandemic forced the palaces to close, costing them visitor revenue of around £15m (as estimated in September 2020). Even if the grant does revert to 15%, valuable leases for offshore wind farms on parts of the seabed that belong to the crown estate promise to swell its profits in the coming years, boosting the royals.
The family’s other sources of wealth will be affected little by the Queen’s death. The duchies are not subject to inheritance tax, and a deal struck in 1993 to safeguard the monarch’s wealth means that neither are any other assets left to his or her successor, so the queen’s entire estate will probably go to Charles. (The arrangement was controversially applied to the Queen Mother’s estate in 2002, including her collection of Fabergé eggs, despite her never having been a sovereign.)
And Charles is unlikely to cut his siblings out of the profits from the duchies. Exactly how that money is spread around remains murky. Mr McClure calls greater transparency about how the duchy’s profits are spent the litmus test of any effort to modernise the monarchy.
© 2020 The Economist Newspaper Limited. All rights reserved. From The Economist published under licence. The original article can be found on www.economist.com.
