Home > Finance, Monarchy, Parliament > The cost of the monarchy

The cost of the monarchy


Time was when the cost to maintain the dignity of the monarch was one and the same with that of administering government. Today there is a much sharper distinction, but there is still a blur in parts – endemic of the inability to fully separate the monarch from the person – the Queen, after all, can never retire, and can never truly take a break from the role.

Much of the struggles of the Seventeenth century were about Parliament gaining control over royal expenditure. This control was made almost complete by 1760, as is detailed below. It’s a broad approximation of a rather complex system, which really ought to be clarified and updated.

The monarchy is financed from six sources.

The Civil List

Firstly – and best known – is the Civil List. The name derives from the list of officials who received royal money for services to the government (the civil service, in other words). This was in contrast to a military list and a naval list, presumably. In 1760, on the Accession to the throne of George III, major reforms were made, in which Parliament provided the monarch with the Civil List as a lump sum payment. In return, the monarch surrendered the hereditary revenues from the Crown Estate, except for the revenues of the Duchy of Lancaster. In 1830, on the Accession of William IV, the Civil List was defined as designed purely to pay for the costs incurred through the duties carried out by the monarch as Head of State.

This remains the same function for the Civil List today. In return for £200 million per annum in Crown Estate revenues (revenues which are produced from a range of sources, such as rents, commerce, trade, parkland and forestry, minerals and fishing – in fact, the second largest shopping centre in the UK is partly on Crown Land) supplied to HM Treasury (as of 2006/7), Parliament votes each decade an annual sum as the Civil List.

In 1990 this sum was set at £7.9 million per annum. An advantageous economic environment in the 1990s allowed the Crown to amass a substantial surplus, so that in 2000 there was no need to adjust the figure (Parliament is forbidden from actually reducing the List), and in 2010 the figure again stayed static. This reserve is now running low, and the Government recently confirmed it would revisit royal finances in 2012. In real terms, the cost of the Civil List has actually fallen by £4.5 million.

This is not ‘pay’ for the Sovereign, as the Sovereign cannot use the money for personal use. In fact the Queen doesn’t get paid at all. About 70% of this is used primarily to fund staff salaries in the Royal Household. The remainder goes towards official receptions, garden parties and official entertainment during State Visits. The full report can be found here.

The Civil List is nowadays set every ten years. There was a period of very high inflation in the 1970s which required much more frequent revisits to royal finances, but this proved impractical as it endangered the necessary space the monarchy needs to be independent of the government and of Parliament. Given that the Queen is monarch to another fifteen realms, and is Head of the Commonwealth, to place the monarchy fully under such control would endanger the monarchy’s capacity to carry out these functions independently of British institutions.

The Privy Purse

In addition to the Civil List, there is the Privy Purse, the revenue the monarch receives from the Duchy of Lancaster, that remainder of the Crown Estate which remains to the Crown for their use. It is kept apart from the Crown Estate as it is not held in trust to the nation but possessed by the Queen in person, in her right as Duke (yes, Duke) of Lancaster, a title held since 1413. In 2009, this amounted to £13.3 million.

The Privy Purse finances other Head of State functions, such as pensions for present and past employers, staff welfare, parts of the cost of Sandringham and Balmoral, and charity subscriptions and donations. The revenue from the Privy Purse is accountable to Parliament through the Chancellor of the Duchy of Lancaster. The Privy Purse’s annual report for 2009 can be found here.

Grant-in-Aid

In addition, grant-in-aid, provided by Parliament, is supplied to members of the Royal Family for the 3,000 public engagements the royal family undertake each year. For example, the Department of Transport helps the royals to get from place to place (broken down here).  I should emphasise: this is costs for official duties; costs for personal jollies and private engagements are not on this bill.

A separate grant is provided by the Department for Culture, Media and Sport to go toward the maintenance of royal residences. This particular grant (which is broken down here) accounts for about 75% of grant-in-aid. In 2009, grants-in-aid was £22.6 million.

All such grants are, of course, subject to Parliament.  This, and Parliamentary annuities, is the only money which royals other than the Queen and the Duke of Edinburgh can receive.  Not even the Prince of Wales gets a penny of state funds unless he is specifically carrying out a representative role on behalf of the monarch.

Parliamentary Annuities

Parliamentary annuities are grants to members of the Royal Family by Parliament to carry out representative roles on behalf of the monarch. In 2009, £400,000 was provided as an annuity to the Duke of Edinburgh. In the case of royals who are not the Queen or the Duke of Edinburgh, the Queen reimburses the Treasury the cost of the annuities.

Government Funds

This field is for other miscellaneous costs, including the cost to create medals and other honours, other ceremonials, State Visits, maintenance of Holyroodhouse (the Queen’s official residence in Scotland), maintenance of the Home Park at Windsor Castle, and equerries on secondment from the Armed Forces. In 2009, this was £4.6 million.

Personal Income

Finally, there is the Queen’s personal income as a private individual. This is sourced from her private investment portfolio and revenue from lands held in her own right (such as Sandringham and Balmoral). This source of funding is used, understandably, for the Queen’s own private expenses.

This does not include the Crown Jewels, the Royal Art Collection, or Royal Palaces – these are held by the Crown, not the Queen. It’s the same as the difference between former President George Bush Jr. having resided in the White House but owning Crawford Ranch in Texas.

The Sovereign is forbidden from generating new wealth, in terms of earnings or business activities. Being unable to retire, the monarch also cannot bypass Inheritance Tax by passing assets on at an early stage to the Heir.

Since 1992, the Queen has voluntarily paid tax on her personal income and the Privy Purse. This isn’t actually much of an innovation – Queen Victoria did the same from 1842 upon Sir Robert Peel’s introduction of income tax, as did Edward VII. In 1910, however, George V managed to get out of it – in return for forking up the cost of entertaining visiting Heads of State. The Prince of Wales, incidentally, voluntarily pays tax on his revenues from the Duchy of Cornwall. All other royals are taxed like any other citizen.

All of this is, of course, a great simplification of an extremely complex form of financing. It clearly needs clarification and updating. Note also that nowhere in this list of sources of revenue has the Queen received any direct pay.

So, to recap – staff salaries and garden parties are from the Civil List; staff pensions and charity subscriptions are from the Privy Purse; Duke of Edinburgh functions are from Parliamentary Annuities; travel is from grants-in-aid; building maintenance is jointly from grants-in-aid and government funds; and State Visit entertainments are jointly from the Civil List and government funds.

The Cost

The total cost then, would be Civil List plus grant-in-aid, plus Parliamentary annuities plus government funds. The Privy Purse is not a burden on the taxpayer, and nor is the Queen’s private expenditure.  Many critics have attempted to criticise the monarchy by pointing to their apparent spend-happy private life, but it’s frankly irrelevant.

In total, we’re looking, as of 2009, at £41.5 million, as can be seen in this annual summary.

This total does not include the costs incurred to the protection of the royal family to the police and the Armed Forces; these are not disclosed.

Is this good value for money? All estimates seem to indicate to the monarchy not being all too expensive. Per taxpayer, this equates more or less to two pints of milk, or 61 pence.  As Robert Hardman noted in the Daily Mail on July 10, 2010, if MPs’ salaries were pegged to the Civil List, they would still be paid £26,701 instead of the present £63,291.

(Incidentally I’m most certainly not a fan of the Daily Mail, but I guess even a broken clock tells the right time twice a day.)

The Republic website erroneously claims that the cost of monarchy is significantly higher – a remarkable £184.8 million. However, this tally is disingenuous in a number of ways. It counts the charges I list above, but they throw in an addition £100 million ‘as an estimate’ for security, which they readily admit to be biased towards the highest possible figure. They also count upkeep of the Palaces as a separate charge even though they are accounted for in the charges I list above.

While they are correct in stating that the Crown Estate is held in trust to the Crown and hence the country, they also take it upon themselves to proclaim that the Queen and the Prince of Wales have no right to have the Duchies of Lancaster and Cornwall as their personal possessions. I know of no lawful authority that could seize a person’s property in such a way. Sorry, Republic.

They also criticise the fact that we don’t know how much the Queen pays in tax – but then, isn’t such information supposed to be covered by Data Protection laws, anyway?  It is rightly kept private.

The most important question however is this: if Britain were to abolish the monarchy, would these costs go away? Answer: no.

The security bill (even if it were £100 million!) would remain pretty much the same. Equally, the cost of maintaining the palaces would remain the same – the German Bundespräsident has a number of official residences too, after all. The staffing costs, the pensions, the full range of duties a Head of State carries out will still have to be carried out by whatever replaces the monarchy. State Visits would continue. Garden parties would continue. Visits to local councils, receptions and the granting of honours would continue. The Head of State’s functions as constitutional umpire would continue. And of course, the new Head of State would require a salary.

What’s more, out of all the G8 countries – FranceItalyRussiaGermanyJapan, the United States and Canada (okay, Canada shares our Queen, but the flight carries the Governor-General), the Queen doesn’t have her own plane, despite increasing terror concerns since 9/11.

I have done my best to find an English language translation of the German federal budget to ascertain the cost of the Bundespräsident; alas, it is not forthcoming, so you’ll have to trust me on this; the Budget seems to indicate that in 2009 the Presidency, which is close in approximation to the role of the British monarchy, cost £20 million. However, this is purely for the dignity of the president, much like our Civil List. Therefore, while at first glance it appears to be half the cost of the monarchy, in truth half the cost is simply moved elsewhere, into a generic building maintenance fund in the Budget. In the end, it works out broadly the same then.

So the cost of the monarch is not all that burdensome; nor can it be made sufficiently cheaper to be worth ditching. At best, you can argue that a republic would save us, what? £5 million? Half a Mars Bar for everyone, then. But then we’d lose the bulk of the £13.3 million the monarch provides from the Privy Purse.

Also, thanks to Gallia Watch, a French politics blog, we can see in action the great contradiction of republics that mean they can accumulate bloated salaries and huge personal budgets without any outcry from the public.  At least here the monarchy has to make sure every penny is well-spent before it goes cap-in-hand to Parliament.

I have also heard rumour that the expenses for the President of the Italian Republic is currently around £200 million.  However I have not been able to verify this as of yet.

Most importantly though, if we became a republic, we’d be losing a whole lot more that can’t be quantified in money. You cannot put a price on magnificence.

Sources:

Bogdanor, V (1997) The Monarchy and the Constitution, Oxford University Press

The Official Website of the British Monarchy

The Duchy of Lancaster

The Crown Estate

Deutsche Bundespräsident

Republic

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Categories: Finance, Monarchy, Parliament
  1. Liz
    July 5, 2010 at 5:54 pm

    Dude, you should totally do a pod delusion report on this.

  2. July 7, 2010 at 7:51 am

    The main objection that I have with this post and the last — both pro-Monarchy — is that the pro-Queen stance is pretty much dependent on the popularity of the Queen. If the person who holds that position was not so admirable, I would readily question why we spend that £41.5 to £180 million on her expenses rather than a head of state who is chosen in some other manner.

    It has been pointed out elsewhere that the Queen is an excellent politician. Like most excellent politicians, it is easy not to begrudge her the position she holds, however she came to it. I wonder how people would feel if and when the role falls to somebody less worthy of admiration.

  3. July 7, 2010 at 9:41 am

    Steve: this is a very fair point and I’m glad you asked.

    You’re right that a lot of the public’s goodwill relies very much on the ability of the incumbent to carry out that role. If a future monarch were to bring the office to severe disrepute then the country would understandably demand the end of the monarchy. I think it would take a lot to get this far though.

    Ultimately though I think the monarchy’s strength is as I put it in my post – as they know they are destined to take up the office at some point in the future, the energies of themselves and their parents are put towards ensuring they are sufficiently capable of carrying out the role. The Prince of Wales has spent the last 35 years or so effectively apprenticing for his mother, and has seen the potholes and problems that she has had to encounter with the government and with foreign visitors. Likewise Prince William is also being trained up. The continuity is remarkable.

    I think this helps a great deal in ensuring good quality (on the whole) in the Head of State. So far it’s done well and of the past, ooh, 150 years it’s on the whole done well – with the obvious exception of Edward VIII, who was removed effectively.

    I think the monarchy has also a greater awareness nowadays of what is implied if they fail to meet expectations which doubles their resolve to work hard. The problem with a president is that election does not necessarily guarantee quality. I’m sure they’d work just as hard as the monarch, but their experience would take a while to pick up and by the time it starts to bed in they’ll be thinking about re-election.

    And I take your point about the post being a little bit too pro-monarchy. I’ve felt myself it tries to push the point over hard. I will revisit at some point to redraft.

    I hope that explains my reasoning to some degree.

  4. February 27, 2011 at 1:56 pm

    I do not find anything “magnificent” in the institution of monarchy, nor do I find it necessary to attach a sense of national identity or pride to the history of such, which is mostly one of greedy dictators and cruel imperialists in any event. No longer in charge of government, they are now but empty show-ponies. Yes, the Queen has very good manners. She’s aquitted herself as expected in the role – this does not mean the role has any validity; let it end gracefully with her death. Even the most superficial understanding of the concepts of egalitarianism and democracy will affirm a total incompatibility between these principles and forced public financial support for a hereditary, institutionalized, aristocracy. It is patently absurd for the two to co-exist and only a matter of time before the British monarchy is a thing of the past. In hindsight, the ridiculousness of pro-monarchy arguments by those who claim to believe in democracy will be a moot point. Sorry darling.

    • February 28, 2011 at 9:49 am

      Diana: I would presume from the main gist of your reply that you haven’t read other posts of mine, but I will sum it up for you here: democracy does not equal elections – although they certainly help. Britain is a democracy because its government is elected and accountable to the people through Parliament. You do not need an elected president for it.

      By saying, as you appear to do, that no country with an unelected Head of State is a democracy, you’re pretty much dismissing nearly every single Western state – including those considered by such authorities as The Economist and Freedom House as the epitome of democratic government. Most of these, by the way, are also monarchies.

      As with may republicans, you make the mistake of believing the method of appointment should come first, and damn the consequences of that. That is inviting unexpected consequences. It is no accident that the majority of democratic states do NOT elect their Head of State, but either have Parliament appoint the office or leave it to inheritance. Simply put, it is the most secure means of creating a balanced constitution.

      In a parliamentary system, the Head of State is there to preside, to act as a symbol for citizens and diplomats, provide advice to the elected government, vouch major appointments, and possess certain emergency powers it would not do to permit the PM to have. Electing the office risks making the Head of State just another politician – with all the abuses of power that brings; keeping it unelected ensures the office holder stays within their job remit, and does not attempt to become yet another ‘player’.

      Democracy and monarchy can exist – because the do. Sorry. Even the most superficial understanding of the real world will show this. Moreover, some of the most egalitarian democracies – such as Sweden, Norway and Denmark – are monarchies; meanwhile some of the worst, and the most cutthroat, are republics. I am not saying it is because they are republics or monarchies that this happens, only that your argument is invalid.

      In response to your remark about not finding the monarchy ‘magnificent’, that is your prerogative, and this is a free country. But you should also appreciate that the majority of people do appreciate the monarchy and are quite proud of it. You cannot take the moral high ground if people wish the monarchy to remain, as they do.

      Your final remark – that monarchy is ‘a thing of the past’ is an enormous logical fallacy. And, your claim it is delegitimised because the Queen’s ancestors were dictators and ‘imperialists’ is also irrelevant – so are the presidents of many republics.

      We should consider ourselves fortunate that we have an enduring head of state who has no agenda other than to represent the people of her nation and who isn’t sucking up to interest groups in order to secure further terms in office.

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