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Electing the Lords: Issues 6 – Cost and size

January 26, 2011 Leave a comment

My sixth post on electing the Lords addresses an oft-overlooked matter: the size and cost of an elected Senate.

Members of the House of Commons are salaried, domiciled in offices, have access to expenses, and employ researchers, both in Westminster and in their constituencies.  The House of Commons cost £432 million in 2009-8 – almost £650,000 per MP.  This is an increase of £36 million from the previous financial year.

Meanwhile, the cost of the Lords went down in the same period – from £152.5 million in 2007-8 to £106.5 million.

After all, Lords do not get salaries. Nor do they receive expenses, beyond a daily attendance allowance. They employ researchers, but they tend to share their talents among groups of Lords. Likewise with accommodation – while MPs are entitled to their own office, Lords tend to share with three or four others. Nor do they get constituency allowances – they don’t have them, after all.  Additionally, the size of Lords committee staff tends to be considerably leaner than those for the Commons.

I’m going to do some maths here, so bear with me.

Let’s see what the cost to the taxpayer would be of electing the House of Lords.  The Work of the House of Lords 2007-8 gives us a helpful breakdown of the £212.5 million the Lords spent in the year, and 40% of it (£48.6 million) is related to members’ expenses, staffing and others – the remaining 60% on on-cash items, such as security and building maintenance.  I will now attempt to work out this 40% as it would likely be under an elected British Senate.

Assuming this is a similar proportion as spent in the Commons, then the Commons spent £154.9 million (40% of £387.2 million) on the same functions.

Dividing this by 659 (the number of MPs in the last Parliament) gives us £235,000 per MP. Let’s keep that figure in the back of our minds for the moment.

Considerations of how big the new Senate would be vary. The 2000 Wakeham Commission proposed a reformed House of 550 members, the 2001 White Paper 600 members, 2007, 540 members. So about three quarter of the House’s present size.

Senators would require the same perks as MPs: salaries, expenses, researchers, constituency offices, websites, and accommodation.  Assuming £235,000 would suffice as it does for MPs, then 540 (to take the lowest estimate) multiplied by £235,000 equals £126.9 million.

Now add back on the rest of the bill, the ‘non-cash items’ (i.e. Chamber maintenance), security, property costs and so on…that’s £126.9 million plus £72.9 million.  The grand total is £200 million.

Cheaper than the Commons, considering its slightly smaller size. But compared to the Lords, an increase of 60% of the cost.

And that’s assuming property costs will stay the same, which it won’t. Senators will demand the same perks as MPs, and that means their own constituency offices, researchers, and above all, those lovely offices in or near Parliament, plus expanded committee sizes.

The costs of elections, according to the 2008 White Paper, would be £43 million.  If a statutory appointments commission were also established, this would cost an extra £1.5 million. Let’s add those too.

The total is £244.5 million. That’s an increase on present costs of £138 million.

This at a time when the size and cost of the state apparently should be falling. Here we are ignoring a potential black hole for the public purse, planning to throw our money at a white elephant which will be a shadow of the chamber it will replace. It’d be the parliamentary equivalent of the Millennium Dome.

Of course, money should not come into any reckoning when the quality of democratic government is concerned.  But as we have seen, electing the Lords threatens to worsen the quality of government.  Is this cost worth it? I think not. Anthony King asks how exactly would the Senate improve our lives:

‘It is also not explained why it should be desirable to add significantly to Britain’s already large body of full-time, professional legislators: 650 at the moment in the House of Commons, 129 in the Scottish Parliament, 60 in the Welsh National Assembly and 108 in the Northern Ireland Assembly – an impressive total of 947.  Even with the proposed reduction in the size of the Commons, the creation of an elected upper chamber would almost certainly push that total to well over 1,000.  That would be a paradoxical outcome at a time when Britons are suspicious of party politics and politicians’.

I think this says it all.  We’ll get an inferior chamber for considerably greater expense.

Back to Article 5

Forward to Article 7

Sources:

A House for the Future, Royal Commission on the Reform of the House of Lords, Lord Wakeham Royal Commission, 2000

The House of Lords: Completing the Reform, HM Government, 7 November 2001

The House of Lords: Reform, HM Government, 2007

An Elected Second Chamber: Further reform of the House of Lords. HM Government, 2008

BBC News, ‘Cost of running Parliament falls’, 19th August 2009

House of Lords: Expenses Allowances and Costs, House of Lords Library, 20 November 2009

The Work of the House of Lords 2007-8, House of Lords 2009

Anthony King, ‘Rebuilding Britain: do voting changes mean we will be better governed?’ Daily Telegraph, May 18th 2010

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The cost of the monarchy

July 5, 2010 5 comments

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

Categories: Finance, Monarchy, Parliament