This is the full version of my New York Times essay on the funding of the British royal family that, in some quarters at least, caused considerable outrage.
The British queen is down to her last pennies. Well, actually, her last millions of pennies. Last month, the Public Accounts Committee — Parliament’s watchdog on public spending — published a damning survey of the state of the royal finances. The queen had spent down her ‘reserve fund’, essentially a savings account built up by years of surplus public subsidy, to ‘a historically low level’ of only £1 million, from £35.3 million in 2001. The MPs condemned years of over-expenditure, demanding that the Queen cuts spending and increases income (by, for instance, opening up Buckingham Palace more frequently to the public). The report also bemoaned the Queen’s failure to properly maintain ‘nationally important heritage properties’. Almost half of the royal estate’s buildings, it observed, were not in ‘an acceptable condition’.
Trying to make sense of the royal finances is like trying to eat spaghetti with a spoon. Here’s the puzzle: Queen Elizabeth II is one of the richest people in the world. According to Forbes magazine, her personal worth is $500 million. Among her private property is Balmoral Castle, her residence in the Scottish Highlands, which was purchased, together with a 50,000-acre estate, by Prince Albert for Queen Victoria in 1848. The Queen also owns stud farms, old Masters and fine jewellery. On top of the Queen’s private wealth are all the assets held by the nation that she enjoys in her role as the Sovereign, including Buckingham Palace and Windsor Castle, the world-renowned Royal art collection, and the Crown Jewels.
If the Queen is so wealthy, how can she be strapped for cash? In 2010, it emerged that the Queen had even privately applied to a government fund that normally helps public institutions such as schools and hospitals provide heating programmes for low-income families. She wanted assistance with Buckingham Palace’s heating bills. Turning the request down, a government official commented, ‘I feel a bit uneasy about the probable adverse press coverage if the palace were given a grant at the expense of, say, a hospital’.
Why is one of the richest people in the world reduced to acting as if she lived in public housing? The short answer is that she does live in public housing — just in an exceptionally grand manner. The Queen does not own Buckingham Palace; the nation does. So, wealthy as she is, the Queen sees no reason to pay for the upkeep of the palace, since she lives there by virtue of her public duties.
Behind this tussle over who pays for what is the fundamental ambiguity of a parliamentary democracy headed by a hereditary monarch. This historic anomaly is the key to unraveling the mysteries of the royal finances. It explains how we can have a queen who is privately so very rich, yet who publicly pleads poverty.
The mysteries of royal finances are wrapped up in a very British relationship between the monarch as an individual and the monarchy as an institution, a relationship shaped not just by formal law but also by custom, tradition and Britain’s unwritten constitution. State funding is supposed to allow the Sovereign perform her formal duties as head of state, providing for staff salaries, costs of ceremonial functions and the upkeep of the Royal Households. But the line between the monarch as a (very wealthy) private individual and the monarchy as a state institution is blurred. To the outsider the British monarchy may seem all about history and pageantry. It is also about power and privilege. The fact that a private individual possesses the privileges of head of state merely by an accident of birth raises profound questions about the nature of British democracy.
The modern royal muddle began in 1760. King George III found himself £3 million in debt — a colossal sum, equivalent to more than £500 million in today’s money. To extricate himself, he surrendered to the government the management of, and revenues from, most of his property, in exchange for the state taking over not just his personal debt but also the debt accrued by all previous monarchs, and the monarch’s responsibility for the costs of the civil government. In return he received a fixed annual payment, known as the Civil List.
This was, in essence, how the British government subsidized the royal household for 250 years — until 2012, when Parliament abolished the Civil List and replaced it with the Sovereign Grant. Ostensibly, this was to rationalize the royal finances: The Civil List was the main source of state funding for the royal family, yet it was supplemented by a host of other grants — to cover palace maintenance, communications and travel costs. The Royal Yacht Britannia, for instance, was separately funded to the tune of £11 million a year, until it was retired by Prime Minister Tony Blair in 1997 as a cost-cutting measure.
The Sovereign Grant was designed to sweep all that away. Rather than the Queen receiving the Civil List and a suite of subsidies, the level of the grant is simply set at a 15 percent cut of the profits from the Crown Estate – a vast portfolio of assets, part of which includes the property handed over by George III. It is, for the royals, a highly renumerative arrangement. The capital worth of the Crown Estate, even after the recession-induced collapse in property values, remains an eye-catching £8.6 billion. A 15 percent cut of profits meant that the Queen received a payment this year of £37.9 million this year (up from from £36.1 million for 2013).
Whether the Crown Estate still belongs to the monarchy has been a matter of much debate. Technically the Estate belongs to the Crown, as an embodiment of the State, but not to the reigning monarch, as an individual. The Queen could, if she so desired, could sell Balmoral Castle tomorrow as it is her private property. But she could not sell Buckingham Palace as she has no legal claim to it. If the monarchy was abolished tomorrow, Buckingham Palace and the Royal art collection would become public property. But the Queen would not (as humourist Sue Townsend imagined in her novel The Queen and I) be forced into some down at heel council estate. Her private wealth would allow her to rub shoulders with Russian oligarchs and Saudi royalty.
The Sovereign Grant did nothing to resolve the constitutional fudge. Many within the royal family clearly look upon the Crown Estate as their personal property. In directly linking royal income to the estate, the grant appeared to some to legitimize the monarch’s claim to it.
The Sovereign Grant is in fact only a small part of a network of public subsidies received by the monarchy. The costs of security, for example, are not included in the Grant. Other subsidies are more hidden. The Duchies of Lancaster and Cornwall are vast portfolios of land and property held in trust for the sovereign and the heir to the throne respectively, distinct from the Crown Estate. Last year the Duchy of Lancaster generated £12.7m for the Queen and the Duchy of Cornwall £19.1m for the Prince of Wales. Both estates were exempt from business taxes. Such ‘lost revenues’, suggests the anti-monarchy campaign group Republic, should be regarded as public subsidies to the Queen. Once all such monies are added up, Republic estimates, the total cost of the monarchy to the taxpayer is more than £200 million a year.
In the background to such a lavish public subsidy of the monarchy is the programme of austerity imposed by the government since 2010, a program that has generated considerable popular anger. There is much hostility, too, toward the privileged social backgrounds of government ministers.Yet, little of this fury has spilled over into outrage about royal funding. Fewer than one in five Britons wants a republic, a figure that has not changed for half a century. In contrast, a poll last year found that 45 percent of the British public showed ‘strong support’ for the monarchy, up from 27 percent in 2006.
For royalists, the monarchy provides ‘value for money’, irrespective of much it costs. It is better, they argue, to have a nonpolitical head of state who can unite the nation, rather an elected politician who would divide it. For some, the very idea that MPs should scrutinize the Queen’s finances verges on impertinence. One Conservative MP, Jacob Rees-Mogg, condemned the PAC report’s ‘meanness’, while another, Nadine Dorries, was ‘embarrassed’ at the humiliation being heaped upon the Queen.
Yet the notion of the monarchy as an apolitical institution is preposterous. Its very existence is a profoundly political statement, proclaiming loudly that an accident of birth matters more than the democratic will. Insofar as the monarchy represents ‘continuity, tradition and dignity’, as historian and Labour shadow education minister Tristram Hunt has suggested, it is continuity with a Britain that should no longer exist, a tradition that speaks only to privilege and power, a dignity established through a legion of servants and minions.
If the royalists have a point, however, it may be this: their contempt for democracy captures a public mood that is deeply cynical about politicians, who are seen as venal and corrupt. Just 18 per cent of the population trusts the government to place the needs of the nation above the interests of the politicians’ own party (the same proportion, coincidentally, as are republicans). That popular anger about austerity has not translated into hostility toward royal funding tells us less about attitudes to the monarchy than it does about the scorn with which politicians are now regarded.
Some suggest that when Elizabeth is eventually replaced by the far less popular Charles, support for the monarchy will plummet. But even when rage at the Windsors was at its height, in the wake of their cack-handed response to the death of Princess Diana in 1997, there was little enthusiasm for a republican alternative.
In the past, reverence for the monarchy was rooted in a sense of deference and an acceptance of social hierarchy. Today, deference has been replaced by cynicism. But so long as the public despises politicians more than royals, one of the richest families in the world will continue to live off (highly lucrative) state handouts – and face little outrage. The key to the survival of the British monarchy lies less in Buckingham Palace than in the Palace of Westminster.