by The Laird o’Thistle
July 16 2010

The stories this last week about the “Queen” selling her shares in Regent Street bring up, yet again, the widespread gross misunderstandings about royal finances in the U.K. Her Majesty does not own, nor is “she” selling, any of Regent Street. The “Crown Estate,” which is actually a government entity, is selling its portion of Regent Street properties to reinvest those monies elsewhere.

The Crown Estate consists of the wealth accrued over time from Crown properties that King George III turned over in 1760 to the British government in return for the ongoing grants for expenses known as the Civil List, which has also been much in the news of late. The Civil List grant is renewed every ten years and has been frozen at the level of 7.9 million GBP (Great Britain Pounds) for 20 years. Currently, it fails to cover the official expenses of the Royal Household, and reserves are due to run out by the time of the Diamond Jubilee in 2012. But, in the current economic crunch, there is no real prospect of any increase in the funding for the next couple of years. (One wonders if they could at least find a way to build in a conditional increase, kicking in as circumstances may allow over the next decade.)

The Crown Estate yields income far above the Civil List. The latest report shows a profit of 210.7 million GBP over the last reporting year, which is 202.8 million beyond the cost of the Civil List. Figuring from that perspective the “Queen” doesn’t really cost the actual taxpayers a single pence, let alone the much-touted 62p, and it could be said that the Crown Estate income yields tax relief of about 15.5 GBP per person after the support of the Civil List has been deducted. (Crown Estate income exceeded the Civil List by about 26 times. And, 26 x 62p – 62p = 15.5 GBP, if I did the mathematics correctly.) Even with additional costs for security, travel, and other expenses covered by other parts of government for the monarchy, the British government still reaps a major profit off of the Crown Estate.

That said, the royals have two additional major funding sources. The Sovereign has the Duchy of Lancaster, and the Prince of Wales has the Duchy of Cornwall, both providing income for their public and private support. Both are profitable entities, and both now pay income taxes. In 2007 the Duchy of Lancaster income was 11.9 million GBP. For the same year the income of the Duchy of Cornwall, which covers all of the expenses of the Prince of Wales (i.e. he gets no Civil List monies), was 16.3 million GBP. The Duchy of Lancaster is the source of revenue for the Queen’s “Privy Purse,” which provides the “private funds” out of which the Queen covers official expenses of junior members of the royal family. My understanding is that while the Sovereign and Prince of Wales receive the income of the duchies, they may not dip into the capital assets held by them.

Another entity holding valuable assets (estimated at approximately 10 billion GBP) is The Royal Collection. It holds the art collection “owned” by the Sovereign in trust for her successors and the nation and is administered under the royal household. It is not considered part of the personal wealth of the royal family and is scattered between official royal residences, historic palaces such as Hampton Court, the Queen’s Galleries at Buckingham Palace and Holyroodhouse, and loans to museums around the country and the world.

Apart from the Royal Collection, the ownership status of the royal jewelry collection (as opposed to the Crown Jewels) remains somewhat ambiguous. Regarded as probably the most historic and fabulous collection in the world, it is officially the Queen’s personal property. But the core elements, at least, seem to be understood to be held in trust to be passed along to her successors.

As for the royal residences, the principal ones – Buckingham Palace, Windsor Castle, Holyroodhouse, Hillsborough Castle in Northern Ireland, St. James’ Palace, Clarence House, and Kensington Palace – belong to the State. Other properties are owned by the Crown Estate and leased to their occupants, the Royal Lodge (Duke of York) and Bagshot Park (Earl of Wessex), being cases in point. Other residences are the private property of the Queen and her family members; these include Sandringham, Balmoral, Birkhall, Highgrove, and Gatcombe Park. Income from these estates is private.

Famously, after the 1992 fire at Windsor Castle, the State declined to fund the restoration of the State-owned property, so the Royal Household instituted new income-producing strategies, principally the summer opening of Buckingham Palace. The benefit of this, acknowledged by Prince Philip and others, was that it gave the royal family a much freer hand, deftly exercised in my opinion, in the restoration.

Finally, the extent of the Queen’s private fortune (including the value of her private estates) is a closely guarded secret, but a 1993 guesstimate of 100 million GBP was called “grossly overstated” by the Queen’s spokesperson. A 2001 guesstimate by Forbes Magazine suggested the Queen’s worth at about 450 million USD (United States Dollars), however, that might translate into the then current exchange rate to GBP. The few who actually do know aren’t saying, but it is clear that the wildest guesstimates don’t understand the breakdown of who-owns-what presented here.

For the moment the greatest concern in regard to royal finance is focused on the critical maintenance needs at Buckingham Palace, Windsor Castle, and the Royal Mausoleum at Frogmore. These are “State” property matters, although a case could probably be made for asking the royals to contribute something to the restoration at Frogmore. The dangers and expense of deferring essential maintenance due to lack of government funding may prove a classic case of “penny” wise and “pound” foolish in the long run. But it seems we are all destined to find out.

Yours Aye,
Ken Cuthbertson