The royal household is openly abusing public money

The total annual cost of the monarchy is estimated by Republic to be around £300m - nine times higher than the official figure.

The total annual cost of the monarchy is estimated by Republic to be around £300m – nine times higher than the official figure

One of the more disreputable traditions associated with the monarchy is the annual farce of the royal finance report. This is when the royal household gets to report on its own spending of taxpayers’ money on its own terms – tightly managing the release of information and ensuring it’s carefully couched in so much spin real abuse of public money gets glossed over.

Yesterday was no exception as Sir Alan Reid, head apologist for royal spending, spun his way through a multi-million pound rip-off that included £4m spent by the head of state on her grandson’s new home and £16,000 spent by her son on a quick trip to Stoke. 

All this was brushed aside – this is a ‘value-for-money-monarchy’, costing each person in the country 56p. The new home for Kate and William was, according to royal aides, ‘an ordinary family home’. It just happens to have more than twenty rooms and a full staff.

The total annual cost is claimed to be £36m, a sum neatly divided by every man, woman and child in the country to reach that magic figure of 56p per person. This spin itself is so disingenuous as to be a real challenge to proper financial scrutiny.

Setting aside the obvious point that not all 60m of us pay tax, dividing the total among all the people is no way to justify public expenditure. Anything can look cheap when you do that: MPs’ expenses only cost us £1.60 last year, so why all the fuss?

The problem is that taxpayers don’t pay into lots of individual pots of money. All our taxes go into the government’s coffers and the government is then expected to share that money out according to its priorities. It can choose whether to spend that £36m on the Queen or on hospitals, schools and policing.

The bigger problem with the official claim is that the £36m only covers the Sovereign Support Grant, a shabby set-up agreed by this government shortly after coming to power. Yesterday’s report ignores tens of millions of pounds of public money spent on or lost to the royals.

This includes over £20m spent by local authorities, £2m spent on Lords Lieutenants no-one has ever heard of, an estimated £102m security bill that includes protection for more than a dozen royals and offspring who can well afford their own protection and almost £90m lost from the Duchies of Lancaster and Cornwall, money that should be going into the treasury.

The total annual cost of the monarchy is estimated by Republic to be around £300m, nine times higher than the official figure. That’s the equivalent of 14,000 new NHS Nurses or newly qualified teachers.

The spending and the spin are the result of unique arrangements made for the palace and the deference shown to the royals by MPs that mean there’s barely any meaningful scrutiny or accountability.

Of course there can never be any real accountability with the royals because they can’t face the ultimate sanction of losing their jobs. But it seems the government and our MPs prefer not to even try to hold the royals to the same standards expected of other public bodies. Most MPs, that is. The Public Accounts Committee has made some attempt at demanding higher standards, but it is telling that the palace is able to ignore their recommendations with impunity.

MPs have in previous years called on the royals to cut costs, yet spending went up more than 5 per cent this year. They insisted the palaces be opened up all year for tourists, to raise the revenue needed for building maintenance – the royals refused.

MPs have also called for greater transparency in financial reporting, such as when, a couple of years ago, the PAC said: “The transparency of the Prince of Wales’ tax payments is limited by the fact that income tax and VAT are reported only as a combined total. These figures should be disclosed separately, so we can understand precisely how much, and at what rate, income tax is paid by the Prince.”

The report from the Duchy this year continues to combine all taxes into one line, giving the impression Charles is paying a higher amount of income tax than he actually is. And of course the Duchy still refuses to pay corporation tax.

The sovereign support grant is an extraordinary coup for the royals. Unlike any other public body its funding level is not set through a proper budgeting process, it isn’t calculated in terms of what the royals need. It is simply pegged at 15 per cent of revenue from the Crown Estate, a huge property portfolio that belongs to the nation and which is set to enjoy big increases in revenue over the next few years.

The beauty of the deal for the royals is that if Crown Estate revenue goes up their grant goes up, but if the revenue falls the grant doesn’t fall with it. It’s a win-win all the way to the bank. What’s more the manner in which the sovereign support grant is managed is completely at odds with normal practice.

The royal household, like many other public bodies has a framework agreement with a government department setting out how it will manage and spend the public money it receives. Comparing the royal household’s framework agreement with that of other public bodies we can see some key differences:

  • the royal household can carry unused funds forward from one year to the next while the general rule for public bodies is that unspent money is lost

  • the Permanent Secretary to the Treasury is accountable to parliament for the Sovereign Grant but is not involved in the process of setting the budget – this is not consistent with standard practice for public bodies

  • public bodies are normally required to draw down grants monthly based on evidence of need but the royal household is not required to show evidence of need

  • the royal household are allowed to decide the mode of transport before going out to tender – meaning that they can choose an expensive mode of transport and then go out to tender – this means tax payers aren’t getting real value for money from the tender exercise

  • the royal household can give gifts of up to £100,000 per annum per person or organisation – this is far in excess of what is allowed for other public bodies [e.g. the ICO needs Ministry of Justice approval for unusual gifts over £250]

In theory, the introduction of the sovereign support grant brought increased scrutiny of the royal finances. The national audit office (NAO) and the public accounts committee (PAC) are now responsible for ensuring the grant is spent wisely.

The problem is that the politicians don’t want to hold the royals to account, and the system is skewed heavily in favour of the royals (no doubt as a result of heavy lobbying by the royal household, lobbying beyond the reach of freedom of information laws).

So while the PAC was highly critical of royal spending in its first report on the grant, there is no sign that the government intends to enact its recommendations.

On the contrary, chancellor George Osborne accused the PAC of “meanness”. In any case, the NAO and PAC only oversee the spending of the sovereign grant – not the many millions of pounds in hidden costs.

At £300m a year and with millions being spent on personal travel, holidays and accommodation the royal household is openly and wantonly abusing public money – with the full consent of a government unwilling to apply basic standards of accountability to the head of state.

Graham Smith is the current chief executive officer of Republic

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15 Responses to “The royal household is openly abusing public money”

  1. lexplex

    Can you cite all your data sources please? You throw a lot of numbers around that aren’t mentioned anywhere else I can find. I’m on the fence about the royal family and it’s frustrating that I only ever read poorly referenced clearly biased diatribes about them either for or against. The idle research I’ve done myself seems to indicate that, give or take the odd debatable amounts, they make more money than they cost. Most of them are gainfully employed and paid salaries (albeit ridiculously large salaries) that cover their costs comfortably, although there are several cases about irresponsibility and corruption on the fringe of the family.

    If we’re using moral expenditure as a reason to create a republic, should we also be planning to kick out all the other highly paid public figures that cost more than their worth like bankers, politicians, charity board members? What about other groups of people with a stereotyped collective identity that are seen to cost large amounts of money without giving anything back? The unemployed? The disabled? At least the royal family performs an important function in the stability of the government.

  2. Trispw

    Let’s get rid of all of them except The Queen and Philip, and Charlie and Mrs Parker Bowles.

    The rest should work for a living as if they were the president’s family, and pay for their own homes, etc. When the Queen dies, then Willie and Middleton can move up.

    And for goodness sake let’s stop them having sway over legislation. In Sweden the king has no role in government. Why does Britain live in the 18th century?

    I’m not so bothered about the amounts, although when there are kids starving in the country it’s a bit much that a p[art time royal worker gets a helicopter bought for him and an ordinary house with 20 rooms.

    I only have 3 rooms. Why does he need 20?

  3. Philip

    Spin works both ways Sonny Jim. Lots of shuffling figures there to get a very weak point across.

  4. littleoddsandpieces

    Ah but there is a much better solution.

    A previous king gave ownership of the royal family’s private property

    (1760 King George III) called the Crown Estate, in return for a grant and we today call this money from the taxpayer.

    If the Crown Estate was given back to the royals’ ownership as a trust, then the taxpayer would not be paying all the upkeep of the cost of the Crown Estate. So the reigning Monarch pays for Royal Palaces upkeep and Royal Travel, as well as all staffing.

    This is funding neutral and forever ends any taxpayer funding of the Monarchy.

    I am sure the monarchy would not do what the Coalition is planning (or already done?)
    …In April 2014 it was reported that the Crown Estate is proposing to sell about 200 of its 750 rural homes in the UK and was evicting tenants in preparation. (Wikipaedia).

    And might be better for the environment than government:
    …the Crown Estate has a monopoly over the marine environment, and has focused too strongly on collecting revenues rather than acting in the long-term public interest around ports and harbours.

    The real pain in the you-know-where are politicians and Peers in the House of Lords, who keep costing more and more in expenses, whilst leaving the rest of us either to starve or be still worse off than the crisis year of 2008.

    Now getting rid of the House of Lords is more viable and doesn’t leave England in danger as in European history of republics, of becoming a dictatorship.

    Cromwell, who began the people’s parliament, decreed the end of the House of Lords on 16 March 1649 AD.

    Blair’s New Labour promised to get rid of the House of Lords, but despite 13 years of Labour rule til 2010, did not get do it.

    A Free Scotland would finalise full indepence from any rule from the House of Lords in passing law. So at least one part of the UK would be free of that aristocratic elite, that the public cannot vote directly for and so has nothing to do with western democracy.

    The media tell us that:
    103 additional peers since 2010 – most of them Tories and Lib Dems
    Cost of unelected peers has surged 17% since the Coalition came to power taking number to 900 Peers.

    Their numbers will grow to 2000 Peers in a few years.

    Not just Peers cost all the millions in expenses, but the cost of consultants to politicians has increased four-fold in two decades, earning more than a back-bench MP.

    MPs get an 11 per cent pay rise in 2015, from around £67,000 after a 1 per cent increase on 1 April, 2014, to a salary of £74,000 in 2015.

    Up to 2012, MPs expenses cost the taxpayer around £100 million a year for 650 MPs in the UK.

    The loss of women’s state pension at 60 from 2013 is about the same money per year as MPs’ 11 per cent pay rise in 2015. As most MPs are independently wealthy beyond their job, and women’s state pension is, in the majority, lost food and fuel money, then politicians are the true burden on the taxpayer.

    Pensioners paid 12 per cent of their wage for many for almost half a century, plus their boss’s also compulsory contribution. And the ring fenced NI Fund is full, not needing a top up from tax for decades, despite all the hype about people living longer, which has made no difference whatsoever. As the NI Fund is not a tax it cannot be emptied to pay off national debt (as wrongly believed even by the Pensioners Convention) or to be used for general expenditure, like the above expenses of wealthy politicians to live a privileged lifestyle on the people.
    Even worse is to come from 2016, leaving many people with no state pension for life:

  5. Jock Campbell

    What price democratic security?

    The US presidency… $1.4Billion. US senate- $17.4 million in salaries plus expenses.

    Kinda puts 300 million quid in the shade.

  6. Kay

    Several good points in this article, especially around the themes of accountability and hidden costs to the taxpayer. The question is not whether we are prepared to pay the price, but whether the government of the day has the wotsits to scrutinise, challenge and cut budgets in the same way that it has cut into public services like, for instance, the Criminal Justice system.

    In my view, the justice system performs just as important a role as the Monarchy in our country’s stability and prosperity. It’s centrality to our freedoms didn’t stop the preceived need for austerity measures and privatisation: global corporations have cherry picked profitable parts of probation and prisons, while the Police have lost 30,000 officers and police staff since 2009, as part of the 20% cut in their budgets.

    The Extended Royal Family should go through the same kind of spending reviews as other public services, in my view. Of course that would mean opening itself up to privatisation, reducing the numbers of people in the Firm, and taking a 20% cut in real terms, but why not? It’s only fair. After all, we are all in this together.

  7. Julian Gibb

    Foodbanks , an increase in child poverty, an NHS with growing demands on it’s resources, An every increasing gap between Rich and Poor, Payday loan companies destroying people’s lives.

    We have a Labour Party which supports the concept of born to rule (and all the extended family), an unelected House of Lords, Trident replacement, Force projection via Aircraft Carriers etc

    When can I have my Party back?

    Labour Party Conference 2011
    Ed Miliband is to propose rewriting the Labour party’s 93-year-old founding principles, amending clause I of its constitution to explicitly put the principles of community organising at its heart.

    In the first redrafting of the party’s clauses in 17 years since Tony Blair famously scrapped clause IV, which until then had committed Labour to a programme of mass nationalisation, Miliband hopes to get party support for his wider ambitions for the party, which have so far been controversial with union leaders. The constitution was adopted by the party in 1918.

  8. Leon Wolfeson

    And the cost of an elected president would start around a billion at the low end…

  9. Leon Wolfeson

    Hi LB. Still spreading pension myths I see.

  10. Leon Wolfeson

    Short version? You can’t.

    We need Proportional Representation.

  11. Fred N.

    I would prefer any country’s govt. without self appointed “overlords”, but if they exist, they should govern (hopefully responsibly) and not smile a lot and pretend that they are not involved, while at the same time getting horrendous amounts of public money and “managing” property amounting to half of the country’s GDP, which they claim to own only because some ancestor of theirs was agressive enough to claim the crown. QE2 may be a remarkable woman, but she is consistently failing as a monarch. But a lot of people could be “remarkable” with several billion pounds in their account.

  12. adamB1

    i cannot be bothered to go through all your points. But the Crown Estates is not tax funded, it looks after its self. It is an estate.

    George III signed the rights to the income of the Crown Lands (back then) to the gov for the civl list. He did not sign over the ownership of the lands. Also it was only for his reign. Ever monarch since has to do it.

  13. adamB1

    The Royal family, expands and reduces its self all by its self always has done. It does not need other to do it.

    You seem to believe the myth we pay for them all we, do not. Time people understood, they are rich.

    If the gov can review the spending of one family? why cannot not do the same for the millions of others that truly do live of the state in council house etc. Same principle.

  14. adamB1

    This article is a load of rubbish. any one with this skills to research the facts and numbers can see that. Graham, knows very little on the topic of monarchy and funding and fails to understand the most important issues. He dismiss they evidence and facts to make up his own arguments when he does not like the true. Like many in his group of followers, he cannot debate, or here the arguments. And when called out, he runs and hides, or just ignore’s the points. As I said rubbish article.

  15. Kieran Dainty

    paying this amount to the so called caring and giving royals whilst government are cutting children homeless fund by £90million that helps house 90,000 homesless and that there is over 6,000 ex soldiers on the street is immoral they have enough money to live off now, the rich 1% in this world is what causes poverty the royals being paid this much is unjustifiable and darn right disgusting, any sane person would not support such power in the world this is what creates divide in societies

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