31 May 2012

Accounting for the Queen

As the UK gears up for a weekend of Diamond Jubilee celebrations, just how much is the Queen actually worth?

The Queen's Diamond Jubilee could cost Britain as much as £1.3bn, according to a government estimate. By anyone’s reckoning that figure from the Department of Culture Media and Sport will buy an awful lot of balloons.

And the notoriously thrifty monarch will doubtless be relieved she’s not buying them. After all, the current economic climate is hitting us all hard and the Royal household seems to be no exception. Her Majesty’s Civil List is about to be replaced by a new index-linked Sovereign Grant, she was recently refused more public funds to help restore Royal buildings and then there was the little expense of Prince William’s wedding last year.

So as she celebrates 60 years on the throne, how much money does the Queen have?

This year’s Sunday Times Rich List listed Her Majesty’s personal fortune at £310m, which is enough to make any 86-year-old woman comfortable but makes her only the 262nd wealthiest Briton. She’s not even in the Top 10 richest monarchs (step forward King Bhumibol Adulyadej of Thailand and his $30bn).


The Queen's personal fortune

Much of the Queen’s perceived richesse, of course, actually belongs to the Crown and therefore is not her personal property at all. The Crown Estate owns an estimated £7bn of land and real estate, including Buckingham Palace, Windsor Castle, London’s Regent Street, a somewhat incongruous selection of city shopping arcades, and more than half of the British shoreline.

It also owns the Tower of London and its sparkly contents – but Elizabeth is not without a few crown jewels of her own.

For a start, she owns both Balmoral and Sandringham, which she inherited from her father. The Queen also has significant collections of art, furniture and jewels as well as a hefty investment portfolio which, while secret in the detail, was recently estimated by Forbes magazine at about £100m.

Then there’s her annual private income – a steady £32m for the last three years – including £13.3m from the Duchy of Lancaster, a portfolio of 18,700 hectares of land, property and assets in England and Wales held in trust for the sovereign.

That’s not to say the Queen has a lot of cash to spare. While her official expenses, and those of Prince Philip, are met by the Civil List, much of this Duchy income is used to pay the expenses of the other members of the Royal family which pretty much balances the books.

Royal austerity

The Queen has run an increasingly cost-efficient monarchy in recent years. The Civil List itself has been frozen at £7.9m for 23 years, on the way losing 76% of its value since then Chancellor John Major set that figure in 1989. The annual shortfall in meeting the Queen’s expenses – total Royal Household spending in 2011 was listed in a Treasury report at £14.9m – is met by the Civil List Reserve, a stockpile of cash reserves Her frugal Majesty put aside in more affluent days.

She also seems committed to paying her own way. She volunteered to pay income tax and capital gains tax in 1993. She also chooses to pay council tax – albeit that the bizarre anomaly of Westminster Council’s low tariff means she pays only £1,375 a year for Buckingham Palace, a lower council tax bill than for a four-bed semi in neighbouring Lambeth. 

However, these are uncertain financial times for the Monarch, not least because next year the Civil List is summarily abolished, ending 250 years of monetary tradition.

The List, the fixed annual payment first accepted in 1760 by George III in return for giving the Treasury surplus revenue from Crown Lands, is axed alongside the Queen’s other official income, Grants-in-Aid from the Department of Transport, to cover her travel expenditure, and from the Department of Culture, Media and Sport, for the upkeep of the Royal residences.

In their place is a new Sovereign Grant, announced last year by George Osborne, which will give the Queen 15% of the surplus of the Crown Estate.

This all-purpose pot will give the Royal household more flexibility on how it spends its money, but there are conflicting opinions as to whether it will make the monarch more royally flush.

The Queen is very keen that the Royal Household should continue to reduce its expenditure

Sir Alan Reid

A Treasury briefing document for the second reading of the Sovereign Grant Bill in December rather gloomily suggested the new system might effectively cut her pay for the next five years: "The grant levels envisaged in the early years of the new system are, in real terms, below what the Royal Household spent in every one of the last 20 years.”

Valuable assets

Other indicators, however, might make her more of a merry monarch – not least the fact that in the year 2010-11 the Crown Estate garnered a record net income profit of £230.9m which, repeated in 2012, would make the Queen’s 15% worth £34.6m.

She also seems set to benefit from a literal windfall with the Estate predicted to double its income through shrewd investments in offshore wind farms.

One thing’s certain - there is no sign Her Majesty will be profligate. Her Official Expenditure for 2010-11, funded by the equivalent of the Sovereign Grant, was £32.1m – 5.3% less than the previous year’s outgoings and a considerable downsize on 1991/2’s equivalent figure of £87.3m in 1991/2.

Sir Alan Reid, Keeper of the Privy Purse, says the monarch is committed to keeping costs under control.
“The Queen is very keen that the Royal Household should continue to reduce its expenditure in line with public expenditure reductions,” he said.

The 65-year-old, a senior partner at KMPG before becoming the Queen’s accountant in 2002, said last year that Her Majesty’s official expenditure had decreased by 19% in real terms in the past five years.

He added: “This is due mainly to increased income generation, the deferral of property maintenance expenditure and the implementation of a pay freeze (among Royal household staff earning more than £50,000 a year).”

The Queen is also adept at finding other ways of raising income. When fire ravaged Windsor Castle in her “annus horribilis” of 1992, causing £36.5m of damage, she raised 70% of the restoration cost by charging the public £3 a head to enter the precincts, and £8 to tour Buckingham Palace.

According to recent Royal calculations, the Queen cost the British public 66p per head in the last year. Republicans might argue that’s still too much – while omitting to point out that the income of the Crown Estates far exceeds the expense of the Civil List, and that even without a monarch, historic buildings would still need maintaining and a president would still need a palace.

Add to that a report published this week by Brand Finance that claims the Royal Family’s brings in £26.4bn annually to the British economy and you can see why the Queen is keen to have that Diamond Jubilee party. She probably feels she's earned it.


Peter Taylor-Whiffen