Head of State expenditure is the official expenditure relating to The Queen’s duties as Head of State and Head of the Commonwealth. Her Majesty is not “employed” by the State in which she receives a “pay-cheque” unlike her counterparts on the continent, whereas the King of the Netherlands (paid in excess of 800.000,00 E in addition to Head of State expenditure provided) and other European Monarchs. Head of State expenditure for Her Majesty, The Queen has reduced significantly over the past decade, from 87.3 million in 1991-92 (expressed in current pounds) to £38.2 million in 2009-10. In the year 2009-10, Palace expenditure equaled the cost of just 62 pence per person. Net expenditure for 2012-13 was £33.3 million (including VAT of £1.9 million) compared to £36.5m in 2008-9, which shows a true reduction in real terms in the cost of operations for our Head of State. The reduction in expenditure was achieved mainly by an increase in income generated by the Royal Household to supplement the Sovereign Grant and lower expenditure on travel.
- For 2016/2017 official expenditure climbed upwards to £42.8 Million due to a rise of £3 million over the 2015/2016 fiscal year. This rise in expenditure was based on the rise of funding provided to the Palace due to the Sovereign Support Grant equation (two years in arrears) which was based on 2014/2015 Crown Estate revenues of £304.1 million
- Official expenditure met by the Sovereign Grant in 2016-17 (released 27 June 2017) amounted to £42.8 million (2016-17: £42.8 million) up £3 million from the previous year. The total expense for the year of Her Majesty as Head of State came to £56.8 million, with additional funding generated by letting out properties and rooms for events. Income supplementing the grant amounted to £14.9 million (up from £13.9 million in 2015/16). In 2016/17 The Palace received £42.8 million for Her Majesty to carry out her official work as Head of State as opposed to the last two annual fiscal reports (2014/15 and 2015/16) which had shown a £0 increase in Palace funding for those two years. In 2016/2017 a slight increase in spending was undertaken. This increase went towards property maintenance, payroll costs and an additional £0.9 million transferred into the Sovereign Grant Reserve.
Head of State expenditure is met from public funds in exchange for the surrender by The Queen of the revenue from the Crown Estate – this was known as the Civil List. In 2008-09 the Treasury’s gross receipts in respect of the Crown Estate were £230 million. Head of State expenditure excludes the costs of Police and Army security and of Armed Services Ceremonial, as figures are not available. Every year the Royal Household publishes an Annual Summary of Head of State expenditure, together a full report on Royal public finances.
For current gross receipts and expenditure in regard to the Sovereign Support Grant until March 2017, please download the official Buckingham Palace Financial Summary PDF below, as provided by royal.gov.uk. Subject to Crown Copyright.
For a fully detailed outline of Palace expenditure from the Annual report and Accounts 2016-2017 as presented to Parliament pursuant to section 2 and section 4 of the Sovereign Grant Act 2011, please download the official Buckingham Palace Annual Report and Accounts 2016-2017 below, as provided by royal.gov.uk. Subject to Crown Copyright.
[gap] The Civil List
This was the amount of money provided by Parliament to meet the official expenses of The Queen’s Household, so that The Queen could carry out her role as Head of State and Head of the Commonwealth. The Queen and The Duke of Edinburgh were the only members of the Royal Family to receive an annual Parliamentary allowance. In 1760, George III reached an agreement with the Government over the Crown Estate. The Crown Lands would be managed on behalf of the Government and the surplus revenue would go to the Treasury. In return, the King would receive a fixed annual payment, which we called the Civil List. In 2006-2007 the revenue surplus received by the Treasury from the Crown Estates was £200 million. Since 2001, The Queen received a set amount of £7.9 million per annum.
About 70 per cent of the Civil List expenditure went towards staff salaries. It also was allocated towards meeting the costs of official functions such as garden parties, receptions and official entertainment during State Visits.
The Queen entertains almost 50,000 people each year. The Royal Household strives to be open and transparent, in which details of Palace expenditure are published in an Annual Summary and Annual Report. The civil list did not directly fund the duties of other members of the Royal Family such as Prince Charles, whose income comes largely from the Duchy of Cornwall, though they do receive grants-in-aid funding for official duties, such as transport costs.
[gap] [gap] Sovereign Support Grant
This single payment (Grant) to Buckingham Palace replaced the Civil List in 2013 as the source of income which allows the Head of State to carry out the ceremonial duties of the nation. This grant consists solely of funds derived by the Crown Estate. This news of the largest change in royal finances in 250 years, was a welcome change by the Palace, as the crown will have more flexibility in determining how to allocate expenditure, so that more can be spent on building maintenance than travel according to priorities each year, instead of earmarked funding. Precise details of the fund show that the lump sum payment is based on a proportion of crown estate revenues each year. Since the 1760s the crown has surrendered the receipts from its estates — £230m in 2008-9 — to the Government in return for the Civil List grant (above), which was set at £7.9m since 1990 and topped up from reserves to £14.2m in 2011. Osborne in 2010 announced that the Civil List, which was due for renegotiation, would remain frozen for a further year and that royal expenditure must be reduced by 14% by 2012-13. The only scheduled increase will be an extra £1-2m to fund the Queen’s Diamond Jubilee in 2012. This change in how the Palace is funded means that the household will have to cut back on building maintenance for the time being, as it has been a long-standing royal grievance that the Government has not fully funded Palace repairs for many years. The cuts also mean that the Palace will have to cut back on garden parties, receptions and other official entertaining. In an effort to reduce costs, the Queen cancelled 2010’s staff Christmas party. Annual royal accounts published last June reflected that the head of state’s expenditure had already been reduced by 17% since 2001.
As past governments have continued to penalise the Palace by not allocating needed increases in the Civil List, this new funding scheme will benefit the Palace financially. Though cost of living, goods, and services have increased over the past two decades, there has been no increase in funds allocated to the Palace to make up for this difference until now. The Treasury had cut Royal household spending by 14% for the fiscal year 2012/13 as the result of an ‘exhausted’ Civil List reserve, in which it had responded by creating the Sovereign Support Grant, linked to the Crown Estate revenue as well as an additional £1m Royal financial facility. Buckingham Palace could be set to gain revenue at an estimated 15 per cent of the Crown Estate’s $6.6bn offshore wind development portfolio. Whilst the Crown Estate has often times generated £210.7m in surplus income, all of its revenues have to date been paid to the Treasury as directed by a deal reached in 1760 by King George III and Parliament, whereas some of these funds will now be redirected to the Royal household as a ‘support grant’ which now replaces the Civil List source of funding. With the Crown Estate’s profits expected to continue to grow by £100m each year on average over the coming years, analysts estimate that the Palace will reap at least an additional £37.5m from Crown Estate earnings each year through the ‘grant’. Though there is no set outline of how this grant is to be set up, or the amounts capped on both the top and bottom, we have yet to see exactly how this new scheme will work and how it will be carried out as to its predecessor the Civil List.
Each year the Royal Family carries out almost 3,000 official engagements around the United Kingdom and overseas. The Royal Household receives annual funding to meet the costs of official travel through the Department of Transport. The majority of Royal Travel expenditure pays for The Queen’s helicopter, charter and scheduled fix-wing aircraft. A separate grant is voted by Parliament each year, through the Department of Culture, Media and Sport, to cover the upkeep of the Royal residences. These are: Buckingham Palace, St James’s Palace, Clarence House, Marlborough House Mews, the residential and office areas of Kensington Palace, Windsor Castle and the buildings in the Home and Great Parks at Windsor, and Hampton Court Mews and Paddocks, as well as The Queen’s Gallery. The money is used to meet the cost of maintenance and some utilities.
[gap] Privy Purse and Duchy of Lancaster
This is a historical term used to describe income from the Duchy of Lancaster, which is used to meet both official and private expenditure by The Queen. The Duchy of Lancaster is a portfolio of land, property and assets held in trust for the Sovereign in his/her role as Sovereign. It is administered separately from the Crown Estates. Its main purpose is to provide an independent source of income, and is used mainly to pay for official expenditure not met by the Sovereign Support Grant (primarily to meet expenses incurred by other members of the Royal Family).
[gap] The Queen’s personal wealth and income
The Queen’s personal income, derived from her personal investment portfolio and private estates, is used to meet her private expenses. Though many see Her Majesty as wealthy, the majority of her wealth is not amassed in liquid assets that she can withdraw from a bank, hedge-fund, or other liquid investments. Far from being Britain’s wealthiest person, the Queen is ranked 105th on The Sunday Times 2001 Rich List. Simply stated, Her Majesty is limited on cash spending for personal needs. The Queen owns the Balmoral and Sandringham Estates, which were both inherited from her father. Estimates of The Queen’s wealth often mistakenly include items which are held by her as Sovereign on behalf of the nation and are not her private property. These include Royal Palaces, the majority of art treasures from the Royal Collection and the Crown Jewels. The Queen cannot sell these – they must pass to her successor as Sovereign. The various official sources of funding detailed in this section are used entirely to support The Queen’s work as Head of State. This means that the money goes towards a number of resources which enable Her Majesty to carry out her official duties. These include: Royal travel for official engagements in the UK and overseas; the maintenance of Royal residences which are used for formal entertaining and ceremonial events; funding for the work of The Duke of Edinburgh which supports and complements that of The Queen and salaries for employees of the Royal Household who support and administrate the work of Her Majesty as Head of State.
Other than The Queen, The Duke of Edinburgh is the only member of the Royal Family to receive an annual parliamentary allowance to enable him to carry out official public duties. Since 1993, The Queen has repaid the annual parliamentary allowances received by other members of the Royal Family. Most of the allowances received are spent on staff who support their public engagements and correspondence. In 2000, the annual amounts payable to members of the Royal Family (which are set every ten years), were reset at their 1990 levels for the next ten years. The Queen pays tax. In 1992, The Queen and the heir to the throne Prince Charles both volunteered to pay income tax and capital gains tax, and since 1993 her personal income has been taxable as for any other taxpayer. The Queen has always been subject to Value Added Tax and pays local rates.
[gap] Prince Charles, The Prince of Wales’ (Duke of Cornwall) Finances
The Prince of Wales’s life and work are funded predominantly by the Duchy of Cornwall. The Prince of Wales does not receive money from the Civil List, but the Grants-in-Aid paid to The Queen’s Household are used, in part, to support His Royal Highness’s official activities. The Duchy of Cornwall is one of the largest and oldest estates in Britain. It includes around 54,521 hectares in 23 counties, mostly in the South West of England.The Duchy estate was created in 1337 by Edward III for his son and heir, Prince Edward, and its primary function was to provide him and future Princes of Wales with an income from its assets. The Prince became the 24th Duke of Cornwall on The Queen’s accession in 1952. It was traditional for many centuries for families with landed estates to settle the land and other assets in trust, so that each generation could live off the income but was unable to sell the assets. This was done to ensure that the estate, and the income which it provided, survived from generation to generation. The same principle was applied to the Duchy of Cornwall.
Under the 1337 charter, as confirmed by subsequent legislation, The Prince of Wales does not own the Duchy’s capital assets, and is not entitled to the proceeds or profit on their sale, and only receives the annual income which they generate (which is voluntarily subject to income tax). The Duchy’s founding charter included the gift of estates spread throughout England. It also stated that the Duchy should be in the stewardship of the Heir Apparent, to provide the Heir with an income independent of the Sovereign or the State. After 670 years, the Duchy’s land holdings have become more diversified, but the Duchy is still predominantly an agricultural estate. Because of the importance of the beneficiary, the Duchy’s ‘trust provisions’ have over the years, been set out in legislation, with the financial security of the Duchy overseen by HM Treasury. His Royal Highness receives the annual net surplus of the Duchy of Cornwall and chooses to use a large proportion of the income to meet the cost of his public and charitable work. The Prince also uses part of the income to meet the costs of his private life and those of his wife, The Duchess of Cornwall, and his sons, Prince William and Prince Harry.
The Duchy is tax exempt, but The Prince of Wales voluntarily pays income tax at the highest rate on his taxable income from it.He is in effect a trustee, and is not entitled to the proceeds of disposals of assets. The Prince must pass on the estate intact, so that it continues to provide an income from its assets for future Dukes of Cornwall.The landed estate includes agricultural, commercial and residential property. The Duchy also has a financial investment portfolio. It is run on a commercial basis, as prescribed by the parliamentary legislation which governs its activities.
Duchy of Cornwall
The Duchy of Cornwall is a private estate established by Edward III in 1337 to provide independence to his son and heir, Prince Edward. A charter ruled that each future Duke of Cornwall would be the eldest surviving son of the Monarch and heir to the throne. The current Duke of Cornwall, HRH The Prince of Wales, is the longest serving Duke in history. The revenue from his estate is used to fund the public, private and charitable activities of The Duke and his children. The Duchy’s estate extends beyond the geographical boundaries of Cornwall – covering 53,408 hectares of land across 23 counties, mostly in the South West of England. It comprises arable and livestock farms, residential and commercial properties, as well as forests, rivers, quarries, and coastline. Under the guidance of the current Duke of Cornwall, it is the Duchy’s responsibility to manage this estate in a way that is sustainable, financially viable and of meaningful value to the local community.
The Duke’s enduring philosophy is to nurture and improve the estate and pass it on to future Dukes, including The Duke of Cambridge and Prince George, in a stronger and better condition. The Duchy employs more than 150 people, who work across seven offices in London, Bath, Dartmoor, Hereford, Liskeard, Poundbury and The Isles of Scilly, as well as in the Duchy’s own businesses – the Duchy Nursery and the Duchy Holiday Cottages.