THE BUSINESS OF MONARCHY NEED FOR REFINANCING THE ROYAL HOUSEHOLD EMERGES

Press, Volume CIX, Issue 31879, 6 January 1969, Page 10

THE BUSINESS OF MONARCHY NEED FOR REFINANCING THE ROYAL HOUSEHOLD EMERGES

(Reprinted from the “Economist” by arrangement) This year the Prince of Wales will come of age. This will result in an increase of over £150,000 in Government spending. However, the Queen’s salary and expense account were fixed in 1952 and have not been modified since, despite inflation and increased costs. This unhappy distinction is shared only by the holders of Britain’s national debt, plus a few other unlucky people living on fixed incomes. There are hints that the palace authorities now want a new deal.

However, the salaries paid to the Queen and other members of the Royal Family are in fact part of a bargain between the monarchy and the State. And over the years this bargain may have brought a financial benefit to the State that more than offsets the royal salaries, and the royal tax exemption—in addition to the real if unmeasurable benefit to the nation of the stabilising and unifying influence caused by the very existence of the monarchy. z The bargain was struck 250 years ago. Then the royal fortunes were at their nadir, yielding no more than £6OOO a year. From then on, the Crown estates were surrendered up to the Government at the beginning of each reign until the end of it, in return for a guaranteed fixed Income—the “civil list.” This practice has continued, reign by reign, ever since, and is now so automatic as to be irrevocable.

£3tn From Estates Today these crown estates yield well over £3m a year to the exchequer. So, at first glance, with inflation now making huge inroads into an income fixed 16 years ago, Queen Elizabeth II seems to have been swindled badly. Her personal “civil list” has been £475.000 since her accession in 1952. Another £40,000 goes to Prince Philip. In addition the Queen gets the revenues from 52,000 acres of (rich land in Yorkshire. Lancashire and Cheshire the Duchy of Lancaster and allowance is made for this income when the civil list is fixed at the beginning of each retan.

The Queen Mother receives: £70,000 a year, and various sums are paid to the other members of the family. But the bargain is not quite as bad as that. The Ministry of Public Buildings and Works spends half a million pounds a year on [maintaining, heating, lighting and repairing Buckingham Palace and Windsor Castle. It employs nearly 200 people at Buckingham and {Kensington Palaces and Windsor Castle. It also maintains the other Royal Palaces.

“Fringe Benefits” This rather arbitrary classification includes St James's, Hampton Court, Holyrood House and Kew, but not some others where no monarch has lived for a long time, like the remains of the Palace of Whitehall, Somerset House, and the Tower of London. Palace maintenance absorbs nearly £lm a year of the revenue from the crown estates. The Ministry of Defence bears the cost of the royal yacht, and the Queen's flight, the squadron of the Royal Air Force that is used by Ministers as well as the

Queen herself. Finally, the Government—or sometimes a Commonwealth one—pays the transport costs of the Queen’s .overseas visits. It also pays for the expensive presents she has to take with her. These “fringe benefits” to the monarchy have built up over time. The first transfer in fact took place at the time of the original swop, when the salaries of various parliamentary officials—whom nobody today would regard as the Queen’s responsibility—were transferred from Crown 1 to government. But a fair slice of these fringe benefits are really simply the cost of having a head of state at all, and would be incurred in any event, with or without the monarchy. Taking into account the civil list, the payments to other members of the Royal Family, and the fringe benefits, and deducting an allowance for normal costs of paying and maintaining a head of state and his establishment. still leaves a fairly comfortable slice of the £3m crown estate income being used to reduce the burden of taxation on Her Majesty'S loyal subjects. But then, unlike her subjects, Her Majesty is exempt from income tax and death duties. An Unknown Figure How much this costs the Government nobody knows, (because nobody—not even (the select committee of the (House of Commons which re(commended the present civil I list—knows how much her | fortune is. True, all the other ! members of the Royal Family pay normal taxes. Even so, dthe Queen’s exemption must II be of considerable value. However, the Queen’s private fortune is not as big as it looks. The contents of ’ the palaces are certainly of 1 immense value. The paintings 1 in Buckingham Palace are probably unique for a private ! collection, thanks mainly to ’ the good taste of the Prince Regent, who added “inter 1 alia” some very beautiful Rembrandts. The royal plate—even ex- ' eluding the coronation regalia —is a monument to official taste, mostly of the periods when, on the whole, official taste could not go far wrong. There is a royal stamp collection worth over £lm. and. of course, a lot of royal Jewellery. But all these glorious possessions have now come to be regarded as official royal property. They go with the Crown.

This is just as well. Had. they been personal possessions. far fewer of them would now belong to Queen | Elizabeth. They would have] gone to Paris with the Duke! of Windsor. As it was. when Edward VIII abdicated, his; youngest brother George VI had to buy the private pro-, [perties from him, but not the! contents of the palaces, nor, of course, the buildings them-' selves. Victoria’s Fortune Nor has much of Queen i Victoria’s considerable for! tune reached the present! Queen. Queen Victoria was rich enough to spend £200,000 ion Osborne (on the Isle of Wight), nearly £300.000 on Sandringham, and another large sum on Balmoral, all three of which were acquired by the Royal Family during Queen Victoria’s reign. This was also the age when ordinary people used to leave money to the sovereign. But; the whole of this fortune was left to her younger children. As Prince of Wales and later as King, Edward VII was usually living above his means. In fact, it is now common for the bulk of the sovereign’s private fortune to go to the younger children. Although the State makes provision—not over-generously—-for the sovereign’s younger children, nothing is granted to their widows or their children. Thus Princess Marina received not a penny direct from the State from the time of her husband’s death during the Second World War until her death this year.

Out of her private capital, however, the Queen manages to maintain her racehorses—and her two private homes, Sandringham and Balmoral, amounting to 47.000 acres altogether. Both houses, properly enough, are maintained out of the Queen's own money. And this spending can be varied to suit the Queen's taste and purse. Public Functions

There is no such flexibility in the operation of the public monarchy itself, the cost of which has increased materially since 1952. Economic crisis or not, there is now a cast iron case for increasing the civil list. Of the Queen’s civil list, £60,000 is regarded as the Privy Purse—her own spending money—in addition to what she gets from the Duchy of Lancaster: £25,000 is earmarked for her to distribute [to such members of the Royal Family as she considers to be in need. The I rest consists of her “expense (account.” Out bf this she pays for all domestic staff at Buckingham Palace and Windsor Castle: all entertaining—banquets, visits and the like —within the Palace: and for all state coaches and horses (60 people work in the Royal Mews for this purpose). The Queen has to pay the

staff of the Lord Chambetlain’s department: this, now that play censorship has been taken out of its hands, is concerned almost entirely with ceremonial. The Ministry of Public Buildings maintains the fabric of the palaces, but the Queen herself is responsible for the upkeep of the contents. For example, two current operations—the inventory and valuation of the contents of Buckingham Palace, and the cleaning of the armour at Windsor—are !her responsibility. Running A Deficit By the end of 1952, George VI was running a deficit of about £30,000 a year. In the Elizabethan euphoria that followed, the civil list was raised from £410,000 to £475,000 a year, and this was when the £40,000 was granted to Prince Philip. The Select Committee reckoned that the palace and other royal staff could not be cut any further.

Since then, however, the total has been cut by 15 per cent. The Queen pays employer’s national insurance contributions, and selective employment tax. But even adding Prince Philips £40,000 to the civil list, the total, in terms of 1952 purchasing power, is now worth only £323,000. This is less than three - quarters the i amount George VI could not manage on, at a time when the real value of Britain's [Gross National Product was [two-thirds of what it is now. | In similar circumstances Queen Juliana of the Netherlands has just had an increase [ —from about half the Queen's ! civil list to 25 per cent, or {nearly £lOO,OOO, above it. and [her consort now gets £7OOO [more than Prince Philip. ! Time Not Apjiiopriate Applying for more money just now would be tactless. It [ would be difficult enough at (any time during a reign, though perhaps the ensuing debate would be better informed if the size of the ■ sovereign's tax-free private fortune were known.

In 1952, the Labour opposition suggested that the civil i list should be fixed at a lower level but reviewed every 10 years. This would have been some protection against inflation, but would have provoked an acrimonious debate every decade. The only long-term solution is for more of the expense of the monarchy to be borne and accounted for year by year by the Government, and less to be left to the sovereign's own discretion. The 1952 civil list removed the “industrial” staff of the palace (plumbers, carpenters. etc.) from the civil list |to the Government. Much [more could follow.

In the short-term, the problem will soon be eased. I Ignoring the revenue from the Duchy of Lancaster, one I member of the Royal Family is protected against inflation. This is the Prince of Wales, who is also the Duke of [Cornwall. Provision For Prince In 1952 it was decided that he should receive one-ninth of the revenue from the Duchy of Cornwall, then running at £90,000 a year, until his 18th birthday. Front then until his 21st birthday he receives £30.000. But from this year he becomes entitled to the whole of the duchy's revenue, which means some £205,000 a year. Most of this now goes to offset the cost of the civil list. I The Government is in fact paying the Queen only about £300,000 a year. Thus the result will be a jump in the Royal Family members’ combined income of some £175,000 a year. Prince Charles pays tax. As a result, out of his extra £175.000 a year, only about £15,000 will actually be available for spending, by the Queen or [anybody else. Therefore the {need for refinancing the (monarchy will re-emerge [before long.