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Understanding royal finances is challenging at best, and utterly confounding when certain publications feel compelled to push their own narrative, leading the British taxpayer to believe he/she is somehow being shafted. There is no finer example than Buckingham Palace’s recent announcement that it plans to undergo a ten year refurbishment to the tune of £369 million. The long overdue renovations are to be funded by profits from the Crown Estate, and therein lies the confusion. What is the Crown Estate? Who does it belong to, and is the taxpayer being shafted? With tabloid-instigated furor at an all-time high, now seems as good a time as any to answer those very questions, as much of the ire raised is somewhat misplaced and almost certainly misguided.

Who better to explain the cogs and sprockets than a former member of the Household?  Here, I, along with my father, Dickie Arbiter, a one-time press secretary to the Queen, will attempt to offer some clarity.

Buckingham Palace is falling down. Though not exactly crumbling into a heap, it will do unless $461m is spent on renovations over the next ten years. The plan is for miles of aging cables, lead pipes, electrical wiring and boilers to be replaced, many for the first time in 60 years.  The result will be a Palace fit for the 21st Century.

The questions is:  how has it been allowed to fall into such a state of disrepair?  For more than two decades the Monarchy has not received sufficient funding to cover maintenance. The oldest part of Buckingham Palace dates back to 1703, and the newest, the familiar frontage, to 1847.  The electrics haven’t been overhauled since 1949, and the state rooms were last decorated in 1952.  Given that we live in an era in which mobile phones have a shelf life of eighteen months, these upgrades would seem long overdue.

Until 1993 maintenance for all occupied royal palaces – Buckingham, St James’s and Kensington, as well as Windsor Castle – was the responsibility of the British government through its Property Services Agency (PSA).  Subsequently, maintenance was handed over to the Royal Household.  All well and good, however, it was not provided enough funding for the ongoing upkeep.  The 2014-15 Sovereign’s Grant Annual Report allowed only $14.6m for maintenance – far too small an amount for far too great a task.

In order to understand royal funding, one must understand the Crown Estate, an independent real estate business established by an Act of Parliament.  It is from the Estate that the Sovereign Grant is drawn, albeit via the Treasury.  Introduced in 2012-13, the Sovereign Grant Act represented the most dramatic overhaul of the royal finances since the Civil List of 1760. Today, the Queen receives 15% of the Crown Estate profits, through the Sovereign Grant, in order to run the business of monarchy.  The Treasury holds on to the remaining 85% thereby benefitting the nation’s finances.  The Crown Estate does not belong personally to the Queen, nor does it belong to the government.  It is the property of the sitting sovereign, and though property can be sold, bought or mortgaged, the Queen cannot dip into it to do her Christmas shopping.  Were it not owned by the reigning monarch, the land would no doubt be broken up and owned by private entities.  In such a scenario 85% of profits would not be handed over to the Treasury.  In fact the government might be lucky to even see any tax revenue, as funds would be squirreled away to off-shore accounts and tax havens.

While it is the official residence of the British Monarch, Buckingham Palace is essentially a glorified office block with a few private rooms set aside for accommodation.  Each year it plays host to over 90,000 guests by way of State Visits, Investitures, receptions and garden parties.  It is not personally owned by the Queen, but rather held in trust by the Crown.  When the Palace announced that $461m was needed for renovations, the media went into overdrive with headlines screaming, ‘The Queen lives there; she should pay for it!’.  It’s a baseless argument.  Yes, she holds the highest position in the land, and that position requires her to live in the official residence of the British monarch…but it is not her property.  The hundred and fifty-seven year old Palace of Westminster is undergoing a forty-year £7bn restoration.  Are MPs and peers being asked to foot that bill?  No, of course not.  What the stories behind those royal headlines failed to outline in detail is the fact that, in a roundabout way, the Queen is paying for the Buckingham Palace renovations.  Here’s how:

  • As already established, each year the Queen receives 15% of the Crown Estate profits, via the Sovereign Grant (via the Treasury), to fund Windsor PLC. The government holds on to the remaining 85%.
  • The refurbishment of Buckingham Palace will be funded by an increase in the Sovereign Grant of 10%.
  • Under this plan, the Queen will receive 25% of the Crown Estate profits (10% of which will cover the cost of repairs), and the Treasury the remaining 75%.
  • Joe Public’s taxes are not being increased to cover Palace repairs, nor is the Queen getting a pay rise.
  • Therefore we can conclude that profits from one part of the Monarch’s estate are being used to pay for the upkeep of another part of the Monarch’s estate.

In the wake of the 1992 fire at Windsor Castle, Buckingham Palace was opened to the public for several weeks each summer in order to pay for the Castle’s renovation.  It was such a successful venture, that it has since been suggested that the current necessary repairs to Buckingham Palace be paid for in the same manner.  A nice idea, but not quite so simple.  Today, all revenues generated from Palace entry fees and souvenir sales go towards maintaining the Royal Collection, one of the largest and most important art collections in the world.  While it is held in trust by the Queen for her successors and the nation, it, too, is not owned by her as a private individual.  The Collection is comprised of more than a million fine and decorative art objects.  Unlike the Victoria and Albert Museum and the National Gallery, which in 2015-16 received $46.3m and $30.1m in government funding respectively, the Royal Collection receives no government grants, no sponsorship, no donations and no legacies.  It is completely self-funded, and is emblematic of how the modern monarchy has consistently sought ways to fund its own upkeep.  Buckingham Palace is no exception.

The United Kingdom is considered a country of living history.  Each year, tourists flock by the millions to visit galleries, museums, cathedrals, abbeys and royal palaces, as well as to witness world class pageantry.  As home to our head of state, Buckingham Palace is an integral part of our national heritage and identity.  It is our responsibility to see that it is maintained for generations to come.  Unfortunately, preservation comes at a cost.  In this instance, however, the cost isn’t ours to bear.