The recent birth of wee Prince George has thrust the British monarchy into the spotlight with a renewed interest that has been growing ever since his parents’ marriage in 2011. But with the increase in affection for the Royals comes an increase in scrutiny as well. Who pays for such a posh lifestyle, and more importantly, does the British monarchy actually give anything of value back?
In 1760, King George III gave the British government rights to the rent he collected on all of the property he owned, now known as the Crown Estate. In return, his personal debts, the debts accrued by previous reigning monarchs, and the costs accrued in the act of governing a nation, were all forgiven. He was also awarded an annual grant called the Civil List, which was, in essence, an allowance.
The Civil List was intended for use in paying for the upkeep of the royal household, and for the cost of carrying out the official duties of the Head of State. The Civil List evolved to co-include a Royal Travel and a Royal Palaces grant-in-aid.
This system continued in more or less the same way until 2011, when the Civil List was replaced with the Sovereign Grant Act. The most significant change was that all of the money the Queen received under the Civil List and related grants were consolidated. The Sovereign Grant Act was passed into legislation by the House of Commons, and is subject to an audit each year by the National Audit Office.
Under the Sovereign Grant Act, the Queen receives a percentage of the revenue from the entire Crown Estate. The Crown Estate includes both urban and rural properties across England, Scotland, Ireland, and Wales, and is managed by Crown Estate Commissioners (you didn’t think the Queen went out and collected rent cheques, did you?).
Currently, the Crown Estate is one of the largest landowners in the UK, and is worth approximately $13 billion. The Sovereign Grant Act is currently set at 15% (about $55 million, or a cost of about $1.70 per person in the UK annually), but this amount too, will be reviewed every five years. The remaining 85% of revenue from the Crown Estate goes to the Treasury, not directly to the Queen.
Much of the controversy surrounding the Royal Family and the Sovereign Grant Act is not the actual cost to the individual tax payer, but whether or not the Royal Family should pay capital gains taxes, or if the Crown Estate is in fact ill-gotten gains, and should belong to the Royal Family at all.
Other members of the Royal Family also receive a grant, including HRH The Prince Philip, Duke of Edinburgh (the Queen’s husband), and The Duke and Duchess of Cornwall (Charles and Camilla). The Queen does not pay taxes on her grant, but does voluntarily pay taxes on her private income (also known as The Privy Purse), which is generated through her real estate holdings, including the entire Duchy of Lancaster. She earns about $25 million from these holdings, and uses that money to support the extended family through reimbursement of various other annuities.
Any member of the royal family actually earning a paycheque (i.e. Prince William as a search and rescue helicopter pilot) pays income tax on those earnings.
As Canadians, we do not pay for the Queen in her role as Head of the Commonwealth; we pay only for the duties she performs while in Canada. However, we do pay for the Governor-General and Lieutenant Governors, who represent the Queen on the Federal and Provincial levels. And they can get expensive.
As far as giving back, the royal family generates money mainly through tourism. In 2010, they made $500 million for British tourism, with that number rising steadily thanks in part to the popularity of Prince William and Kate Middleton. New baby Prince George will be a boon to the UK economy, with analysts suggesting his birth will bring in an additional $400 million.
Whether or not this sounds like a good exchange depends on where you stand on all things Royal. For now, the Queen’s face will remain on our money, which she will happily accept back from us.