In a cost of living crisis, headlines suggesting that the King is set for a “£45m pay rise” funded by taxpayers are bound to rankle – but they are misleading.
The monarchy is not funded out of the public purse in the ordinary sense. The money the King receives – the Sovereign Grant – is derived from the Crown Estate. This is a vast portfolio of land that the monarch runs on behalf of the nation – and the nation is getting a pretty good deal. Accounts released yesterday showed £1.1bn net revenue profit, £658.1m more than last year, all of which goes directly to the Treasury. Charles III then receives a 12 per cent share back to pay for staffing, travel and maintenance of Royal palaces, down from 25 per cent in 2021/22. This is quite different to being funded out of general taxation – it would be more accurate to say that the King runs a business he can never sell with a unique corporation tax rate of 88 per cent.
To assess whether this represents value for money it’s necessary to consider the alternatives. The Crown’s bumper year is largely the result of the sale of offshore wind licenses, generating environmental benefits as well as revenue. It is far from clear that the government could have done a better job – indeed when ministers held an auction for financial support contracts for wind farms in 2023 they did not receive a single bid. And as for other private investors, would we really prefer the seabeds to be sold off to foreign investors?
There is little evidence that any other form of government is cheaper. Presidents in France and America, for example, still have vast security details and lavish residences. Assuming a putative British republic did not wish to turn its castles into casinos, their upkeep would still have to be paid for. And here, again, the Royals have proved themselves reliable stewards of our national assets. In a series of National Audit Office reports released this week, the renovation of Buckingham Palace was a rare bright spot in a catalogue of waste and inefficiency. Gareth Davies, head of the NAO, said that this “significant undertaking has been well-handled to date” and praised the “sound planning and project management”. Compare that to MPs’ abject failure to agree a plan to restore the Palace of Westminster, which means the whole, priceless building is at imminent risk of being destroyed.
All this is before you factor in revenue from tourism, merchandise and patronage – which Brand Finance estimates generated close to £1bn last year – and soft power no sun of money could buy. So whatever you think about the mystery and magic of our ancient constitution, there is a solid business case for the monarchy.