LONDON — The British queen is down to
her last pennies. Well, actually, her last millions of pennies.
Last month, the Public Accounts Committee
— Parliament’s watchdog on public spending — published a damning survey of the
state of the royal finances. The queen had spent down her “reserve fund,” a
savings account built up by years of surplus public subsidy, to “a historically
low level” of only £1 million ($1.6 million), from £35.3 million in 2001.
Trying to make sense of the royal
finances is like trying to eat spaghetti with a spoon. Here’s the puzzle: Queen
Elizabeth II is often described, by some measures, as one of the richest people
in the world. Among her private property is Balmoral Castle, her residence in
the Scottish Highlands, which was purchased, together with a 50,000-acre
estate, by Prince Albert for Queen Victoria in 1848. Queen Elizabeth also owns
stud farms, personal art and fine jewelry. According to Forbes magazine, her
personal worth is $500 million.
If the queen is so wealthy, how can she
be strapped for cash? In 2010, it emerged that the queen had even privately
applied to a government fund normally reserved for low-income families to help
with Buckingham Palace’s heating bills. Turning the request down, a government
official commented, “I also feel a bit uneasy about the probable adverse press
coverage if the palace were given a grant at the expense of, say, a hospital.”
Why is the queen reduced to acting as if she lived in public housing?
The short answer is that she does live
in public housing — just in an exceptionally grand manner.
The queen does not own Buckingham
Palace; the nation does. It follows that, wealthy as she is, the queen sees no
reason to pay for the upkeep of the palace, since she lives there by virtue of
her public duties.
Behind this tussle over who pays for
what is the fundamental ambiguity of a parliamentary democracy headed by a
hereditary monarch. This historic anomaly is the key to unraveling the
mysteries of the royal finances. It explains how we can have a queen who is
privately so very rich, yet who publicly pleads poverty.
The modern muddle began in 1760. King
George III found himself £3 million in debt — a colossal sum, equivalent to
more than £500 million in today’s money. To extricate himself, he surrendered
to the government the management of, and revenues from, most of his property.
In return, he received a fixed annual payment, known as the Civil List.
This was, in essence, how the British
government subsidized the royal household for 250 years — until 2012, when
Parliament abolished the Civil List and replaced it with the Sovereign Grant.
Ostensibly, this was to rationalize the royal finances: The Civil List was the
main source of state funding for the royal family, yet it was supplemented by a
host of other grants — to cover palace maintenance, communications and travel
costs. The Royal Yacht Britannia, for instance, was separately funded to the
tune of £11 million a year, until it was retired by Prime Minister Tony Blair
in 1997 as a cost-cutting measure.
The Sovereign Grant was designed to
sweep all that away. Rather than the queen’s receiving the Civil List and a
suite of subsidies, the level of the grant is simply set at a 15 percent cut of
the profits from the Crown Estate. It is a remunerative new arrangement, which
projects an income steadily rising to £37.9 million this year, from £36.1
million for 2013.
Despite its name, the Crown Estate is a
vast property portfolio that belongs to the crown as an embodiment of the
state, and not to the reigning monarch as an individual. Among the assets held
by the nation that the queen enjoys in her role as the sovereign are Buckingham
Palace, Windsor Castle, the world-renowned royal art collection and the Crown
Jewels.
The queen could, if she so desired,
sell Balmoral Castle tomorrow, as it is her private property. But she could not
sell the Crown Jewels; she has no legal title to them.
If the monarchy were abolished
tomorrow, Buckingham Palace and the royal art collection would, as before, be
public property. But the queen would not be obliged — as the humorist Sue
Townsend imagined in her 1992 novel “The Queen and I” — to live in a slum: Her
personal wealth would enable her to keep company with Russian oligarchs and Saudi
royalty indefinitely.
The Sovereign Grant seemed to simplify
things, but it did nothing to resolve the constitutional fudge. Many within the
royal family clearly look upon the Crown Estate as their personal property. And
in directly linking royal income to the estate, the grant appeared to some to
legitimize the monarch’s claim to it.
And there are still hidden subsidies.
The Duchies of Lancaster and Cornwall, for example, are huge property holdings
“held in trust” for the sovereign and the heir to the throne, respectively, and
are distinct from the Crown Estate. Last year, the queen received £12.7 million
from the Duchy of Lancaster, and the Prince of Wales £19.1 million from the
Duchy of Cornwall. And both were exempt from business taxes.
Such “lost revenues,” argues the
anti-monarchy campaign group Republic, should be regarded as state handouts to
the queen. On this basis, Republic estimates the total cost of the monarchy to
the taxpayer is more than £200 million a year.
In the background to such a lavish
public subsidy of the monarchy is the austerity imposed by the government since
2010, a program that has generated considerable popular anger. There is
hostility, too, toward the social privilege of government ministers.
Yet, little of this fury has spilled
over into outrage about royal funding. Fewer than one in five Britons wants a
republic, a figure that has not changed for half a century. In contrast, a poll
last year found that 45 percent of the British public showed “strong support”
for the monarchy, up from 27 percent in 2006.
For royalists, who point to how the
economy benefits from tourism through royal pageantry, the monarchy provides
value for money. And it is better, they say, to have a nonpolitical head of
state who can unite the nation, rather than an elected politician who would
divide it. For some, the very idea that M.P.’s should scrutinize the queen’s
finances verges on impertinence.
Yet the notion of the monarchy as an
apolitical institution is preposterous. Its very existence proclaims that an
accident of birth matters more than the democratic will. If the royalists have
a point, however, it may be this: Their contempt for democracy captures a
public mood that is deeply cynical about politicians, who are seen as venal and
corrupt. Some suggest that when Queen Elizabeth is eventually replaced by the
far less popular Charles, support for the monarchy will plummet. But even when
rage at the Windsors was at its height, in the wake of their cack-handed
response to the death of Princess Diana in 1997, there was little enthusiasm
for a republican alternative.
In the past, reverence for the monarchy
was rooted in a sense of deference and an acceptance of hierarchy. Today,
deference has been replaced by cynicism — but as long as the public despises
politicians and favors the royals, one of the richest families in the world
will continue to live luxuriously at the taxpayers’ expense.
Kenan Malik is a writer, lecturer
and broadcaster, and the author of “From Fatwa to Jihad: The Rushdie Affair and
Its Aftermath.”