Scotland, the Sovereign Grant & the Crown Estate
There is a lot of complete nonsense being spun in the media today about the alleged refusal of Scotland to contribute to the financial support of the Royal family. Front page splashes on the Times and the Telegraph has been gleefully picked up by broadcasters and others. The population has now been led to believe that Nicola Sturgeon and the Scottish Government are somehow snubbing the Queen and refusing to pay a fair share of the costs of maintaining her in the style to which she is accustomed,
We have been here before.
Last December, the journalist Hamish Macdonnell spun stories in the Daily Mail and the Spectator. I debunked them here.
So what are the facts?
The Crown Estate is public land and the Crown Estate Commissioners a statutory corporation responsible for managing the Crown Estate. The net revenues from the Crown Estate are public revenues which are currently paid to HM Treasury.
The Royal Family is financed by through a Sovereign Grant established under the Sovereign Grant Act 2011. Section 1 of the Act provides that the Grant is paid by the Treasury each year from funds voted by Parliament (the UK Parliament).
The Scottish Government has no responsibility whatsoever to provide any funding for the Royal Family since it is a reserved matter. Scottish taxpayers pay towards the Sovereign Grant in the same way as they contribute to all areas of reserved expenditure.
The sum of money comprising the Grant is calculated by reference to the net surplus revenue paid to the Treasury by the Crown Estate Commissioners. The first step in the calculation (Section 6 of the Act) is to calculate 15% of the revenue in the financial year two years prior.
The money is not paid directly from the net Crown Estate revenues. That would be illegal. The Crown Estate revenues are merely used as a reference point. Other reference points could (and should have) been used.
I suggested at the time the Bill was rushed through Parliament (see here and here) that the profits of the Stilton cheese industry might be a candidate. Ian Davidson MP suggested GDP. George Osborne himself said “I completely accept that I could have brought other mechanisms before the House, but the Crown Estate is a large commercial property company that is run in a pretty conservative way. It is not a bad proxy for how the country and the economy are doing.”
With the proposed devolution of the management and revenues of the Crown Estate in Scotland the net profits remitted to the Treasury will shrink slighty from any given base and thus the 15% will reduce very slightly (Scotland only contributes around 3% of the net revenue).
The UK Parliament and the Treasury are free at any time to alter the formula and the Smith Commission recognised that it might be necessary. Indeed, a statutory review is due in April 2016. The problem they have at the moment is in fact that the Sovereign grant has grown faster than expected due to the London property market and George Osborne and the Royal Trustees are busy negotiating a reduction in the Grant.
The Palace official who briefed the media would, in a more distant age, probably have been taken out and shot. Quite why the Palace wants to pick an entirely unfounded and counter-productive attack on the Scottish Government is not clear.
Meanwhile, confusion reigns at precisely the moment when, with the Scotland Bill being debate in Parliament, we need calm negotiation.
UPDATE 2130
Buckingham Palace has released a statement as follows.
“Sir Alan Reid Keeper of the Privy Purse said today: “Yesterday’s media briefing on the Sovereign Grant report 2014-15 was intended to highlight some of the issues that may arise when the first review of the Sovereign Grant begins in April next year. The comments and observations were about a principle and never intended to be a criticism of Scotland or of the First Minister or to suggest that the First Minister had cast doubt on the continued funding of the Monarchy.
The principle is about what happens if profits from certain Crown Estate assets, such as those in Scotland, are not paid to the Treasury and the impact that may have on the calculation of the Sovereign Grant in future years. This question will form part of next year’s review.
As we made clear at the briefing, Scotland contributes in many ways to the Treasury’s consolidated fund – out of which the Sovereign Grant is paid. We said explicitly that to imply Scotland would not pay for the Monarchy was simply wrong and we accept unreservedly the assurances of the Scottish Government that the Sovereign Grant will not be cut as a result of devolution of the Crown Estate.”
As a land owner in favour of sensible constructive land reform and a monarchist in favour of Scottish independence, I thank you for this blog. The spin is typical of MSM and does no good or credit to this issue in particular, and indeed to Scotland in general..
I note that the BBC is saying it w a royal source which claimed there could be a cut if Crown Estate profits are retained by the Scottish Parliament. Was it a Palace official with or without the the approval of the soveriegn?
Or was it (as I suspect) in actual fact someone like the Crown Estate Commisioner (or one of his minions) smearing to try and win a political advantage during the convoluted devolution negotiations.
In any event it reflects badly on the monarch whose household should be capable of managing her interests in a better manner.
It was Palace officials providing an on the record briefing to journalists. The CEC had no involvement in the story.
Phew! I’m glad to see that at last you regard the Scotland Bill as being a matter for negotiation around the grey areas of the Smith Agreement rather than just telling people they’re wrong.
I would suggest, entirely without a shred of evidence, but based on the belief that HRH is getting worried about her northern territory, that the Royal spin merchants are intent on stirring up concern among monarchists that the dastardly SNP intend to nationalise or otherwise deprive HRH and others of their estates in Scotland.
My reasoning depends on the fact that many of the people I know have fallen, hook, line, and sinker for the notions that the Royal Family is actually a boon to the UK financially and that hereditary and unaccountable positions in society are compatible with a democracy. They twitch whenever their ‘leader’ appears to be under threat.
I would suggest they look at the Republic web site (in addition to this one) for more accurate information on the true financial costs of maintaining the Royal Family and the archaic customs they are associated with (see http://www.republic.org.uk).
Today I’ve been on the IPSO website reading up about their complaints procedures.
It’s always delightful to have a reasoned intervention in a misreported world. Why does no one ever eat their words any more? (Maybe they never did.)
Only hats are eaten now.
I’m in the States, but it certainly isn’t hard to find out where the money to run the Monarchy comes from.
All I did was go to the UK Government’s website and searched for Sovereign Grant. It had a link to the UK Treasury page which gave the history of the Sovereign grant [and its prior incarnations] back to when the Parliament and King George III negotiated the deal which created the Crown Estate 1760, which required that 100% of the annual income from the Estate be paid to the Treasury which would then return 15% [the amount has varied over the centuries] to the Monarch to run the Monarchy.
It also has information on the Royal Duchies of Lancaster and Cornwall which provide for the personal expenses of the Prince of Wales and Queen Elizabeth.
The bottom line according to the UK Treasury page is that the Monarchy doesn’t cost UK taxpayers for anything but some security costs. In fact the Monarchy effectively pays an 85% tax in its income.
Hmm. Not quite. Crown revenues are public revenues. Their origins lie in an age when the Monarch ran the country, paid for HM Navy, HM Diplomatic Service etc. With the advent of parliamentary government, the revenues continued to support such expenditure but under the control of Parliament. The Queen has private sources of income and private property but those are distinct. None of the Royal Family pays 85% income tax.
Andy, if anything this latest media storm in a Royal teacup highlights a number of issues.
1. London has not yet figured out how to politically mitigate the virtual elimination of the three Unionist parties in Scotland.
2. The divergence of Scotland’s finances from the rUK is going to get more byzantine & unworkable even after a liberal watering down of the recommendations from the Smith Commission.
3. The amount of state benefits received by the Royal family throughout & beyond this bitter period of austerity is distasteful & uncomfortable. QEII & clan are clearly living beyond there means, having almost exhausted the £35 million contingency fund. But expect further support of the Royals from the London Establishment & media throughout this UK parliament. This, while there remains a significant Republican sentiment in Scotland.
There are many others but I basically can’t be arsed mentioning them here. I’m too ill. Maybe tomorrow.
Well done again Andy. Light not heat.