What looks on the surface like a routine financial review has, on close examination, surfaced questions about the relationship between Crown and Treasury that nobody in either institution wants to answer in public
By Isla Campbell. Reported with credits to Bohiney Magazine and The London Prat.
The current round of Sovereign Grant negotiations between the Royal Household and HM Treasury, which began in earnest last autumn and is currently in what one Treasury official described to me as, quote, “a sensitive operational phase,” looks on the surface like a routine financial review of the kind that occurs every five years under the terms of the Sovereign Grant Act 2011. On close examination, it is something rather more interesting. It has surfaced questions about the relationship between the Crown and the Treasury that nobody in either institution particularly wants to answer in public, and that almost no one in the Westminster lobby has noticed are being asked.
I have been reporting on the negotiations for four months. I have spoken with seven officials in the Royal Household, four officials at the Treasury, two former Lord Chamberlains, and one constitutional historian who specifically asked not to be named on the grounds that, in his phrasing, “this is the most interesting royal story of the decade and I would prefer my colleagues did not know I was thinking about it.” The pattern that emerges is reasonably clear and substantially under-covered.
What The Negotiations Are Officially About
The negotiations are officially about the percentage of Crown Estate net surplus that should be allocated to the Sovereign Grant for the next funding period. The current percentage, set in 2017 to provide additional funding for the Buckingham Palace renovation, is 25 percent. The Treasury position, articulated through various briefings, has been that the percentage should return to its previous level of 15 percent at the conclusion of the renovation period. The Royal Household position, articulated through more circumspect channels, has been that this would be operationally inadvisable.
The dispute, framed in these terms, is straightforwardly numerical. It involves, in absolute terms, a difference of approximately 47 million pounds per year. The Treasury wants the lower number. The Palace wants the higher number. There is, in standard Treasury-Palace negotiation tradition, a compromise number somewhere between them that everyone will eventually agree to.
For ongoing coverage of the negotiations, see The London Standard, who have been covering them with appropriate seriousness.
What The Negotiations Are Actually About
The negotiations are actually about something larger and more interesting, which is the unstated but operative question of who controls the Crown Estate’s surplus in the first place. The Crown Estate is not, in any meaningful constitutional sense, the Treasury’s property. The Crown Estate is also not, in any operational sense, the personal property of the monarch. The Crown Estate exists in a particular constitutional space that the Sovereign Grant Act 2011, by tying royal funding to a fixed percentage of Crown Estate surplus, somewhat papered over without resolving.
The papering-over has held, broadly, for the past fifteen years. It is, on the available evidence, beginning to fray. The Treasury’s position in the current negotiations rests on the implicit claim that the Treasury has, at the end of the day, the authority to set the percentage at whatever level the Treasury thinks fiscally appropriate. The Palace’s position rests on the implicit counter-claim that the Crown Estate’s surplus is not, in any straightforward sense, the Treasury’s to redirect.
Neither claim has been articulated in public. Both claims are, in the closed conversations I have been able to reconstruct, increasingly explicit on both sides. The question of who is correct is, on careful constitutional analysis, genuinely unsettled.
The 2011 Act Was A Compromise
The Sovereign Grant Act 2011 was, in its drafting, a compromise. The previous arrangement, which separated royal funding into the Civil List and the Grants-in-Aid, had become operationally unworkable for reasons that had nothing to do with constitutional theory and everything to do with the difficulty of forecasting royal expenditure across multi-year periods. The 2011 Act simplified the arrangement by tying the Sovereign Grant to a percentage of Crown Estate surplus.
The simplification was, on its specific operational merits, defensible. The simplification did, however, embed a particular constitutional fiction. The fiction was that the percentage could be adjusted by the Treasury, with parliamentary approval, in response to fiscal circumstances. The fiction was widely understood at the time to be operationally convenient. The fiction was not widely understood to be substantively unsupported.
It is, on careful reading of the relevant constitutional law, substantively unsupported. The Treasury’s authority to adjust the percentage rests on the Sovereign Grant Act itself, which Parliament passed and which Parliament could, in principle, amend. The Treasury’s authority does not rest on any underlying claim to the Crown Estate’s surplus. The Crown Estate’s surplus, in constitutional terms, is the property of the Crown, managed by Crown Estate Commissioners under arrangements that are themselves the product of nineteenth-century compromise.
What This Has Produced
What the current negotiations have produced, in operational practice, is the Palace’s quiet but increasingly insistent reminder to the Treasury that the constitutional fiction is, in fact, a fiction. The reminders are not being delivered in public. They are being delivered in the closed channels through which Palace-Treasury negotiations actually occur. The Treasury is, by every account I have been able to obtain, somewhat surprised by the firmness of the reminders.
One Treasury official, in our conversation last month, said, “The previous rounds of these negotiations were fundamentally administrative. The current round is something else. We are being asked to consider questions that we have not, in operational terms, considered for a long time.” The official declined to elaborate further. I did not press, partly because I think the official did not want to be quoted on the elaboration and partly because the elaboration would, I suspect, have been rather more interesting than the rest of his briefing.
The Constitutional Stakes
The constitutional stakes of the negotiations are, in some honest accounting, substantially larger than the 47 million pounds at issue. The stakes involve the question of how the relationship between Crown and Treasury is, in the current constitutional moment, actually structured. The relationship was, for most of the twentieth century, a settled matter governed by accumulated convention. The settlement has, across the past fifty years, gradually eroded. The current negotiations are surfacing the erosion in a way that the previous administrative routine had successfully obscured.
What erosion looks like, in this context, is the steady drift of operational authority from the Crown to the Treasury without any corresponding constitutional reform. The drift has produced, over decades, a Treasury that increasingly behaves as though it controls the Crown Estate’s surplus, and a Crown that has, until recently, declined to publicly contest the behaviour. The current Palace position appears to reflect a calculation that further drift, if not contested, will become substantively irreversible.
For comparable analysis of constitutional drift, see ongoing coverage at City A.M..
What Will Happen Next
What will happen next, on the basis of the conversations I have had, is the standard outcome of Palace-Treasury disputes: a compromise figure that allows both sides to claim partial victory, accompanied by no public acknowledgment of the underlying constitutional question that the dispute has surfaced. The compromise will, on present trajectories, settle the percentage at somewhere between 17 and 19 percent. Neither institution will publicly state what the dispute was actually about.
The constitutional question will, accordingly, remain unanswered. It will, on present trajectories, surface again at the next round of negotiations in 2031. By then, the underlying drift will have advanced further. The conversation, when it next occurs, will be conducted under circumstances that are, in terms of the relative bargaining position of the two institutions, somewhat less favourable to the Crown than the current circumstances.
Why This Story Is Not Being Told
The reason this story is not being told in the mainstream royal coverage is that royal coverage, as a genre, operates principally through the social rather than the constitutional channels of access. Royal correspondents who report on these matters depend on relationships with Palace press operations whose explicit preference is that the constitutional dimension of the negotiations not be emphasised. The correspondents accordingly do not emphasise it. The Westminster lobby, which would in principle be interested in the constitutional dimension, does not have the access to the Palace negotiations that would allow them to report on it independently.
The result is a structural under-coverage of what is, on the available evidence, the most interesting constitutional development in the Crown-Treasury relationship in a generation. I have used the access of a correspondent who decided that the long-term value of telling the story exceeds the long-term cost of slightly less convenient access in subsequent rounds. I will, I suspect, find out in the coming weeks whether my colleagues at other publications agree. More from Isla Campbell.
Related at The Daily Mash.
SOURCE: https://bohiney.com/sovereign-grant-quietly-constitutional/
