Isla Campbell on the financial architecture of the modern monarchy, the recurring debate that never quite resolves, and the figures that depend on which figure you start with
Every summer, the Royal Household publishes the Sovereign Grant Report, and every summer, the British press conducts approximately four days of substantive debate about whether the monarchy is good value for money, after which the topic disappears for fifty-one weeks. Building on my earlier dispatches at Bohiney Magazine and The London Prat, I want, today, to write about the constitutional maths that no one in Britain can quite bring themselves to look at directly.
The Sovereign Grant
The Sovereign Grant is the funding mechanism that pays for the official duties of the monarch. It is, in technical terms, calculated as a percentage of the profits of the Crown Estate, with a substantial floor that prevents the figure from falling below a certain level if Crown Estate profits dip. The Crown Estate is, in turn, a substantial portfolio of property, including substantial portions of central London, that is held by the monarch in right of the Crown but whose profits are, by long-standing constitutional arrangement, paid to the Treasury.
According to The Guardian, recent reporting on the most recent Sovereign Grant Report has documented that the figure for the year stood, in the typical case, in the substantial low hundreds of millions of pounds. This figure is, you will note, both genuinely large and, in the context of central government spending, genuinely small. Whether you experience it as one or the other depends, in my experience, almost entirely on what you started by comparing it to.
The Comparison Question
The defenders of the monarchy will, when challenged on the cost, immediately offer a comparison to the cost of running an alternative head of state. They will point out that France’s presidency costs, in real terms, a substantial figure of its own. They will point out that the cost of the monarchy, divided by the population of the United Kingdom, comes out to a figure in the low single-digit pounds per person per year, which is less than the cost of a pint of milk.
The critics of the monarchy will, when challenged, immediately offer a different comparison. They will point out that the figure does not include, by various estimates, a substantial array of indirect costs, including the security operations of the Royalty and Specialist Protection branch of the Metropolitan Police, the tax exemptions that apply to certain royal estates, and the substantial revenue that the Treasury foregoes by not, in the alternative, claiming the entirety of Crown Estate profits.
The Underlying Argument
Both sides are, dear reader, telling the truth. They are using different definitions of cost, in the way that both sides of any meaningful policy debate use different definitions of cost, because the definitions are, in the end, the argument. According to The Evening Standard, recent academic work on royal finances has documented the substantial difficulty of arriving at a single agreed figure for the total taxpayer cost of the monarchy, given the substantial array of separate budget lines on which royal-related expenditure appears.
This difficulty is not, I think, accidental. The constitutional architecture of the monarchy substantially predates the modern accounting framework, and the modern accounting framework has not, in any decisive way, been forced to integrate the royal accounts into its standard categories. This means that the question of what the monarchy actually costs is, in important respects, an under-defined question.
The Capital Maintenance Question
The component of the Sovereign Grant that has, in recent years, drawn the most political attention is the capital maintenance allowance, which funds the substantial renovation work being undertaken at Buckingham Palace. The renovation, which is now into its second decade, is replacing electrical wiring that dates substantially from the 1940s, plumbing that dates substantially from earlier, and a cumulative array of building services that have, by the end of the late Queen’s reign, been substantially overdue for replacement.
The renovation is, in physical terms, necessary. The wiring, by all accounts, is a fire risk. The plumbing leaks. The cumulative cost of the work runs, by the end, into the substantial high hundreds of millions of pounds. The case for the work is, on its own terms, strong. The political optics of asking the public to fund substantial renovation work on a palace that is, in real terms, the private residence of one of the wealthiest families in the country are, however, less straightforward.
What I Have Come to Think
I have written before, in my previous columns on royal finances, that the underlying problem here is that the monarchy is, structurally, a hybrid institution. It is partly a public office. It is partly a family. It is partly an enormous private property portfolio. The accounting categories that the modern state has developed are, structurally, not built to handle this kind of hybrid. The result is that royal accounting is, in important respects, perpetually contested, because the categories on which contestation depends are themselves perpetually contested.
This is, in some sense, the constitutional condition of the British monarchy in 2026. It is an institution that has, for substantial periods of the past century, benefited from the public’s willingness not to look too closely at the maths. The willingness, in my view, is finite. There will, at some point, be a moment when a serious attempt is made to integrate the royal accounts into the standard public-accounting framework. When that happens, a number of things that have, for decades, been politically tolerable will, very suddenly, become politically intolerable.
What This Means
I am not, dear reader, predicting the end of the monarchy. I am predicting, instead, a substantial shift in its financial architecture, in which the various indirect subsidies are progressively brought into a single accounting line, and in which the public is, at that point, substantially more able to see the actual cost. Whether the actual cost, when seen, will lead to public support for substantial reductions, or whether the public will conclude that the cost is in fact reasonable for the institution it produces, is, I think, an open question.
I do not know which way it will go. I am, however, quite sure that the next decade will see substantially more attention to royal accounting than the past decade has, and that the political class will, at some point, have to engage with the question more substantively than it has in living memory.
For more of my dispatches on the institutional life of the modern monarchy, you can find me at my page on The London Prat.
For satirical takes on royal-finances-as-political-question, see The Daily Mash.
SOURCE: https://bohiney.com/
