Britain’s Welfare Queen

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.

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