Sovereign Grant Act: frequently asked questions relating to the Act and on general issues
Quick links to the main sections of the FAQ:
What is the purpose of the Sovereign Grant?
- Reform of arrangements for supporting The Queen’s official duties.
- A new consolidated grant rounding together the Civil List, Royal Palaces and Royal Travel grants-in-aid. It is intended that future funding will be set as a fraction of The Crown Estate revenue and paid through the annual Treasury Estimates process, and subject to full National Audit Office audit.
- The Sovereign Grant will not support The Queen’s private activities as She has her own private income too.
What is the Civil List?
- The Civil List is the funding currently provided by Parliament to meet the official expenses of The Queen’s Household, so that The Queen can carry out Her role as Head of State and Head of the Commonwealth.
What are the “grants-in-aid”?
- Grant-in-aid for Royal Travel: The Royal Household receives annual funding to meet the costs of official travel through the Department of Transport.
- Grant-in-aid for the maintenance of the Royal Palaces: The Royal Household receives annual funding for the costs of maintaining Royal residences through the Department for Culture, Media and Sport. This grant also covers expenditure on communication and information.
- These grants will be paid for the last time in 2011-12.
Why the change of the present system and who requested the change?
- As the current arrangements are now 40 years old, it was important to take a fresh look to see if improvements in the current funding arrangements can be made, and to put any new proposals to the House of Commons.
What is the Queen expected to pay for out of the Sovereign Grant?
- The Grant is to enable The Queen to discharge her duties as Head of State. i.e it meets the central staff costs and running expenses of Her Majesty’s official Household – such things as official receptions, investitures, garden parties and so on. It will also cover the maintenance of the Royal Palaces in England and the cost of travel to carry out royal engagements such as opening buildings and other royal visits.
Is it just the Queen who will receive this Grant or will others in the Royal Family be covered by the Sovereign Grant?
- The new Sovereign Grant will provide support for The Queen in Her official duties as Head of State.
What about the Duke of Edinburgh?
- A Parliamentary annuity for HRH The Prince Philip, Duke of Edinburgh will continue. This allowance is to meet official expenses incurred in carrying out his public duties in support of The Queen.
What about the Duke of York and other members of the Royal Family?
- The payments of Parliamentary Annuities for The Duke of York, The Earl of Wessex, The Princess Royal, and those for The Duke of Gloucester, Duke of Kent and Princess Alexandra will all cease.
- Since 1975 the annuities for The Dukes of Gloucester and Kent and Princess Alexandra, and since 1993 for the others, these allowances have been reimbursed to the Exchequer by The Queen.
- So the net effect of this alteration will be no financial change – it just tidies things up.
Where is the money for the Sovereign Grant coming from?
- Sovereign Grant is to be paid each year through the Treasury Estimate, which is the process whereby departments seek Parliament’s approval of resources>
- While the amount of the Grant will be linked to the profits of the Crown Estate, those profits will continue to be paid in to the Exchequer; they are not to be hypothecated. Setting the Grant at a percentage of profits of the Crown Estate will help to put in place a durable and transparent framework.
Who will be keeping an eye on Royal Household expenditure?
- The Keeper of the Privy Purse must keep proper accounting records relating to Royal Household expenditure. The Keeper will prepare a statement of accounts relating to relevant resources used for a financial year, and give a copy of the statement to the Comptroller and Auditor General.
- The Comptroller and Auditor General will examine, certify and report on the statement of accounts, and give a copy of the report and statement to the Treasury.
- The Treasury will lay a copy of the report and statement of accounts before Parliament, and give a copy of the report and statement to the Royal Trustees.
- The Comptroller and Auditor General will have the power to carry out value for money examinations of Royal Household expenditure.
Civil List Audit Act 1816. Why are you changing the audit arrangements after nearly 200 years?
- The new arrangements provide full transparency and accountability to Parliament through audit by the public auditor, the Comptroller and Auditor General.
Will legislation be required to allow NAO audit?
- The Sovereign Grant Act contains necessary powers.
Will there be PAC hearings on Sovereign Grant?
- Yes, the Royal Household have agreed that from 2012 Sovereign Grant expenditure will be subject to the same audit scrutiny as other government expenditure, through the National Audit Office and the Public Accounts Committee.
Determination and review of the Sovereign Grant
How will the grant be calculated, and how frequently will it be paid?
- Normally the size of the Sovereign Grant for a given year will be equal to a prescribed proportion (initially 15%) of The Crown Estate’s surplus revenue in the financial year two years prior. This means that the grant can be set firmly at the beginning of each financial year. The grant will be paid annually.
How will you know how much to pay?
- The Crown Estate’s audited accounts for 2011-12 will be published in summer 2012. The Royal Trustees (the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse) will then publish a formal report recommending the amount of the Sovereign Grant for 2013-14 based on the formula mentioned above.
What if you give The Queen too much money?
- If the whole of the Sovereign Grant is not spent in a given year, the surplus will be paid into a “Reserve Fund”, controlled by the Royal Trustees.
What if you give The Queen too little money?
- If the Sovereign Grant in a given year proves insufficient, the shortfall can be met with monies from the “Reserve Fund”.
Does this mean The Queen can build up a large Reserve Fund?
- No. The amount that may accumulate in the Reserve Fund is capped at “about 50%” of the Sovereign Grant value. In order to keep to this level, the Royal Trustees have the power to stipulate a lower level of Sovereign Grant to be paid to the Royal Household than would otherwise have been the case.
How would this work?
- If in one particular year (say in 2014-15) the value of the Reserve Fund was in excess of 50% of the value of the Sovereign Grant in that year, the Royal Trustees should reduce the 2016-17 Sovereign Grant by an appropriate amount to bring the Reserve back to an acceptable level.
What will happen to any surplus revenues each year?
- Any monies left will be transferred to the reserve fund.
What happens if that surplus revenue builds up to a very large sum as with civil list in previous years?
- The Royal Trustees must set the sovereign grant to prevent the revenue fund remaining above 50%.
How often will the amount of the grant be reviewed?
What happens if the percentage is to increase or decrease?
- If the Royal Trustees recommend an increase, a Statutory Instrument will be laid for approval by affirmative resolution in the House of Commons.
- If the Royal Trustees recommend a reduction, the Statutory Instrument will be subject to negative resolution in the House of Commons.
Duchy of Cornwall
What is the Duchy of Cornwall?
- The Duchy of Cornwall is a landed estate which was created by Charter in 1337 by Edward III for his son and heir, Prince Edward (later known as the Black Prince), and its primary function was to provide him and future eldest sons of the sovereign with an income from its assets.
- The estate comprises primarily agricultural, commercial and residential property, in addition to which the Duchy has a portfolio of financial investments. The Duchy consists of around 53,600 hectares of land in 23 counties, mostly in the South West of England.
How does the Act affect the Duchy of Cornwall?
- It allows a grant to be paid to heirs to the throne who are not Dukes of Cornwall to put them in a similar financial position as if they were Dukes of Cornwall. This means that in future daughters of the monarch, as well as younger sons, could benefit.
- If the heir is not the Duke of Cornwall and is over 18, the heir would be given a grant based on Duchy revenues. The Monarch would receive the Duchy revenues, and the Sovereign Grant would be reduced by an equal amount. In effect, the heir would receive the Duchy income.
- If the Duke of Cornwall is a minor, 90% of the revenues of the Duchy are received by would go to the monarch and the Sovereign Grant would be reduced accordingly.
The Sovereign Grant is replacing grant in aid for the Royal Palaces, what is this?
- The Occupied Royal Palaces are held in trust for the nation by The Queen as Sovereign. Their maintenance and upkeep is one of the expenses met by the Government in return for the surrender by the Sovereign of the Hereditary Revenues of the Crown (mainly the profit from The Crown Estate.
What are the Occupied Royal Palaces?
- Buckingham Palace
- St James’s Palace, Clarence House and Marlborough House Mews
- The residential and office areas of Kensington Palace
- The Royal Mews and Royal Paddocks at Hampton Court, and
- Windsor Castle and buildings in the Home and Great Parks at Windsor.
Will the Sovereign Grant make any difference to how the grant in aid operates or will the processes remain the same?
- The grant in aid for the maintenance of the Palaces will no longer be paid to the Royal Household separately by DCMS. The unitary sovereign grant will allow the Royal Household to set its own priorities and thus generate economies.
Questions of general interest
The Sovereign Grant is replacing the Royal Travel Grant-in-aid - What is this?
- The Royal Travel Grant-in-aid is the annual funding provided by the Department for Transport to meet the costs of official royal travel. For 2011-12 the budget was £7 million.
What is meant by “official royal travel”?
“Official royal travel” means:
- Travel by air and rail by members of the Royal Family in pursuance of their Royal functions.
- Travel by air and rail by senior members of the Royal Family between official residences.
- Travel by air and rail by staff of the Royal Households where the journeys are undertaken directly in connection with the Royal functions of Members of the Royal Family.
What doesn’t the Royal Travel budget cover?
- It doesn’t cover official travel by car. Official travel by car for other Members of the Royal Family will be paid from the Sovereign Grant or individual households.
Will the Sovereign Grant make any difference to how the grant in aid operated or will the processes remain the same?
- The unitary Sovereign Grant will allow the Royal Household to set its own priorities and thus generate economies.
How is the mode of travel decided?
- Value for money
- Length of journey
- Transport which is consistent with the requirement and dignity of occasion taking into account whether the aircraft landing site is in the public eye
- Which represents the most effective use of the Royal Family’s time
- And which minimises disruption to others.
What is the current position relating to the Royal Train?
- A review of the Royal Train about 8 years ago concluded that it should continue to be used as an integral part of Royal Travel but that the Royal Household and Department for Transport should actively monitor costs to ensure it is run and maintained in the most cost effective manner possible.
- During the thirteen years of the travel grant-in-aid (up to 2009-10), costs have reduced by 49% in real terms, through initiatives such as the nationalisation of the coach fleet and review of costs with the railway companies.
- Members of the Royal Household also make use scheduled rail services where appropriate.
How much does the Royal Train cost?
- The Royal Train cost £1m in 2009-10.
- It was used for 19 journeys, with an average distance of 751 miles per journey. During the journeys a total of 20 nights were spent on the Royal Train.
Will the new funding arrangements change the tax position of The Queen and other Members of the Royal Family?
- There is no change to the current tax arrangements for The Queen, The Duke of Cornwall, the Duke of Edinburgh or any other Member of the Royal Family.
- The Crown is not liable to pay tax unless specifically required to do so by an Act of Parliament, and this exemption also applies to the income from the Duchy of Cornwall.
- Since 1993, The Queen and the Prince of Wales have paid tax voluntarily under arrangements agreed with the Government. This is set out in a Memorandum of Understanding on Royal Taxation, attached to a Report of the Royal Trustees published on 11th February 1993 (HC464).
Will The Queen pay tax on the Sovereign Grant?
- No. The Queen is not liable to pay tax. In any event, The Sovereign Grant covers official expenditure only and under the arrangements in the Memorandum tax would not be due.
Does The Queen pay income tax on Her other income?
- Tax is paid voluntarily on all Her private sources of income. Tax is also paid on The Queen’s Privy Purse income (which includes income received from the Duchy of Lancaster) to the extent that it is not used for official purposes.
What about income tax paid by the Prince of Wales?
- As above, The Prince of Wales similarly pays tax voluntarily on income from the Duchy of Cornwall which is not used to meet expenditure in connection with official duties.
What about other members of the Royal Family?
- Other members of the Royal Family are fully liable to tax in the normal way.
- The Duke of Edinburgh would be liable to pay tax on any part of the annuity that is not used wholly, exclusively and necessarily in the performance of his official duties. However, that does not arise as the whole of the annuity is used for official purposes.
Why is the Crown Estate providing the grant?
- The new Sovereign Grant is to be linked to the surplus revenue (profit) of The Crown Estate. It is not paid from the Crown Estate. The Crown Estate is the property of the Sovereign “in right of the Crown”, though its revenue is surrendered to the Exchequer in return for government support. This exchange has been made on the accession of each Sovereign since George III in 1760.
What if Crown Estate earnings dip as in 2009-10, or, if Crown Estate earnings escalate as offshore wind business develops?
- The rules set out in section 6 of the Sovereign Grant Act provide safeguards. They define lower and upper limits to ensure neither too low or too high a grant is issued.
Will the Sovereign Grant go straight to the Palace from the Crown Estate?
- No. The Crown Estate’s earnings will continue to be remitted directly to the Exchequer as now. They will not be hypothecated to the Royal Household.
Why no breakdown of security costs provided given this represents a major cost for the taxpayer?
- Disclosure of such information could compromise the integrity of these arrangements and affect the security of individuals protected. It is therefore long established policy not to comment upon the protective security arrangements and their related costs for members of the Royal Family or their residences.
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