Should Taxpayers Fund the Monarchy in Times of Economic Hardship?

Last week the Public Accounts Committee released a report on the Sovereign Grant paid to the Queen each year calling for the Royal Household to get ‘a much firmer grip’ on its budget; but in times of austerity cuts to almost every governmental department should the tax payer continue to subsidise the Windsor’s at all?

The British Monarchy is not just of traditional value to the United Kingdom, but brings millions to the UK each year through the Crown Estate and tourism. The Crown Estate is the land ‘surrendered’ to the British Government at the beginning of each Monarch’s reign, in return for the their annual salary. Since 2011, the annual profits from the Estate have totalled £240.2 million annually, and with only 15% of that forming the Monarch’s annual salary- the Sovereign Grant- it all adds up for the tax payer. If the Monarchy were to be removed however, the state would most probably lose the Crown Estate along with it; meaning to completely remove the Monarchy would be a bad decision not just for British culture, but economically as well.

Tourism is a massive sector in the UK; accounting for £96 billion of England’s GDP (8.6% of the economy) as of 2009 and employs around 2 million people- 4% of the work force. Much of what makes the UK the 8th biggest tourist destination in the world is our Monarchy. The Tower of London is the most popular UK attraction, with three castles featuring in the top 15. Although it is argued by many that these buildings would still be there if the Monarchy were removed, what draws the 3.5 million North American and 21.5 million European tourists each year is that the history is still very much alive today in Britain- something that would be irreplaceable if the Monarchy were to be removed. It was estimated by consultancy Brand Finance in 2012 that the net value of the Monarchy is £44bn, though the methodology used to draw this conclusion has been questioned by many. This is not to say, however, that the Royal Household’s spending and management is not in need of reform.

In 2012-13 the net expenditure of the Royal Household was £33.3 million, a £2.3 million overspend from their budget, a major argument behind Chairwoman Margaret Hodge’s report appealing for the Household to improve its long term planning and management of the budget. Hodge stated there was ‘huge scope for savings’, as the body managed to escape much of public sector austerity; reducing spending by only 5% in the last six years and maintaining the same staffing levels at a time when many public sector jobs have been cut. Meanwhile, the report praised the Household’s increased income of £11.5 million- an increase of £4.9 million from 2007/08- but said it was not ‘looking after nationally important heritage properties adequately’ as 39% of the Estate was deemed to be under the acceptable condition. Moreover, the PCA argued the Queen could do a lot more to increase her income, for example opening Buckingham Palace for longer than the 78 days a year it is open at the moment to increase the number of tourists and therefore revenue created from the Palace.

The Treasury, meanwhile, is supposed to be overseeing Royal spending but has of yet been inefficient in this capacity. The PAC’s report demands the Treasury to have a more active role in scrutinising spending, offering advice on key challenges for the Household and giving it clear incentives to become a more efficient body. It is hoped the department will also deal with the great transparency issues with the Queen’s personal income as, although the introduction of the Sovereign Grant has improved this, there is still not nearly as much transparency as there is with other public spending. British pressure group Republic argues that until the monarchy’s exemption from the Freedom of Information Act is removed, transparency cannot be achieved. Republic also stated that the ‘MPs on the Commons Public Accounts Committee have missed key issues in their report on Royal funding’. Their ‘Alternative Budget’ estimating the real cost of the Monarchy to the taxpayer is well over £200 million once hidden costs have been taken into account.

Whether the cost of the British Monarchy is the £33.2 million of the Sovereign Grant or Republic’s Alternative Budget of over £200 million, the statistics still suggest that a state funded Monarchy is a viable expense for the taxpayer producing £240.2 million from the Crown State and contributing massively to the tourist industry, even in times of economic hardship.

Contributed by George Waddell

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