Britain's Welfare Queen

By Malik, Kenan | International New York Times, February 15, 2014 | Go to article overview

Britain's Welfare Queen


Malik, Kenan, International New York Times


What lies behind the British public's surprising willingness to bail out royalty?

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 Pounds 1 million ($1.6 million), from Pounds 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 Pounds 3 million in debt -- a colossal sum, equivalent to more than Pounds 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 Pounds 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 Pounds 37.9 million this year, from Pounds 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. …

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