‘The way the Windsors got their millions is a Royal RIP-OFF more in line with Henry VIII than a modern democracy,’ writes author and former government minister NORMAN BAKER
- Author has led the way holding the Royal Family to account over huge wealth
- But they ‘use the tax system to their advantage’ and ‘evade awkward questions’
- Read here: Charles cant hide behind aides. His fingerprints are all over this
It is a curious thing that our Royal Family was effectively bankrupt in 1760 when George III came to the throne, so much so that did a deal with Parliament to hand over Crown lands in return for an annual grant known as the Civil List.
Yet today, the Windsors are fabulously wealthy in their own right, with every senior member worth at least 20 million. One recent calculation put King Charles’s wealth at up to 480 million.
You have to ask how such a transformation came to pass.
There was a big hint recently when The Mail on Sunday revealed that the whole of Queen Elizabeth’s estate had been bequeathed to her son, King Charles, without a penny of tax being paid. Uniquely, the monarch does not pay death duties.
And how much money was involved? Even back in 2001 The MoS calculated that the Queen was worth 1.15 billion, almost certainly an underestimate then, let alone now. Her stamp collection alone was put at 100 million. It is a safe bet to assume that what she bequeathed to Charles will have increased substantially.
At any rate, we can assume that the latest Monarch-to-Monarch transfer of wealth is a considerable loss to the exchequer.
So, just how much money have the Windsors accumulated?
Exact figures are hard to come by and no wonder: the Royal Family likes it that way. At every turn they have used the tax system to their advantage and a culture of secrecy to prevent awkward questions.
The highly unusual way they treat legacies is a good example.
Wills are public documents, as everyone knows. Indeed, they have always been open for inspection in this country as an essential safeguard to prevent theft and malpractice.
But uniquely the royals have secured an exemption meaning that, since 1911, their wills have been hidden from the public.
Royal wills are locked up in a metal safe behind an iron cage in Somerset House. And while over the years the scope of the Freedom of Information Act has been generally been extended, allowing enquiries about a greater range of public bodies, secrecy about the royals has gone in the opposite direction. Uniquely.
After pressure from Charles, the supply of information has dried up to a dribble.
The National Archives are releasing ever more of our historical documents as the years go by, and from earlier and earlier.
The Duchy of Lancaster, including the Whitewell Estate in the Forest of Bowland, is owned by the monarchy. It was passed directly from the late Queen to King Charles with no tax paid
But not royal ones. When I visited Kew, I found there were 3,629 closed files on the Royal Family. Some are closed for 100 years.
Worse, some files, especially those containing embarrassing financial information, are kept in the private royal archives in Windsor where they will disappear into a black hole, perhaps forever.
Where has all the Windsors money come from? The simple answer is that it all originates from the public purse, either directly or indirectly through unique tax breaks, then augmented by investments (again not properly taxed).
Take Balmoral Castle and Sandringham House, for example. Prince Albert had gone to the government, cap in hand, to say the Civil List the public subsidy in place since 1760 – was insufficient to cover royal duties.
But that was not true. When Parliament handed over more money, it was instead used to buy these two private properties, plus Osborne House, a Palladian mansion on the Isle of Wight.
Then there are the fabulously beneficial tax breaks. Unlike everyone else in the country, monarchs are exempt from death duties. So nothing was paid on the estimated 70 million left by the Queen Mother. (And where did that come from? Not winnings on the horses).
And nothing has been paid on the vast legacy, including private property, from the Queen to Charles. The cash-strapped Treasury is being deprived of millions by possibly the richest family in the country. Between 1952 and 1993 the Queen paid no income tax or corporation tax, and no income dividend tax.
In 2001, statisticians from Barclays Capital calculated that the 2m stock investment made by the Queen in 1951 would, 50 years later, be worth 1.4 billion. If tax had been paid, the residual figure would have been less than 300 million almost a billion pounds lost to the public purse from this one source alone.
2012: Royal Gravy Train Kicks In
But it was from 2012 that the royal gravy train really picked up speed. Because this was the year the Sovereign Grant Act came into force, sweeping away the long-established Civil List and replacing it with a generous new source of public funding.
The figures speak for themselves. Between 2001 and 2011, the old Civil List had been set at 7.9 million annually. In the most recent financial year, the Sovereign Grant payout to the Royal Family reached a staggering 86.3 million.
And the annual amount can only ever stay the same or go up. It can never go down. The Sovereign Grant Act overturned a settled way of doing things that had lasted more than 250 years.
In 1760, George III did a deal with the government: he would surrender land across Britain to the nation in return for money from the government to support him and his lifestyle.
As part of the deal the government would take over responsibility for funding the Armed Forces, the secret service, the judiciary and other public functions. Over the years, however, some Royals have looked at the performance of its former land and property, which is today known as the Crown Estates.
They have seen it prosper and have started to regret George III’s arrangement. If only the clock could be turned back
Royal wills are locked up in a metal safe behind an iron cage at Somerset House, London
The Duchy of Cornwall even owns the Oval, a test match venue and home to Surrey
Successive governments of all colours had resisted this suggestion, until former coalition Chancellor George Osborne disastrously agreed to re-establish the connection.
Now, 25 per cent of the profits from the Crown Estates go straight into the royal coffers.
Of course, if Charles really wants to recreate the position before 1760, that would require the monarch once again to personally fund the salaries and pensions of Ministers, judges and civil servants, and the costs of the Armed Forces and secret services, too.
It was to lose that heavy burden that George III agreed to a new arrangement.
But the current agreement concerns only in the beneficial side of that equation the one that that would enrich the Royals, not the one that would entail liabilities.
And what a pay day it was. As the Crown Estates holds the rights to the seabeds around Britain, the explosion in offshore wind, the biggest offshore windpower development in the world, is giving the royals a massive windfall, billions that before 2012 would have gone into the Treasury to help pay for schools, hospitals and defence of the realm.
The royals also benefit from what in effect are royal slush funds: the Duchies of Lancaster and Cornwall. The only reason they were not handed over to the state in 1760 is because they were basically worthless.
Lancaster was worth less than 20 at the time. Now they are hugely profitable estates, covering large swaths of the country. The Duchy of Cornwall even owns the Oval cricket ground extra cover for Charles to hit the taxpayer for six.
The royals are at pains to say these estates are ‘private’, yet in the past they have been classified as government departments. There is in fact still a minister for the Duchy of Lancaster. And if they are private, how come they are exempt from corporation tax, unlike any other private estate?
When it comes to royal money, secrecy is king.
The Royals are not cheap to run. Besides the ballooning Sovereign Grant, they demand expensive security, even for minor Royals whom most people have barely heard of, costing the taxpayer an estimated further 200 million a year.
Then there are the official properties – way in excess of what is needed to sustain a constitutional monarchy.
The State supports not just Buckingham Palace but also St James’s Palace, Clarence House, Marlborough House Mews, Kensington Palace, Windsor Castle, Frogmore Cottage and Hampton Court Mews, to name but a few. In total, the taxpayer pays for more than 100 Royal buildings.
NORMAN BAKER: In fairness to Charles, he appears keen to rein in royal expenditure, having ordered non-working Windsors, such as Andrew, to live more prudently
Meanwhile, the public purse funds the whole sprawling network of 99 Lords Lieutenant (not to mention hundreds more deputies) who act as the King’s personal representatives.
In fairness to Charles, he appears keen to rein in royal expenditure, having ordered non-working Windsors, such as Andrew, to either live more prudently or earn some money of their own.
Yet this is no more than scratching the surface of his rather medieval arrangements in which the State should provide him with copious amounts of public money, free from taxation, with no questions asked.
Its a royal rip-off more in line with the practices of his ancestor Henry VIII than a modern democracy.
Norman Baker is a former minister and MP, and a serving Privy Counsellor. He is author of And What Do You Do? – What The Royal Family Doesnt Want You To Know published by Biteback, 10.99