The Sovereign Grant Act 2011 (c. 15) is the
Act of the
Parliament of the United Kingdom
The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprema ...
which introduced the Sovereign Grant, the payment which is paid annually to the
monarch
A monarch is a head of stateWebster's II New College DictionarMonarch Houghton Mifflin. Boston. 2001. p. 707. Life tenure, for life or until abdication, and therefore the head of state of a monarchy. A monarch may exercise the highest authority ...
by the
government
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is a ...
in order to fund the monarch's official duties. It was the biggest reform to the
finances of the British royal family since the inception of the
Civil List
A civil list is a list of individuals to whom money is paid by the government, typically for service to the state or as honorary pensions. It is a term especially associated with the United Kingdom and its former colonies of Canada, India, New Zeal ...
in 1760.
Background
In 1760,
King George III
George III (George William Frederick; 4 June 173829 January 1820) was King of Great Britain and of Ireland from 25 October 1760 until the union of the two kingdoms on 1 January 1801, after which he was King of the United Kingdom of Great Br ...
agreed with Parliament that he was no longer to govern in person, and therefore was no longer entitled to income from the
Crown Estate
The Crown Estate is a collection of lands and holdings in the United Kingdom belonging to the British monarch as a corporation sole, making it "the sovereign's public estate", which is neither government property nor part of the monarch's priva ...
, which for 700 years had always been used for the administration of the state. Parliament passed the
Civil List Act 1760 which granted a fixed annual income from the Civil List. The resulting system required the annual state expenditure on the monarchy to be decided by the
Treasury
A treasury is either
*A government department related to finance and taxation, a finance ministry.
*A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or in p ...
and presented to
House of Commons
The House of Commons is the name for the elected lower house of the bicameral parliaments of the United Kingdom and Canada. In both of these countries, the Commons holds much more legislative power than the nominally upper house of parliament. ...
. Prior to abolition, the Civil List was fixed at £7.9 million annually for the decade 2001–2010, the same amount as in 1991, with the reserve being consumed over the decade. In 2011 the Civil List was raised to £13.7 million.
There were four funding sources:
* The Civil List paid by the
Exchequer
In the civil service of the United Kingdom, His Majesty’s Exchequer, or just the Exchequer, is the accounting process of central government and the government's ''current account'' (i.e., money held from taxation and other government reven ...
* The Grant-in-Aid for Royal Travel paid by the
Department for Transport
The Department for Transport (DfT) is a department of His Majesty's Government responsible for the English transport network and a limited number of transport matters in Scotland, Wales and Northern Ireland that have not been devolved. The d ...
* The Grant-in-Aid for Communications and Information paid by the
Department for Culture, Media and Sport
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* The Grant-in-Aid for the Maintenance of the Royal Palaces paid by the Department for Culture, Media and Sport
Legislation
The Act came into force on 1 April 2012, the start of the
financial year
A fiscal year (or financial year, or sometimes budget year) is used in government accounting, which varies between countries, and for budget purposes. It is also used for financial reporting by businesses and other organizations. Laws in many j ...
, and changed the arrangements for the funding of the Queen’s official duties. The Act consolidated all four funding sources into a single payment, called the ''Sovereign Grant''. The current system is intended to be a more permanent arrangement than the previous one, which was reign-specific.
The Sovereign Grant is paid annually by
H.M. Treasury
His Majesty's Treasury (HM Treasury), occasionally referred to as the Exchequer, or more informally the Treasury, is a Departments of the Government of the United Kingdom, department of Government of the United Kingdom, His Majesty's Government ...
at a value indexed as a percentage of the revenues from the
Crown Estate
The Crown Estate is a collection of lands and holdings in the United Kingdom belonging to the British monarch as a corporation sole, making it "the sovereign's public estate", which is neither government property nor part of the monarch's priva ...
and other revenues in the financial year two years earlier.
It is based on an index percentage which was initially set at 15%
and this is reviewed every five years by the Royal Trustees (the
Prime Minister
A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is not ...
, the
Chancellor of the Exchequer
The chancellor of the Exchequer, often abbreviated to chancellor, is a senior minister of the Crown within the Government of the United Kingdom, and head of His Majesty's Treasury. As one of the four Great Offices of State, the Chancellor is ...
and the
Keeper of the Privy Purse
The Keeper of the Privy Purse and Treasurer to the King/Queen (or Financial Secretary to the King/Queen) is responsible for the financial management of the Royal Households of the United Kingdom, Royal Household of the Monarchy of the United Kingd ...
).
Any unspent Sovereign Grant is put into a reserve fund. The level of the Sovereign Grant is protected by law from decreasing as a result of falling Crown Estate revenues. In addition, the legislation requires that the Sovereign Grant shall not rise to such a level that the Reserve Fund becomes more than half the level of annual expenditure.
[ Annual financial accounts are published by the Keeper of the Privy Purse][ and audited by the National Audit Office, making the Sovereign Grant more accountable than its predecessor.] Funding to the Royal Household is treated similarly to funding for other government departments, unlike previous Civil List payments.
Finances
Since its inception, the Sovereign Grant has been rising each year at a rate higher than the rate of inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
. About a third of the grant is used to tackle the backlog in property maintenance at the Royal Palaces. Following the 2016 review of the percentage of the Crown Estate income used to calculate the grant, it was announced that a temporary increase in the Sovereign Grant would be used to fund a £369 million refurbishment of Buckingham Palace
Buckingham Palace () is a London royal residence and the administrative headquarters of the monarch of the United Kingdom. Located in the City of Westminster, the palace is often at the centre of state occasions and royal hospitality. It ...
, subject to parliamentary approval. The trustees recommended that the percentage should rise to 25% for the 10 years during which the work would take place, and that the grant should then be returned to 15% when building work is finished in 2027. This was expected to result in a 66% rise in the grant in 2017–18. The increase in the grant to 25% was approved by Parliament in March 2017. A decrease in the Crown Estate's rental income during the COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
led to the first use of the provision that prevents the value of the Sovereign Grant from falling, with the Treasury committing to make up the shortfall.
The King and the Prince of Wales also receive private income through the Duchy of Lancaster
The Duchy of Lancaster is the private estate of the Monarchy of the United Kingdom, British sovereign as Duke of Lancaster. The principal purpose of the estate is to provide a source of independent income to the sovereign. The estate consists of ...
and Duchy of Cornwall
The Duchy of Cornwall ( kw, Duketh Kernow) is one of two royal duchies in England, the other being the Duchy of Lancaster. The eldest son of the reigning British monarch obtains possession of the duchy and the title of 'Duke of Cornwall' at ...
. The Sovereign Grant only accounts for one part of the total cost of running the monarchy. The Sovereign Grant does not cover the costs of police and military security and of armed services ceremonial duties[ nor does it cover the costs of royal ceremonies or local government costs for royal visits.][
]
Notes
{{Reflist
United Kingdom Acts of Parliament 2011
British monarchy
Monarchy and money