It’s been widely reported that the Queen got a £6 million pay rise this week. In these straightened times of austerity, many have criticised the government for what seems to be a selective approach to managing the public finances.
But when it comes to the Queen’s finances, it’s not quite so simple.
Where does the Queen get her money?
The Queen owns the Crown Estate – which is the collective term for all the land and properties that belong to the monarch. The Estate is the ultimate source of her income, but it’s up to the Treasury to decide how much she can access.
The map below shows how the Estate’s assets – from castles, to forests, to offshore wind farms – are scattered throughout the country.
Since 1961, the Crown Estate has been a “statutory corporation”. Although the Queen legally owns the assets of the Crown Estate, they are not her personal property. She has no powers of management or control over them.
The Crown Estate is a business. All its profits go straight to the Treasury. The Treasury gives the Queen some of the money back in the form of the Sovereign Grant.
How does the Treasury decide what to pay the Queen?
The exact amount that the Queen gets from the Sovereign Grant changes each year because it depends on how much profit the Crown Estate makes.
The law says that the Queen should get a Grant equal to 15 per cent of the Crown Estate’s profits from two years previously.
Two years ago, the Crown Estate made a profit of £285.1 million. So the Grant for the financial year 2016-17 was 15 per cent of that figure – i.e. £42.8 million.
That’s a £2.1 million increase on the Sovereign Grant for 2015-16. It went up because the Crown Estate’s profits were higher two years ago.
In autumn last year, the government announced that it would change the way the Sovereign Grant is calculated in order to fund “essential” repairs to Buckingham Palace.
From this year (2017-18), the Sovereign Grant will equal 25 per cent of the Crown Estate’s profits, rather than 15 per cent. That means the Queen will get £76.1 million from the Sovereign Grant this year. It’s a massive increase.
But officials say that without renovations to Buckingham Palace, it risks “catastrophic building failure”. The work will replace the Palace’s 33-year-old boilers and 60-year-old electrics.
Is this the fruit of the magic money tree?
Not really. The Queen’s income goes straight to the Treasury. She gets only some of it back in the form of the Sovereign Grant.
The £6 million pay rise reported this week comes from the Crown Estate’s increased profits two years ago. Because of the way the Sovereign Grant is calculated, the benefit is only now trickling through.
The amount of money the Queen gets is set out in law. That was increased in 2016, but only to carry out essential maintenance to a palace that hasn’t been properly renovated in decades.