Sovereign Grant Act 2011

The Sovereign Grant Act 2011 (c. 15) is the Act of the Parliament of the United Kingdom which introduced the Sovereign Grant, the payment which is paid annually to the monarch by the government 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 in 1760.[1]

Sovereign Grant Act 2011
Long titleAn Act to make provision for the honour and dignity of the Crown and the Royal Family; make provision about allowances and pensions under the Civil List Acts of 1837 and 1952; and for connected purposes.
Introduced byJustine Greening and Lord Sassoon
Dates
Royal assent18 October 2011
Commencement1 April 2012
Status: Current legislation
Text of statute as originally enacted
Revised text of statute as amended

Background

In 1760, King George III agreed with Parliament that he was no longer to govern in person, and therefore was no longer entitled to income from the Crown Estate, 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.[2] The resulting system required the annual state expenditure on the monarchy to be decided by the Treasury and presented to House of Commons. 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.[3] In 2011 the Civil List was raised to £13.7 million.[4]

There were four funding sources:

Legislation

The Act came into force on 1 April 2012, the start of the financial year,[5] 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.[6]

The Sovereign Grant is paid annually by H.M. Treasury at a value indexed as a percentage of the revenues from the Crown Estate and other revenues in the financial year two years earlier.[7] It is based on an index percentage which was initially set at 15%[8] and this is reviewed every five years by the Royal Trustees (the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse).

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.[7] Annual financial accounts are published by the Keeper of the Privy Purse[6] and audited by the National Audit Office, making the Sovereign Grant more accountable than its predecessor.[9] 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. 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, subject to parliamentary approval.[10] 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.[11] The increase in the grant to 25% was approved by Parliament in March 2017.[12] A decrease in the Crown Estate's rental income during the COVID-19 pandemic 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.[13]

YearGrant (£m)Annual % increase
2012-1331.0-
2013-1436.1[14]16.5%
2014-1537.9[9]5.0%
2015-1640.0[15]5.5%
2016-1742.8[16]7.0%
2017–1876.1[17]77.8%
2018–1982.2[18]8.0%
2019–2082.4[19]0.0%

The Queen and the Prince of Wales also receive private income through the Duchy of Lancaster and Duchy of Cornwall.[20] The Sovereign Grant only accounts for a small part of the total cost of running the monarchy, which is approximately £300 million annually.[20] The Sovereign Grant does not cover the costs of police and military security and of armed services ceremonial duties.[8] Nor does it cover the costs of royal ceremonies or local government costs for royal visits.[20]

Notes
  1. "Royal funding changes become law". BBC News Online. 18 October 2011.
  2. E. A. Reitan, 'The Civil List in Eighteenth-Century British Politics: Parliamentary Supremacy versus the Independence of the Crown', The Historical Journal Vol. 9, No. 3 (1966), p. 323.
  3. Elena Egawhary (23 June 2010). "How the Civil List is spent". BBC News. Retrieved 30 January 2014.
  4. "Royal Public Finances: Five Years to March 2012" (PDF). www.royal.gov.uk. 7 June 2012. p. 4. Archived from the original (PDF) on July 14, 2014. Retrieved 6 July 2014.
  5. "Sovereign Grant Act 2011 section 15". UK Statute Law Database. Retrieved 1 April 2017.
  6. "Royal finances". The Official Website of the British Monarchy. Archived from the original on February 2, 2014. Retrieved 29 January 2014.
  7. "Determination of the amount of Sovereign Grant". www.legislation.gov.uk. Retrieved 31 January 2014.
  8. "Sovereign Grant Annual Report 2012-13". The Official Website of the British Monarchy. 27 June 2013. Archived from the original on February 2, 2014. Retrieved 29 January 2014.
  9. "Royal overspend prompts call to open palace doors". BBC News. 28 January 2014.
  10. "Buckingham Palace to get £369m refurbishment". BBC News. 18 November 2016.
  11. Caroline Davies (18 November 2016). "Buckingham Palace to undergo 'essential' £370m refurbishment". The Guardian.
  12. "The Sovereign Grant Act 2011 (Change of Percentage) Order 2017". www.legislation.gov.uk. Retrieved 26 April 2018.
  13. Forrest, Adam (25 September 2020). "Queen to receive government 'bailout' to top up income after Crown Estate hit by economic slump". The Independent.
  14. "The Sovereign Grant and Sovereign Grant Reserve Annual Report and Accounts 2012-13" (PDF). Her Majesty's Stationery Office. 27 June 2013. p. 2. Archived from the original (PDF) on February 2, 2014. Retrieved 31 January 2014.
  15. "Queen's income set to rise to £40m next year". BBC News. 26 June 2014.
  16. "Spending Review and Autumn Statement 2015" (PDF). HM Treasury. Retrieved 25 November 2015.
  17. The Sovereign Grant and Sovereign Grant Reserve: Annual Report and Accounts 2016-17 (PDF) (Report). Her Majesty’s Stationery Office. 27 June 2017. p. 2. ISBN 9781474142717.
  18. The Sovereign Grant and Sovereign Grant Reserve: Annual Report and Accounts 2017-18 (PDF) (Report). Her Majesty’s Stationery Office. 27 June 2018. p. 2. ISBN 978-1-5286-0459-8.
  19. The Sovereign Grant and Sovereign Grant Reserve: Annual Report and Accounts 2018-19 (PDF) (Report). HMSO. 24 June 2019. p. 2. ISBN 978-1-5286-1206-7.
  20. Rayner, Gordon (21 Jun 2015). "Queen's finances are safe from cuts for two years". The Telegraph. London. Retrieved 3 July 2015.
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