This is a public service announcement.
Time and again, people criticising Conservative economic policy cite a few choice examples of Government expenditure to prove that austerity is a political choice. They argue that cuts to social care, to housing, to green subsidies, to local government or to the arts (to give a few examples) are not necessary, but are ideologically driven. They point out that the Government could find the money if they wanted to, but instead choose to use simplistic economic arguments to mask the fact that their ideal is a free market economy with minimal state interference. After all, the argument runs, the state bailed out the banks, it is spending vast sums on a new generation of nuclear power stations, on high speed rail, on the Trident successor.
Such arguments are not without value. Certainly austerity is a political choice (contrast current economic policy with that pursued in the post-war period, where, despite huge debts, we built the NHS). However, all too often, these arguments are marred. Alongside Trident, the banks and HS2, the other self-evident waste of money which is routinely cited is the Monarchy. And that is a problem.
In the financial year 2015-16, the Crown received £40m of taxpayer income. in 2016-17, it will receive £42.8m. This is not small change, and could be put to better use than funding one rich family’s decadent lifestyle.
Except that isn’t true. in 2015-16, the Sovereign Grant was £40m, and that did rise to £42.8m in 2016-17, but this is not taxpayer money. It is granted from the Treasury, but funded from the income of the Crown Estates. These are lands which belong to the Crown (rather than to the monarch as an individual) – which have traditionally been used for the administration of the state. Under the current Sovereign Grant scheme, the crown receives 15% of the crown estates’ income, with the other 85% going into Treasury coffers.
This 15% grant is used to fund the royal household. Now remember, the royal household remains a branch of government. This is not (as it is often presented) money going into the Queen’s pockets. It covers staffing, property maintenance and so on. Spending 15% of income on operational costs would give any business very good profit margins. Or, to look at it another way, the crown pays tax at a rate of 85%! It is of course right that those with the broadest shoulders bear the greatest burdens, but even the most redistributive of us would surely agree that 85% is a pretty high rate of tax.
Controversially, it has been agreed that, from 2017 to 2027, the Sovereign Grant will be increased to 25% of Crown Estates income, in order to fund repairs to Buckingham Palace and other Crown properties. In other words, the crown will only be taxed at 75%, so that it can afford to pay for repairs to its most famous properties, which have been put off due to lack of funds. These properties are used for state functions and are huge tourist attractions. Recent repairs have included replacing roofing (so that priceless historical artefacts are not damaged) and removing asbestos (because “Queen Dies of Asbestos Inhalation” is a headline nobody wants). Such repairs are not decadent, and should not be seen as controversial.
I should add that the Sovereign Grant is only one part of the royal income. Royal ceremonies and security are paid for from the public purse, separately to the Sovereign Grant. The Queens’ personal expenses, meanwhile, are funded by the Duchy of Lancaster and from her personal assets. These income streams are primarily inherited, and will be taxed as capital gains. There is an altogether separate discussion to be had about how inherited wealth and capital gains are taxed in this country, but the over-arching point is this:
The Crown voluntarily surrenders the income from the Crown Estates to the state. The state recognises that the Crown is part of it, and so returns a relatively small part of this money to the Crown. This is not unreasonable. Nor is it unreasonable that the amount of money should be increased to ensure that the Estates’ property is maintained in an appropriate fashion. To cite the increased in the Sovereign Grant as an example of frivolous spending of taxpayer money is misleading, as the money came only from a single tax payer – the same tax payer who is being given some more of it back. It is disingenuous to present this money as further lining the pockets of an individual born into great wealth. It fails to recognise that the increase in the Sovereign Grant is, in effect, a long term investment in buildings of national importance. And it fails to recognise that, even after the increase, the state will still do pretty well out of the Crown.
In other words, there are far better arguments against austerity to be articulated.