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Royal Household spending and accountability

Royal Household1 expenditure last year amounted to £117.3 million, according to a new report by the National Audit Office.

In its report – Royal Household spending and accountability – the NAO analyses the public funding for the Household and the arrangements in place for oversight of this funding. It also outlines the accountability arrangements that Parliament has put in place for the Duchies of Lancaster and Cornwall but does not go into detail about the Duchies, or other private funds, which are outside of the remit of the NAO.

Among its findings the NAO detailed how, in addition to £86.3 million in public money the Royal Household received in the form of the Sovereign Grant,2 it raised £9.8 million from other income. This included property rentals and fees for digital services to other households such as the Privy Purse.3 Funds from the Sovereign Grant Reserve were used to make up the £21.2 million difference between income and expenditure, and the Reserve stood at £10.1 million at the end of March 2023.4

The Royal Household’s biggest outlay is property maintenance of the Occupied Royal Palaces. Of the £117.3 million cost last year, £57.8 million (49%) was spent on maintenance and £27.1 million (23%) on salaries for Royal Household staff who support the work of the King. Most of the maintenance outgoings went on the reservicing of Buckingham Palace (£43.0 million).5 By March 2023, £185.1 million had been spent on this reservicing programme, which is replacing cabling, plumbing and heating throughout the Palace. Separate to the reservicing programme, the Royal Household also has a rolling ten-year plan for maintaining the Occupied Royal Palaces, which currently runs to 2026-27. The Comptroller and Auditor General plans to report separately next year on the Buckingham Palace reservicing programme, which has an approved budget of £369 million.

The Crown Estate – the profits of which determine the Sovereign Grant6 – posted profits of £442.6 million in 2022-23.7 Expected revenue related to offshore windfarms is likely to affect the funding formula calculations for the Sovereign Grant. In the coming years, approximately £1 billion of income per annum is expected from option fees paid by windfarm developers.

Since the Grant is set in relation to The Crown Estate’s profit, the Grant would increase by more than £100 million a year if the formula is not revised.9 The latest review of the Grant by the Royal Trustees is expected to be published in 2023.10 This review will include an assessment of the funding formula, determining what percentage of The Crown Estate’s profit should be used to determine the Grant in coming years.  

Read the full report :  Royal Household spending and accountability

Notes for editors

  1. The Royal Household supports the King and members of the Royal Family in their official duties.
  2. Of the £86.3 million, £51.8 million was intended for core activities and £34.5 million for the reservicing of Buckingham Palace.
  3. Information about the Privy Purse can be found in Figure 1 of the report. The Sovereign Grant Act came into force in April 2012 and sets out the approach to calculating the value of the grant paid by HM Treasury to the Royal Household to support the official duties of the Sovereign and to maintain the Occupied Royal Palaces. HM Treasury is the Royal Household’s sponsoring department and is therefore responsible to Parliament for the Grant. The Grant is included in HM Treasury’s budget. As such, it is responsible for paying the Grant to the Household and ensuring that it complies with all necessary requirements. HM Treasury appoints the Accounting Officer of the Grant, specifies the format of annual report and accounts and has a framework agreement relating to the Grant that sets out the governance and accountability arrangements between HM Treasury and the Royal Household.
  4. The Reserve is where surplus funds are kept for future contingencies.
  5. The Royal Household has a rolling ten-year plan for maintaining the Occupied Royal Palaces. Each year, this is broken down to create an annual works programme funded by the Grant.
  6. In 2017, the Crown Estate’s revenue account profit that should be used to calculate the Grant was increased from 15% to 25% to fund the reservicing of Buckingham Palace.
  7. Under the agreements for lease, The Crown Estate receives an annual option fee from each project developer until they are ready to enter into a lease for the seabed site. The option fee sum was determined by the project developers through an open market process to ensure fair value for seabed rights. Option fees will contribute toward The Crown Estate’s net revenue profit, 100% of which is paid to HM Treasury.
  8. The Crown Estate’s revenue account profit in 2022-23, that is deposited into the government’s general bank account, known as the Consolidated Fund.
  9. Once leases have been signed and construction begins on the new Round 4 offshore windfarms, the Crown Estate’s windfarm-related income may decline. If the Crown Estate’s income falls, it may require another adjustment to the funding formula in the future. However, it is also possible that the Crown Estate’s seabed rights might lead to additional sources of income.
  10. The Trustees are the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse, the last of whom is responsible for the day-to-day operations and management of the Grant.
  11. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
Channel website: https://www.nao.org.uk/

Original article link: https://www.nao.org.uk/press-releases/royal-household-spending-and-accountability/

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