Features » September 30, 2013
The True Jewel in the British Crown? Tax-Free Benefits
There’s one British family who won’t have to worry about austerity measures.
Because of this refusal to hold the royal family accountable even in the midst of a financial crisis, the monarchs become an emblem of entitlement and privilege that’s impervious to all change—and incapable of flexibility.
Since coming to power in 2010, the United Kingdom's Conservative-Liberal coalition has enacted a ruthless policy of economic hack and slash; by targeting state spending and social welfare, they have increased financial instability for some of the country’s poorest and most vulnerable citizens.
A beleaguered Labour opposition recently pointed out that working people are earning an average of £1,350 less per annum in terms of real wages than when David Cameron arrived in office three years ago. Since then, the coalition has implemented a series of draconian measures, such as the notorious Welfare Reform Act 2012—commonly known as the “Bedroom Tax”—whereby social housing tenants stand to lose their housing benefits if they are deemed to have a spare bedroom. There’s also the universal credit scheme the coalition introduced earlier this year, which will leave an estimated half a million people with disabilities struggling to feed themselves and their families. To cap it off, Chancellor George Osborne has given the nod this month for another round of cuts.
And yet … it’s not all doom and gloom. There is at least one family on benefits in the United Kingdom whom the otherwise austerity-animated chancellor and his bunch of millionaire cohorts seem determined to show unlimited warmth and personal largesse. This particular family’s considerable government payouts will not be threatened by the coalition’s budgetary decisions—even though Buckingham Palace has rather more than one spare bedroom at its disposal. Indeed, the current administration recently decided to pump excess funding into the British royal family’s treasury, increasing the annual Sovereign Grant by £5 million to a whopping £36.1 million per year.
Despite a few references in the mainstream media, though, such tweaking of the royal budget was largely blanketed out in the national consciousness by the never-ending procession of pomp and ceremony which, among other things, allowed her royal subjects to gain a precious glimpse of Her Madge frowning out from a boat underneath a grey, waterlogged sky during the Diamond Jubilee, or to see her perched high up in the balconies, scowling her way through yet another Royal Variety Performance.
The more trenchant monarchists tend to argue that the increase in royal finance is not simply a result of the government siphoning more taxpayer money in the direction of the monarch. They suggest any pay raise comes out of a net increase in the Queen’s property holdings—otherwise known as the Crown Estate. Therefore, they argue, the success of the Queen’s property portfolio has engendered her sudden surge of excess wealth. They demand: Why should she be penalized for a series of astute investment activities?
There are a few flaws in that logic, however. Back in the 18th century, George III, as a result of his bad debt and poor management skills, handed the Estate to the government in return for an annual stipend; the Crown Estate, therefore, can in no way be considered the Queen’s private property, for she does not have the legal right to sell it. But the huge profits accrued by the Estate have still allowed that stipend, otherwise known as the Sovereign Grant, to reach extremely high levels while remaining entirely tax-free.
The idea that that the Queen’s 15 percent intake from the Estate is premised on the industry and endeavour of her private investment schemes belies the fact that she is simply vacuuming up state revenue in and through a series of properties—her profits from which are exempt from taxation. The Queen doesn’t even run the Estate herself; instead, it’s managed by an independent group of chairpersons, giving it an essentially corporate structure. The Crown Estate, therefore, is not so much a benefit the monarchy confers on the country by raising state revenues, but rather one which is conferred on the monarchy by the state itself.
And this, of course, is merely the tip of the iceberg. It does not reflect the money the Queen saves by not having to pay any mortgages on her various palaces and mansions, or the millions local councils have to fork out in funding royal trips and events, or the cash accrued by security costs. It does not take into account the existence of the Duchy of Lancaster and the Duchy of Cornwall: portfolios of land, property and assets that are legally exempt from corporation and capital gains taxes (though many royals volunteer to pay them) and that allow the Queen and the Prince of Wales respectively to absorb many more millions into their ever-deepening pockets.
It is difficult to say exactly how much the British monarchy costs the British public, for it is exempt from the Freedom of Information Act, but the campaign pressure group Republic—in perhaps the most comprehensive study on the issue—puts it at a £202.4 million yearly cost to the taxpayer. That’s around five times more than the figure published by the royal household itself.
But this isn’t only about economic interests. It is also about the ideologies that serve them. Because of this refusal to hold the royal family accountable even in the midst of a financial crisis, the monarchs become an emblem of entitlement and privilege that’s impervious to all change—and incapable of flexibility.
And the royals don’t help dispel this notion. In a recent speech, Prince William expressed his worries for the future. Did these involve the financial depredations the majority of his subjects could look forward to? The higher level of privatization of the National Health Service? The increase in the working age and the slashing of pensions? Or the food banks that have begun to proliferate all over the country? These things went unmentioned by our future overlord. Hardly surprising—after all, his royal son can look forward to a future that will remain pristine and untouched by such issues. So what was William’s ultimate concern?
Rhinoceri. Specifically, the fear that they will no longer be grazing in the wild when his son is old enough to enjoy the African leg of a Royal world tour. To be fair, the prince was giving a speech at the Tusk Conservation Awards—but perhaps some time spent publicly dwelling on the financial outlook of the United Kingdom would have been better spent.
ABOUT THIS AUTHOR
Tony McKenna's work has been featured by The Progressive, The Huffington Post, Monthly Review, New Statesman, New Internationalist, The United Nations, ABC Australia, Open Democracy and others. You can follow him on Twitter @MckennaTony.