Economics of Royalty: Is the Royal Family a Waste of Money?

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March 15th, 2021

After a week of controversy surrounding the Royal Family, we thought it was worth discussing one of the core debates related to them – are they good value for money. So in this video, we discuss how the Royal Family are paid for and the economic benefits they provide the UK.

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Video posted at: https://www.youtube.com/watch?v=vT4vA0U499Y.

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In the video, we make a number of claims surrounding the Crown Estate and just how the monarch receives from the Crown Estate or the Government. We wish to clarify the following: The Crown Estate is not the property of the Royal Family nor the Monarch in their personal capacity. As the Crown Estate website (https://www.thecrownestate.co.uk/en-gb/our-business/our-structure-and-governance/) stresses "The assets of The Crown Estate are therefore not the property of the Government, nor are they the Sovereign's private estate. They are part of the hereditary possessions of the Sovereign "in right of the Crown". In more simple terms, the Crown Estate is owned by the monarch "by virtue of their accession to the throne" "for the duration of their reign". Think of it like the keys to an office - when you start a new job (in non-COVID times), you'll probably get your own set of keys. You "own" these keys by virtue of your employment for the duration of that employment. If you quit, or are fired, the keys are no longer yours. The calculation of the Sovereign Grant is a bit more complicated than what we explained in the video. The Royal Family doesn't immediately skim off 25% of that year's revenues or net profits. Rather the entirety of it is sent to the Treasury. The Treasury then, in accordance with the Sovereign Grant Act 2011, calculates and sends to the Crown the Sovereign Grant. Under Section 6 of the Sovereign Grant Act 2011 (https://www.legislation.gov.uk/ukpga/2011/15/section/6), the Sovereign Grant is calculated as follows: First, calculate 25% of the Crown Estate income for two years prior (i.e. when calculating the Sovereign Grant for 2021-22 use figures from the Crown Estate corresponding to 2019-20). Round that figure up to the nearest 100 grand. Then compare the rounded figure with the Sovereign Grant given last year. (After some adjustments), award the higher amount. In effect, the Sovereign Grant has a ratchet clause embedded in it - the Grant can only ever go up. Subsequently, say hypothetically due to a pandemic, the Crown Estate makes a loss that year. The Sovereign Grant will not suddenly become negative - the Treasury would have to stump up cash from elsewhere.

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