Sovereign Grant Bill

Baroness Royall of Blaisdon Excerpts

Monday 3rd October 2011 Lords Chamber

[Baroness Royall of Blaisdon]

My Lords, noble Lords may well wonder why I am speaking on a Treasury Bill. The reasons are two. First, my colleagues in the Treasury team all have long-standing engagements at this time during this unexpected week of business. Secondly, I hold Her Majesty in the greatest esteem, and, since I am a former Lord President of the Council and a former Chancellor of the Duchy of Lancaster, both positions of which I was immensely proud, it seemed appropriate for me to speak on behalf of the Opposition.

The Bill seeks to modernise and simplify the way in which we finance our Royal Family. It brings up to date the method of grant allocation and greatly increases the transparency of the finances of Her Majesty and the wider Royal Family. It facilitates accountability to Parliament via the National Audit Office and the Public Accounts Committee. On behalf of Her Majesty's loyal Opposition, I begin my contribution to this Second Reading debate by putting on the record our particular support for this element of the changes that we are discussing today.

I am glad that the business managers in this House have made proper time available for consideration of this short but important Bill. I understand that in the Commons there was no Second Reading because the previous business overran. This is yet another signal to the Government that their legislative programme really is far too full to enable the proper scrutiny that is rightly demanded by the citizens of this country.

This debate is happening 250 years after the current system for allocating funds to the Royal Household was first decided upon. It was in 1760 that King George III surrendered the entirety of the income from the Crown Estate to Parliament in exchange for an annual grant to fund his and his family’s duties in his role as monarch. With time, this grant has in fact developed into four separate allowances. The Civil List is the annual grant to meet the core official expense to enable the Queen to carry out her role as Head of State and Head of the Commonwealth, and it comes from the Treasury. There is a grant in aid for royal travel, which is funded by the Department for Transport, and the Department for Culture, Media and Sport provides both a grant in aid for maintenance of the royal palaces and a grant for expenditure on communications and information.

There is no permitted crossover between those pots of money. Their hypothecated nature has prevented a surplus in the travel grant being put towards the urgent upkeep of a particular royal palace, for example. The Bill before us today will put an end to this rigidity, giving the Royal Family the flexibility that they have always wanted, and it is extremely welcome. The new sovereign grant will be able to be used as the Royal Household sees fit under the guidance of the Keeper of Her Majesty’s Privy Purse, and the Opposition have absolutely no objection to this sensible rationalisation of the way in which the monarchy is funded.

I shall focus my comments around three broad areas: the level of the grant, the mechanisms to review it, and the audit of public funds apportioned to financing the monarchy. The Minister has informed the House that the value of the sovereign grant in any given year will be equivalent to 15 per cent of the profits of the Crown Estate in the two years prior. This means that in the first year of the new system, 2013-14, the sovereign grant will be determined as 15 per cent of the profits from the Crown Estate in 2011-12. The Minister has told your Lordships that this is predicted to equate to £34 million. This figure is broadly in line with the expenditure of the Royal Family in recent years. In another place, the Chancellor of the Exchequer explained that the effect of choosing this particular percentage of Crown Estate profits, in order to determine the level of the sovereign grant, would be to provide the Queen with a sum throughout this Parliament that was broadly the same as the sum she received throughout the last. The Chancellor is right to say:

“In the end, it is a matter of judgment whether £34 million or so is the right amount for the future”.—[Official Report, Commons, 14/07/11; col. 540].

From the opposition Benches, I wish to stress to your Lordships, and to the Government, that the key issues are the values and priorities that underpin that judgment. Her Majesty the Queen and the Royal Family continue, and must continue, to play a vital role in the affairs of our nation in the new century. They must be financed in a way that enables them to fulfil this role—at home and in the wider Commonwealth—and to maintain the support of the public. Accordingly, the funding arrangements need to strike a fair and workable balance between the legitimate needs of the household and the interests of taxpayers. Setting the sovereign grant at 15 per cent of Crown revenues will mean, from next year until the end of the current Parliament, a 3.2 per cent real-terms rise in the grant available to the Royal Household. I ask the Minister for reassurance that, in these times of austerity, when the impact of the Government’s policies and priorities, as well as the state of the global economy, are causing tough times for hard-working people across the country, the interests of taxpayers are being carefully considered. I also ask whether he is able to make available to Parliament detailed projections of the value of the sovereign grant over the coming years.

I turn to the scope for adjusting the level of the sovereign grant as outlined in this Bill. In the other place, the Chancellor of the Exchequer explained that the Government had chosen the mechanism of a percentage of the Crown Estate profit because it was,

“broadly in line with the economy”.—[Official Report, Commons, 14/07.11; co1. 536].

The Chancellor described the Crown Estate as a large commercial property company run in a conservative way, which was not a bad proxy for how the country as a whole was doing. We on the opposition Benches are not sure whether the figure of 15 per cent of Crown revenues will prove to rise in line with the overall performance of the economy going forward. The Crown Estate’s annual report describes current growth as “exponential” and growth over the next 10 years as “significant”. We know from recent figures and forecasts, including from the OBR, that the UK is flat-lining. We are disappointed that in another place the Government resisted calls from the opposition Front Bench to require the grant’s trustees to review the funding arrangements if the Crown Estate’s income rose faster in the previous financial year than the underlying trend growth rate of the economy. We felt such a provision to be particularly sensible considering the Crown Estate’s stake in offshore wind farms, and with Crown Estate income from renewables growing by 44 per cent in 2009-10. Notwithstanding this, we are pleased to say that the Government heeded the Opposition’s calls for more frequent reviews of the new funding mechanism. The Bill requires, as the Minister said, the calculation of the sovereign grant to be reviewed every five rather than seven years.

I am pleased to inform your Lordships’ House that Her Majesty’s Opposition fully support the auditing arrangements of the new system, as laid out in the Bill. It is welcome that, for the first time, the National Audit Office and the Public Accounts Committee will have the same powers to audit and scrutinise the Royal Household in the same way as any government department. We welcome this unprecedented increase in transparency and scrutiny of the Royal Household. It is not only the proper thing to do; it will likely serve to build further trust and support for the monarchy in our country. We hope that the PAC will decide to take frequent looks at the Royal Household’s accounts to monitor the suitability of the new sovereign grant mechanism.

In times of real economic hardship, and also at a time when the pressures on the Royal Family seem to be increasing in various ways, it is vital that in arriving at a settlement for funding the monarchy, Parliament balances the interests of the taxpayer with the dignity and needs of the Royal Household. The Bill seems to strike that balance, but I look forward to hearing the Minister’s response to my questions and those which will undoubtedly follow from other noble Lords.