Sovereign Grant Bill

Caroline Nokes Excerpts

2nd reading
Monday 14th September 2026 Commons Chamber

[Torsten Bell]

I think everybody in this House will agree with the thrust of what the right hon. Gentleman successfully argues. A royal household with an important role, both as the sovereign, and in maintaining an estate of grade I listed monuments, needs certainty about its income. It is not for me to defend the previous Government, but the 2011 Act provided two bases for funding. The first is the mechanism that he mentioned, relating to a proportion of the profits of the Crown Estate. The second is a proviso that there be no fall, from year to year, in the amount of the grant. That is to provide exactly the stability that he talks about. That is why we are taking forward this primary legislation, with that dual lock. The reduction this year is purely to take into account the bringing to an end of the Buckingham Palace 10-year repair project. The legislation then provides an ongoing commitment to the royal household and the monarch that the grant will remain at next year’s level, at least. I hope that offers the right hon. Gentleman reassurance.

As I was saying, a key point of context is that Parliament agreed a temporary uplift to the grant from 2017-18 to 2026-27 to fund the Buckingham Palace reservicing programme. That was a major 10-year investment to modernise ageing infrastructure, replace critical electrical and mechanical systems, and safeguard the long-term future of one of the nation’s most historic buildings. As that programme nears completion, it is time for the level of funding to be reassessed. Earlier this year, the then royal trustees completed the latest review and considered both the royal household’s projected expenditure and the Crown Estate’s projected revenues for the period from 2027 to 2032. The trustees concluded that with the Buckingham Palace reservicing programme nearing completion, the exceptional funding requirements that justified that temporary uplift no longer exist. They therefore recommended that the sovereign grant should fall from £137.9 million in 2026-27 to £99.9 million in 2027-28. That represents a reduction of almost £38 million, or more than a quarter.

At the same time, the trustees recognised that the royal household continues to face operational pressures in delivering what we all think of as crucial work. The recommended amount of funding will enable the household to address a maintenance backlog that was exacerbated by the pandemic, and to replace ageing digital infrastructure to strengthen cyber-security. The grant provided for by this Bill ensures value for money for taxpayers, and that the royal household can continue to discharge its crucial functions effectively.

This Bill delivers a fair and proportionate funding settlement. It reduces the amount of the sovereign grant, following the completion of a major capital programme; it improves the resilience and sustainability of the statutory framework established in 2011, while maintaining parliamentary oversight; and it ensures that the sovereign grant can continue to fulfil its core purpose, which is supporting the official duties of the monarch and maintaining the occupied royal palaces on behalf of the nation. On that basis, I commend this Bill to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

--- Later in debate ---

[Brian Leishman (Alloa and Grangemouth) (Lab)]

My sense of patriotism does not come from a flag, an anthem or the royal family. Instead, my patriotism comes from things like our national health service; movements such as that of the Levellers, who were committed to popular sovereignty, extended suffrage, equality and religious tolerance; and how Britain stood up to and defeated the evil of fascism, both abroad during the second world war and at home in places like Cable Street, where Jewish residents, Irish dockers, trade unionists, socialists and others united to stop the British Union of Fascists movement from marching through Jewish neighbourhoods. That is the sort of patriotism I love.

I have the utmost respect for any citizen who believes that the royal family is a fundamental part of British life. I have no issues with that opinion; people are entitled to it, but it is simply not one that I share. There were many reasons why I joined the Labour party. One was to change—

[Madam Deputy Speaker (Caroline Nokes)]

Order. I am sure that the hon. Gentleman is expecting this, but it is important that he focuses his remarks on the Sovereign Grant Bill, and not wider issues to do with the monarchy, patriotism or why he joined the Labour party.

[Brian Leishman]

I will just put a red pen—a very dark red pen, obviously—through some of the comments that I wished to make. I will accelerate my remarks. It is clear that we are a nation of persistent inequality. I fully appreciate that the role of the royal family is way down the list of pressing issues that my Government have to deal with, but when looking at the intense suffering that millions of people are experiencing, I cannot help but feel that the sovereign grant money could and should be directed elsewhere, and not to a family worth an estimated £21 billion.

--- Later in debate ---

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Bobby Dean (Carshalton and Wallington) (LD)]

The Liberal Democrats understand the purposes of this Bill and accept some of the Government’s conclusions about how the grant needs to change, but we continue to be concerned about transparency. It is important to make it clear at the start that the sovereign grant provides no personal income to the King or Queen or any member of the royal family; the funding is tied entirely to the running of the institution. We recognise that the household’s budget has increased, but the bulk of that increase is earmarked for a maintenance backlog across the royal palaces, green infrastructure, and cyber-security in an increasingly hostile international landscape. We agree that it is right for the grant to be reset now that the Buckingham Palace programme has finished. However, taxpayers will rightly have questions about where and, importantly, who this money goes to. The Government must ensure that not a penny of this grant goes to Andrew Mountbatten-Windsor, who disgraced his title in office —

[Madam Deputy Speaker (Caroline Nokes)]

Order. I reiterate that we are going to stick to the scope of the Sovereign Grant Bill, which is very specifically only about the amount of the sovereign grant and how it is to be determined in future years. The hon. Gentleman will be aware that the grant goes to the King.

[Bobby Dean]

Thank you, Madam Deputy Speaker. I will move directly on to our amendment, which would insert a new subsection stopping the royal trustees from proposing any future increase to the percentage of Crown Estate profit used in the grant formula unless three conditions are met first: the National Audit Office must be commissioned to carry out a value-for-money assessment of the proposed change—

[Madam Deputy Speaker (Caroline Nokes)]

Order. Apologies, and I appreciate that I am now leaping to my feet with monotonous regularity, but it would be more appropriate for the amendment to be discussed in Committee than on Second Reading.

[Bobby Dean]

Clearly, I have been very well briefed. I think my comments at the beginning were probably sufficient. We understand the purpose of the Sovereign Grant Bill. We have some concerns about transparency, but I will return to those later.

Sovereign Grant Bill

Caroline Nokes Excerpts

Committee of the whole House & 3rd reading
Monday 14th September 2026 Commons Chamber

[Ms Nokes in the Chair]

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I remind Members that in Committee Members should not address the Chair as Deputy Speaker. Please use my name when addressing the Chair. Madam Chair, Chair and Madam Chairman are also acceptable.

Clause 1

Amount of Sovereign Grant for the financial year 2027-28

Question proposed, That the clause stand part of the Bill.

[The Second Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 1, in clause 2, page 2, line 20, at end insert—

“(3) Section 6 of the Sovereign Grant Act 2011 is amended as follows.

(4) After subsection (4) insert—

“(5) The Royal Trustees may not make any proposals to increase the percentage specified in Step 1 (as amended by Section 2 of the Sovereign Grant Act 2026) for determining the amount of the Sovereign Grant, unless—

(a) they have commissioned the National Audit Office to undertake a value for money assessment of the proposed change, and

(b) the National Audit Office’s report has been laid before both Houses of Parliament, and

(c) a motion approving the change has been debated and approved by resolution of the House of Commons.””

This amendment would ensure that any future increase to the percentage of Crown Estate profit used to calculate the Sovereign Grant is subject to independent assessment and an affirmative vote in the House of Commons.

Clause 2 stand part.

Clauses 3 and 4 stand part.

--- Later in debate ---

[Dan Tomlinson]

My hon. Friend is right to highlight that the works on Buckingham Palace over the past 10 years have been carried out with efficiency and effectiveness. In fact, the National Audit Office took a look at the programme of work and was able to commend it for its effective use of taxpayer money, which is of course very important. Clause 1 delivers, therefore, the intended reduction in funding following the completion of that work, and implements the conclusions of the royal trustees review to establish a new baseline for future years.

Having reset the grant for 2027-28, clause 2 turns to the framework that will determine grant funding in future years. The grant has, since 2012, been linked to the performance of the Crown Estate. That underlying principle remains unchanged by the Bill. Clause 2 updates the percentage of Crown Estate profits used within that calculation, so that the framework remains appropriate after the grant has been reset through that bottom-up calculation. It sets the relevant percentage at 20.5%. Returning to conversations we had on Second Reading, I want to reassure Members that that figure is not arbitrary. It comes directly from the conclusions of the June 2026 royal trustees review, which assessed both the royal household’s expected expenditure requirements and the Crown Estate’s forecast revenues over the period 2031-32.

Clause 3 introduces targeted safeguards to ensure that the funding framework can continue to operate effectively in exceptional circumstances. This is to ensure that where royal trustees conclude that the amount produced by the statutory formula would result in the sovereign grant reserve falling below 10% of annual expenditure or exceeding 50% of annual expenditure, and where the existing framework can adequately correct that outcome, the trustees must explain that conclusion in their annual report and identify the new amount they believe would be appropriate. The Treasury must then implement that through regulations. This reform allows greater flexibility to prevent reserves becoming either too large or too small, and it means that action can be taken before reserve levels move outside of a sustainable range, rather than waiting until existing statutory mechanisms have been triggered.

The second mechanism is a limited power to increase the grant during a financial year in genuinely exceptional circumstances, and is intended as an emergency power. It can only be used when unforeseen circumstances arise during a financial year that cannot be reasonably addressed through the normal annual funding process. Clause 4 contains standard provisions relating to commencement and the short title of the Bill; I commend this and all other clauses to the Committee.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

[Richard Fuller (North Bedfordshire) (Con)]

I thank the Minister for his clear exposition of the Bill’s clauses. He emphasised the importance of the 2026 royal trustees’ review. The interesting thing is that it is their forecast of their needs over the next five years on which a lot of the mechanism rests. Notwithstanding some comments made by Government Back Benchers, a lot of the intention of the Bill is about financial restrictions on expenditure, rather than there being excess expenditure in the future. I am grateful for the Minister’s letter to my hon. Friend the Member for Dumfries and Galloway (John Cooper); in his summing up, will the Minister give a bit more comfort and clarity on some of those matters?

If I am right, the £99.9 million is the estimate of what is required this year, based on a review of what the forecast requirements may be through to 2031-32. Will the Minister explain how those financial assessments were made? What discount rate was used to work out what the estimates might be? I am not questioning it, and I do not need a precise figure; what I am looking for is some comfort from the Minister that he feels that those financial projections, that model and the work of the trustees give him adequate confidence in the baseline of £99.9 million. That leads, in turn, to why we have 20.5% variability over the next five years.

In the Minister’s response to my hon. Friend the Member for Dumfries and Galloway, I was also interested to hear about the use of other income. In his letter, the Minister said:

“The Household forecasts that this income will increase by around 25% over the review period, based on recent performance, detailed modelling and increased visitor capacity… If income were lower than forecast, there is no expectation that the Grant would increase above £99.9 million per year.”

Can the Minister confirm that, essentially, the other income is being treated as supplementary to what we see as the duty of the sovereign grant? I would be grateful to the Minister for reconfirming what he put in his letter.

In clause 3, I am interested in proposed new section 6(5) to the Sovereign Grant Act 2011, stating that the reserve fund will be:

“no lower than 10% and no higher than 50%”.

What is of interest there is the duty to change the amount of the sovereign grant. There is an issue about to what extent that reserve, at 10% to 50%, is going to cover reasonable expectations of expense. That gets to the point that my hon. Friend the Member for Dumfries and Galloway made earlier about long-term plans. If significant capital expenditures are due, then the reserve, by its very nature, will be quite variable during the period. I would like some comfort from the Minister that the range of 10% to 50%—which sounds, on face value, to be reasonable—was correct in the modelling.

There is just one slight concern about the Treasury’s thinking on this. When my hon. Friend the Member for North West Norfolk (James Wild) asked about powers to adjust the grant between reviews and the circumstances in which they might be used, the answer from the Treasury was:

“These powers are intended for exceptional circumstances and are not expected to be used routinely”,

which, of course, is the definition of exceptional. However, the letter does then go on to talk about major fire, flood and so on, saying that in those circumstances,

“Any adjustment would require Parliamentary approval through secondary legislation.”

Could the Minister advise on whether or not that approval will be subject to the affirmative procedure? I think that other Members may want to raise that as well.

[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

[Bobby Dean (Carshalton and Wallington) (LD)]

The Liberal Democrats support the thrust of the Bill. We understand why the royal household budget has increased and agree that it is right for the grant to be reset now that the Buckingham Palace programme has finished. However, we remain concerned about transparency and have put forward an amendment to that effect.

Our amendment would insert a new subsection that would stop the royal trustees proposing any future increase to the percentage of Crown Estate profit used in the grant formula unless three conditions are met first. The National Audit Office must be commissioned to carry out a value-for-money assessment of the proposed change; that NAO report must be laid before both Houses; and finally, the House of Commons must debate and approve the change by resolution.

This contrasts with the Bill as drafted, which sets the figures straight into primary legislation on the strength of the royal trustees’ own conclusions, with no separate independent check built in for the next time that the percentage is revisited. That matters because it is the royal trustees who produce that report—the Prime Minister, the Chancellor and the Keeper of the Privy Purse. In other words, the people proposing the change are marking their own homework, with no independent body or vote required to test whether it represents good value for the taxpayer.

Our amendment is not about opposing the grant or blocking today’s readjustment, which the Liberal Democrats accept is right now that the reservicing works are complete. Instead, it is about ensuring that if a percentage increase is proposed again in the future, taxpayers get an independent, NAO-assessed value-for-money check, with their elected representatives getting an actual vote on it, rather than the change simply following through the trustees’ own formula.

To conclude, the Liberal Democrats believe that greater transparency and independent scrutiny of taxpayer money must be built into the system for the future, not treated as optional, and that that is best guaranteed by external checks, not simply taking the Government’s word for it.