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.