Sovereign Grant Bill

Dan Tomlinson Excerpts

2nd reading
Monday 14th September 2026 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank Members on both sides of the House for their contributions to the debate. I thank, in particular, my hon. Friend the Member for Poole (Neil Duncan-Jordan) for his engagement in the ways and means debate. I was glad to be able to write to him and to the Opposition in the intervening days to clarify a few points and, I hope, expand on some of the information that I gave during that debate.

Let me briefly touch on the headlines of the three things that the Bill is doing; I will then deal with the points that have been raised, and will wrap up in good time. First, the Bill resets the level of the sovereign grant to reflect the fact that the exceptional funding requirement associated with the Buckingham Palace reservicing programme is coming to an end. Secondly, it establishes a revised mechanism for calculating the grant in future years. Thirdly, it introduces limited powers to adjust the grant in exceptional circumstances—powers that have already been discussed in our proceedings—including circumstances in which funding would otherwise become inappropriately high. The Government believe that, taken together, these changes amount to a measured and sensible reform.

I now turn to some of the points raised. My hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) made a valuable contribution. I would have enjoyed hearing more of it, but I understand that he had to keep within scope, and I will ensure that I do so too, Madam Deputy Speaker. His final point was that he does not think it is appropriate for this sum of £99.9 million to go to the royal family. It is worth clarifying that this grant is not for the family’s personal purposes, but to enable His Majesty the King and the working members of the royal family to carry out their official duties on behalf of all of us and of the country.

Turning to the Liberal Democrat spokesperson, the hon. Member for Carshalton and Wallington (Bobby Dean), I look forward to debating the proposed amendment in more detail in Committee. I thank the Liberal Democrats and the official Opposition for their support and engagement on the Bill.

If I understood my hon. Friend the Member for Poole correctly, his key question is: why is the grant set relative to the profits from the Crown Estate at 20.5%, rather than the needs of the household? I reassure him that the key thing is the needs of the household, rather than the figure of 20.5%. The way the trustees arrive at the relevant figure is via a bottom-up assessment of what is required to enable the royal household to carry out its duties on our behalf. It starts not with the relevant percentage of the Crown Estate profits, but instead with the specific needs and requirements of the monarchy.

On my hon. Friend’s specific point about the increase in the sovereign grant over recent years, he is right to point out that it is set to increase by more than inflation, but the trustees interrogated a number of reasons for that when the £99.9 million grant was determined. They include, for example, an £11.7 million addition for a 10-year programme to replace the gas heating systems at Buckingham Palace and Windsor Castle as part of the royal household’s clean energy transition; £4.3 million to modernise ageing digital infrastructure and strengthen cyber-security, and replace some legacy IT systems, some of which are over 20 years old; and £11.5 million for other cost increases such as on utilities, travel, housekeeping, equipment and professional services.

I do take and understand my hon. Friend’s point about inflation, but I point out that the grant will in effect be frozen—in cash terms—throughout the next five-year period. That goes to the point made by the right hon. Member for South West Wiltshire (Dr Murrison) about the stability of the royal household’s finances. It also goes some way to explaining why the Government do not think that coming back each year would be the most appropriate and efficient way to set the grant. For those seeking to deliver value for money for the taxpayer, particularly with long-term capital expenditure, via the sovereign grant, it is much easier to do so when it is possible to plan on a long-term basis.

[Jim Shannon]

The royal family have buildings, which are of some age, all over the country, and by their nature there is deterioration due to their size, the heating, the roofs, the way the buildings are and the length of time they have been in existence. Does the Minister agree that, when it comes to the responsibility of the royal family to look after these buildings, further consideration must be given to those that are showing years—maybe hundreds of years—of deterioration?

[Dan Tomlinson]

Yes, I agree with the hon. Member on that point. These grade I listed buildings and scheduled ancient monuments are a very significant part of our national story and, for many, of our national identity. On his point about the quality of the estate, I can tell the House that independent surveys have found that 52% of the estate was at the target condition in 2020, but that had fallen to 38% by 2025.

To conclude, the question before us is a practical one: do we wish to leave in place a framework that no longer properly reflects the end of the exceptional reservicing expenditure on the palace; or do we wish to put in place a revised framework that resets the grant, improves flexibility and preserves the ability of the grant to fulfil its core purpose? The Government’s view is that the right course is the latter. These measures are targeted, proportionate and deliver value for money for taxpayers. They improve the existing framework to the sovereign grant so that it continues to operate, I believe, as Parliament intended. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, this day).

Sovereign Grant Bill

Dan Tomlinson Excerpts

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

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I will turn briefly to each of the short clauses in the Bill.

Clause 1 gives effect to the central purpose of the Bill. It sets the amount of the sovereign grant for the financial year 2027-28 at £99.9 million. In doing so, it resets the level of the grant following the completion of the Buckingham Palace reservicing programme. As that programme nears completion, the temporary funding associated with it is no longer required. Both the previous Government and this Government recognised that the level of the grant should therefore be reset and that legislation would be necessary to achieve that outcome. That is what clause 1 does: it establishes a grant of £99.9 million for 2027-28, reflecting the conclusions of the 2026 royal trustees review. The practical effect, therefore, is that funding falls from £137.9 million in this financial year to £99.9 million in 2027-28.

[Chris Vince (Harlow) (Lab/Co-op)]

Thank you, Madam Chair. I desperately tried not to intervene at all, but I could not stop myself. I was on the Modernisation Committee when it had the opportunity to visit Buckingham Palace to see some of the regeneration work being done. Does the Minister feel as reassured as I do that the renovation work was done as efficiently and practically as possible, bringing in apprentices from elsewhere—I do not think any of them came from Harlow, unfortunately—to ensure it was successful?

[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.

--- Later in debate ---

[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.

[Dan Tomlinson]

I thank the Opposition spokespeople for their questions and comments.

Turning first to the questions from the spokesperson for the official Opposition, the OBR forecasts for inflation, interest rates and so on were used as the underlying basis for the projections. To the extent that Members across the House support the OBR and its independent forecasting duties, I hope that they would support the royal household using those forecasts.

On the hon. Gentleman’s point about the reserve, the household previously aimed to maintain reserves of at least 5% of annual expenditure. This legislation formalises a slightly higher reserve at 10% as the floor, with 50% being the ceiling. It is our judgment that that is reasonable. Of course, 50% is a significant reserve.

The hon. Gentleman asked what happens to the reserve. Of course, it can be drawn down on in times when the royal household faces significant in-year financial costs. The first reaction of the Treasury and the royal trustees would not be to come to the House to ask for a vote to increase the expenditure in the case of additional in-year costs. Instead, it would be hoped that capital programmes could be smoothed out over time, and that the flexibility allowed by the reserve could be drawn on.

The hon. Gentleman asked specifically whether the secondary legislation in the event of changes would be subject to the affirmative or negative procedure in the House. I can confirm that if the percentage were to go up, it would be subject to the affirmative procedure, and we would therefore have the option to debate and discuss. If the percentage were to go down, my understanding is that it would be subject to the negative procedure.

I am grateful to the Liberal Democrat spokesperson for raising the important issues of transparency, accountability and value for money. However, it is the Government’s view that the Liberal Democrat amendment is not necessary under the existing framework. Any future proposal to increase the percentage used to calculate the sovereign grant would already require a published report from the trustees setting out the rationale and, as I have just said, would require the approval of the Commons through the statutory instrument being subject to the affirmative procedure, so Members of the House would have the opportunity to analyse and debate any proposed change.

The National Audit Office already plays an important role in scrutinising the sovereign grant. It audits the grant annually and can undertake value-for-money examinations where it considers that such work would assist Parliament. Indeed, it exercised these powers, as we have discussed, in relation to the Buckingham Palace reservicing programme.

The Liberal Democrat amendment would also create a unique test that is not applied to other bodies funded by the public sector. It is the Government’s view that the sovereign grant is already subject to robust arrangements for accountability and scrutiny, including the managing public money principles, accounting officer oversight, National Audit Office audit and parliamentary approval for legislative changes.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill reported, without amendment.

Bill, not amended in the Committee, considered.

Third Reading

[Dan Tomlinson]

I beg to move, That the Bill be now read the Third time.

I thank hon. Members across the House for their contributions today as the Bill has progressed. I believe that we have done it justice, interrogating various points of contention and clarification on Second Reading and in Committee. I commend this Bill to the House.