Civil List

Ed Balls Excerpts

Thursday 30th June 2011 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Although I, like other Members, have not yet seen the Bill that we are debating today, I thank the Chancellor of the Exchequer for giving me a briefing a full 48 hours in advance of today’s debate. That allowed me to spend yesterday preparing my response and the Chancellor to spend the afternoon at centre court, Wimbledon. I know that he was in a box; I do not know whether it was the royal box, but there we are.

We are debating a very important reform today. As the Chancellor of the Exchequer said, it is the most significant reform to the financing of the royal household since the accession of King George III in 1760, when building upon the Civil List Act 1697—see, my day yesterday was well spent—tax revenues and Crown land revenues, which were hitherto under the independent control of the sovereign, were surrendered to Parliament in exchange for a civil list then of £800,000.

This is the first time that Parliament has had the chance to debate those matters from first principles since the Civil List Act 1972, and, as the then Chancellor of the Exchequer, Anthony Barber, told the Committee of the Whole House:

“I do not believe that the British people want the work of the Royal Family to be cut down. I believe that they want it to be continued and performed by the Royal Family.”—[Official Report, 19 January 1972; Vol. 829, c. 551.]

He had already reminded the House that in debating these matters,

“we are taking decisions about an institution which, just as much as Parliament, is an essential part of our history, our constitution and our way of life.”—[Official Report, 14 December 1971; Vol. 828, c. 292.]

Almost 40 years on, that sentiment will find widespread support across all parts of this House. Replying for Her Majesty’s Loyal Opposition, the then shadow Chancellor of the Exchequer, the late Lord Jenkins of Hillhead, was right also to point out:

“The acceptance and the appreciation of the Monarchical function does not preclude proper consideration by this House of how financial provision should be made.”—[Official Report, 14 December 1971; Vol. 828, c. 383.]

Again, that is a sentiment that will command support from all parts of this House.

Reading back over those debates from the early 1970s, it was clear that not everyone in the House supported the changes. Indeed, I noted that my hon. Friend the Member for Bolsover (Mr Skinner)—he is not in his seat today—voted against the changes in 1972. I looked for his contribution to the debates, but the Hansard record does not record a speech by my hon. Friend, just a series of documented comments from a sedentary position; some things do not change. At one point, the Member for Chelmsford, a future Leader of the House of Commons, Norman St John-Stevas, remarked that

“criticism of the Monarchy, just as of this House, should be fair and temperate not unfair and prejudiced.”—[Official Report, 21 December 1971; Vol. 828, c. 1357.]

Hansard shows that the newly elected Member for Bolsover simply shouted out, “Why?” It was a relatively tame intervention. My hon. Friend was just at the foothills of what has turned out to be a very fine parliamentary heckling career.

The world, the monarchy and the House have all changed a great deal since the early 1970s. The global demands of the royal household have grown significantly, with all that that entails in security and admin burdens. The monarchy has changed greatly—it is now much more open and more scrutinised than ever before—and Parliament, as the Chancellor said, now has a greater role in scrutinising the finances of the royal household than in the 1970s. Of course, the one unchanging rock across all those turbulent decades has been Her Majesty the Queen herself, whose grace, wisdom and dedicated service to our country are second to none.

I agree with the Chancellor about this. I know that not everyone in this House will agree with what I am going to say, but it is the view of Her Majesty’s Loyal Opposition, as it is the view of the Government, that the monarchy continues, and must continue, to play a vital role in the affairs of our nation in the new century, but that to play this role and to command public support, the royal household must, as the Chancellor said, be financed in a proper, open and fair way, which means fair to the royal household and, as the Chancellor said, fair to the taxpayer too. There is a balance to be struck, as there has been for over 250 years since the 1760 settlement. It is the job of the Prime Minister, the Chancellor and the Government, with the royal household, to strike a fair and workable balance between the legitimate needs of the household and the interests of the taxpayer. It is the responsibility of Her Majesty’s Opposition to scrutinise the actions of the Government to make sure that it is done in a fair and proper way, and it is the job of this Parliament to oversee these matters.

I thank the Chancellor for giving me advance notice of the details; as I said, I have not yet seen the legislation. I want to assure him that although we have questions to ask, it is our intention to support him in reforming the current arrangements. However, it is very important that he seeks to establish a consensus not only across the Dispatch Box but in the country as a whole in support of these reforms. At a time when many families and businesses are under real financial pressure, the Chancellor will need to provide, today or on Second Reading, some more clarity, detail and reassurance on four particular issues that I will set out today in advance of those debates: the level of the sovereign grant; the costs of royal security, which, while not covered by the sovereign grant itself, are material to these matters; the mechanism for uprating the sovereign grant; and how Parliament scrutinises these new arrangements.

On the first issue, the Chancellor and the Treasury will need to provide some more analysis in advance of Second Reading to explain why, in choosing the figure of 15% of the profits of the Crown Estate, they believe they have set the sovereign grant at the right level. I understand that, adjusting for the issue of the drawing down of the reserves, this new arrangement is expected to maintain the current level of spending broadly over the course of this Parliament.

It is right that we ask whether this is the right level of expenditure given the costs, pressures and demands on the royal household. On the one hand, the Queen has managed to deliver a 50% reduction in the total expenditure of the royal household over the past two decades, but has this process of efficiency savings come to an end, or are there further savings that can and should be made? On the other hand, the wonderfully successful wedding of the Duke and Duchess of Cambridge, who start their visit to Canada today, has thrust the younger members of the royal family into the limelight: they are in demand in this country and all round the world. Meanwhile, Her Majesty the Queen’s historic visit to Ireland and the Duke of Edinburgh’s recent birthday celebrations have seen their popularity reach new heights, and this can only increase as we move towards the diamond jubilee next year. This necessarily raises issues of resourcing and security.

The demands on the newly extended royal family are higher than they have ever been, and it is right that we ask whether the level of the royal grant is commensurate with the high tide mark in the royal family’s responsibilities and public appearances. This necessarily raises security issues too. It has been reported that a number of members of the royal family have had their security support downgraded, or in some cases removed. We should ask whether the Chancellor, as part of this process, has examined the impact of these changes on the royal family and on the public purse, and whether they may have gone too far. Does the current security budget meet the needs of the wider royal family in this more demanding environment? At a time when the Home Office and security budget is very stretched and under pressure, it is important that we ask that question.

That takes me to the third issue: the arrangements for the uprating of the sovereign grant. The Chancellor’s proposals imply that the total expenditure of the royal household will fall in real terms from the beginning to the end of the Parliament, but the proposals also imply that spending will, from next year, be rising in cash and in real terms, alongside a 3.2% real-terms rise in the total sovereign grant between now and the end of the Parliament. I understand, too, that the Chancellor is proposing to put a cash floor on the finances of the royal household into the future, by however much the profits from the Crown estates fall. I have to say that this is a generous proposal which suggests that the Chancellor thinks that the efficiency savings have come to an end. We also know that the profits of the Crown Estate could rise. If they rise markedly in future, the House and the country will need an assurance that proper and responsive arrangements are to be put in place.

It is unclear at this stage whether the Chancellor is saying that any increase in revenues over and above the levels that he is currently predicting will automatically be passed into the reserves or could lead to higher expenditure by the royal household. The arrangements that he set out appear to suggest that if expenditure were to rise alongside income, there would not then be an automatic review of the percentage of income allocated through the sovereign grant. If revenues are higher, then rather than waiting a full seven years for a review and risking upward pressure on spending or a repeat of the accumulation of reserves that we saw in the 1990s, is there not a case for a more automatic and immediate formula to return those excess revenues to the taxpayer?

As the Chancellor said, this issue is particularly relevant because the Crown estates are set to see an increase in their income from the exploitation of wind and tidal energy in the coming years. Crown Estate income from the renewables sector grew by 44% to £2.6m in 2009-10 alone. The annual report of the Crown Estate describes current growth as “exponential” and growth over the next 10 years as “significant”. Given the potentially significant change in income from renewables in the coming years, it is important that we ensure that the proposals are robust as regards a significant rise in Crown revenues.

The final issue is parliamentary oversight.

[Oliver Heald (North East Hertfordshire) (Con)]

I certainly support the comments of the right hon. Gentleman and the Chancellor. Is the right hon. Gentleman at all interested in asking for an assurance or some information on whether the proposals are likely to influence the investment strategy of the Crown Estate, and what that might involve? How much income or growth are required are often quite important parts of an estate’s strategy.

[Ed Balls]

The hon. Gentleman raises an important question. It is good that Parliament has an opportunity to scrutinise the proposals in the coming weeks or months. We are in an unusual situation. This debate is not a statement, so it is inappropriate for me to ask questions of the Chancellor today and expect him to respond. The debate is also on a Bill that we have not yet seen, which is obviously awkward. I am in a stronger position to ask detailed questions than everybody else, because I knew some of the content of the proposals in advance, but I do not know all the detail.

Today we are setting out questions and issues on which the Government might want to provide more detail between now and the debate on Second Reading. We will certainly expect more detail and debate then. I am sure that in reaching that deal over past months, the Chancellor and members of the royal household scrutinised the kind of issue that the hon. Gentleman raises. However, we need to find out the detail of that scrutiny, what analysis was looked at before that agreement was reached, and the impact of the proposals on a number of things. I mentioned security and the uprating formula, and the hon. Gentleman asks the very important question of whether the measures will enhance the Crown Estate or deter it from seeking to make new investments. I do not know the answer to that, but it is a good issue for debate.

[Mr George Osborne]

The right hon. Gentleman is right: this is not a statement. It is a rather archaic procedure, but if it is any consolation, it is a lot less archaic than it was in the early 1970s—through discussions with the Chair, we managed to reduce some of that procedure. I am unable to respond to the points that he makes, but I shall use this intervention to say that I thank him for the support in principle that he has given to the measure. He has asked some good questions, to which I hope to respond on Second Reading, and other hon. Members will raise other issues. I was not able to publish the Bill until this resolution has been passed by the House. I appreciate the right hon. Gentleman’s approach. The debate on Second Reading will be an opportunity for hon. Members to go into the detail of the Bill after they have studied it.

[Ed Balls]

I was in no way criticising the approach that has been taken. I was simply noting the rather odd situation that we are in: I am able to say some things that, potentially, nobody else fully understands because they have not had the briefing from the Chancellor that I had, but I totally understand the Chancellor’s position.

[Paul Flynn (Newport West) (Lab)]

As this announcement has been described as “important”, a disappointingly small number of Members are in the Chamber. Will my right hon. Friend tell me when he first heard that this announcement would be made today?

--- Later in debate ---

[Ed Balls]

I do not want to say anything inappropriate, but I believe that it is appropriate for me to say that the Prime Minister briefed the Leader of the Opposition on these matters a week ago. The Chancellor requested that I meet him, and we met on Tuesday. The clear view of the House authorities, the Government and the royal household—I do not know exactly who makes such decisions—was that the first public knowledge of the proposals should be the making of the gracious request, which happened yesterday. It was then a matter for the Government to respond the next day, which is where we are. That is the fullest answer I can give, so there we are.

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 as any other Government Department. I am sure that the Chair of the PAC will speak in this debate about that in greater detail. However, there are important issues of detail in respect of how the proposals will work in practice. Will the reports be frequent and timely? Will all necessary information be disclosed to the PAC and Parliament? Who will give evidence to the Committee on those matters?

In June last year, the Chair of the Commons Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge), said:

“If there is to be serious assessment of efficiency and economy and effectiveness (of the monarchy), one has to look at the total income and expenditure. It is difficult to look at just a part.”

That has been our situation in recent years. As the Chancellor says, even before today’s Bill, our situation is a substantial advance from where we were 40 years ago. It is true that the original debate was opened by the Prime Minister and that the Chancellor represented the Government in a Committee of the whole House, but it is also true that that was pretty much the only opportunity for scrutiny of such matters in the previous 40 years. We are therefore in a better place, but the Chair of the PAC is right to say that we need to go further and to do so in a proper way. I hope that we hear from her today, but it is vital that Parliament has the proper information so that it can properly and fully scrutinise such significant sums of revenue.

In conclusion, the Opposition will support the Chancellor in making necessary reforms, but my advice to him is that there is more work to do on providing more detail and reassurance in advance of the debate on Second Reading. It is necessary to build a consensus not only in the House but in the country. The case needs to be made that the reforms represent a secure, balanced and fair way forward for the royal household and the taxpayer in the years to come. We look forward to playing our part in those debates and that scrutiny in the coming weeks and months.

--- Later in debate ---

[Jacob Rees-Mogg]

I would most certainly not be recommending that IPSA comes anywhere near our sovereign.

When the Crown Estate was granted in 1760 by George III, at the same time as he gave up his claim as King of France, the monarchy was in deficit and it needed extra money to fulfil the functions that were being fulfilled. Some of those functions were greater than those now paid for by the civil list. That is all certainly true, although Parliament would vote excess resources to pay for things such as the Army, so my hon. and noble friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) was not entirely fair on the point about paying for the Army.

Now the Crown Estate is in substantial surplus and I think that the Chancellor, in his proposals, which in many ways are very good, may be being somewhat canny, because the next sovereign would be able to cancel this arrangement and say, “I should like £200 million a year, thank you very much.” There is no requirement on a new sovereign to agree to hand the Crown Estate over in return for a civil list. The hon. Member for North Durham (Mr Jones) said that this is taxpayers’ money and not the Crown’s money, but it really is the Crown’s money because, on becoming King, the Prince of Wales or any other sovereign could simply rescind the agreement and claim it back. The Crown Estate is the sovereign’s property, which the sovereign gives to Parliament to help to pay for the costs of the nation; it is not taxpayers’ money that is being handed over. [Interruption.] Does the right hon. Member for Morley and Outwood (Ed Balls) want me to give way?

[Ed Balls]

indicated dissent.

[Jacob Rees-Mogg]

No, he is going to let me carry on. As a result of what I have described the Queen is paying a higher rate of tax than anybody else. We should remember that and I hope that the Chancellor will be generous. I would like the 15% provision to be increased because we want to have a glamorous monarchy that befits the status of our nation. We are a great nation, a noble nation and a nation that has had power across the globe in the past. We have one of the finest histories of any country in the world. When I see the coronation coach being pulled through the streets of London, I want to see it being pulled by the finest horses that money can buy and I want to see it gilded with the finest gold that can be bought. I want Her Majesty to have as a jubilee present the finest window that can be funded by Members of Parliament. That is the status of monarchy that we want and I urge the Chancellor to remember that. Even though I know that we are in this time of austerity, that we are all in it together and that the Opposition spent all the money, maxed out the credit card and so on, we should look after Her Majesty.