King Charles has just asked for an expected surge in his profits from the Crown Estate to be used for the “wider public good”.
Normally 25% of the Crown Estate profits would go towards the royal family for their public funded activities.
However, the monarch has now asked for this amount to be reduced amid the cost of living crisis, a problem he discussed in his Christmas speech.
Why was Charles about to get around £1 billion?
Six new offshore wind farms to build on the Crown Estate (an independently run, commercial business whose profits go to the treasury), mean he would receive a huge boost to his accounts during the cost of living crisis.
The profits decide the benchmark for the amount of funding which go from the Crown Estate (which earns more than £312 million a year) to the royal family. So, if it makes less money, the royals receive less overall.
This is known as the sovereign grant – last year, this was worth £86.3 million – and is paid for the costs of working royals, travel for engagements and maintenance of the royal properties.
For context, the sovereign grant used to be just 15% of the Crown Estate but was increased on a temporary basis for the repairs and renovations for Buckingham Palace until 2027.
This year’s profits were supposed to be even larger because of the new wind farms, bringing in an extra £1 billion.
And the wind farms (expected to generate electricity for seven million homes) would add an extra billion pounds to the Crown Estate for 2024 and 2025 too.
The grant is also based on funds two years in arrears – meaning any changes would not affect the sovereign grant until 2024 to 2025.
What has Charles said?
The King has suggested that he didn’t want to take entire fund, with the Keeper of the Privy Purse (Sir Michael Stevens) asking PM Rishi Sunak and chancellor Jeremy Hunt for there to be an “appropriate reduction”.
Buckingham Palace said: “In view of the offshore energy windfall, the keeper of the privy purse has written to the prime minister and chancellor to share the King’s wish that this windfall be directed for wider public good, rather than to the sovereign grant, through an appropriate reduction in the proportion of crown estate surplus that funds the sovereign grant.”
Charles used his first Christmas speech to acknowledge the “great anxiety and hardship” for people who struggle to “pay their bills and keep their families fed and warm”.
He has been known for being an activist prince before he took up the mantle as the monarch, prompting fears he would be a “meddling monarch” which he tried to quash.
Just a few months into his reign though, this intervention was praised for showing an awareness around the cost of living crisis, looming recession and 40-year-high inflation which is affecting people around the country right now.
Dan Labbad, chief executive of the Crown Estate, told Sky News that the wind farms were “wonderful news”, adding: “It’s about ensuring that we’ve delivering value to the taxpayer, but at the same time, it’s ensuring we’re supporting our fight against energy security challenges, the climate crisis, protecting our seas, and biodiversity and creating jobs.”
So why is not everyone thrilled?
On the surface, this is a positive step – but some people have approached it with scrutiny.
1. Would the King even have a say over this percentage?
The prime minister, the chancellor and the keeper of the privy purse are all the royal trustees of the sovereign grant, so they decide how much the royals receive from the crown estate, rather than the monarch.
Graham Smith, leader of the anti-monarchy campaign group Republic, suggested that this was “constitutional theatre”.
According to Sky News, he said: “He didn’t wish to do anything, he made a statement that reflected an arrangement he had no power to change. And he doesn’t retain anything, because it’s not his to retain and 100% of the profits go to the government.”
2. Is it PR?
Smith also suggested that the wind farm announcement was “cynical PR to pre-empt a government decision to reduce the percentage”.
The royals have received a flurry of bad headlines in the last month as Prince Harry has made a series of allegations against them in his memoir, Spare.
This includes Charles supposedly claiming he had finally had an “heir and a spare” once Harry was born, meaning his job was “done”.
3. What about his other advantages?
Charles does not have to pay tax on his inheritance from his mother, the Queen, as there is a special rule for inheritance going from one monarch to another.
This is part of a 1993 agreement – so while he does voluntarily pay income tax, he does not have to pay the 40% levy on all assets valued at more than £325,000 which the rest of the UK population does.
That meant he automatically inherited the Queen’s £652 million estate with no deductions.
As former BBC correspondent Peter Hunt tweeted pointing out: “The exemption the King enjoys is unjustified at any time, but especially during a recession.”