But unlike many other families, the Queen and Prince Charles are well placed to weather the worst effects of the coronavirus thanks to a funding system that inoculates them against loss.

The Queen will receive a £3 million pay rise this year, for instance, as a result of laws that guarantee her taxpayer-funded income never decreases. The combined earnings of the monarch and her eldest son have more than doubled since the financial crisis of 2008, our investigation shows.

As the rest of Britain endured a decade of austerity, royal earnings from the family’s main sources of income rose from £63.5 million in that year to £142.4 million in 2019. These figures do not include substantial private investments and inheritances – which are hidden from public view.

At the same time, the number of engagements undertaken by the two royals and their spouses – Prince Philip and Camilla, the Duchess of Cornwall – dropped from 1,628 in 2010 to 1,040 last year (the Duke of Edinburgh’s retirement in 2017 was responsible for around half this decrease).

“In terms of the public engagements, they seem to be costing more and doing less,” David McClure, an expert on royal finances, told us.

The royal family is entering a period of almost unprecedented change as they seek to navigate a post-Covid-19, post-Brexit Britain whose subjects might expect and demand more from their rulers – including in a financial sense.

Royal money currently flows between dozens of charities, estates and private accounts, and is sometimes co-mingled. While some accounts are fairly transparent, others seem to be deliberately obtuse, often making it impossible to determine where money ends up.

When the Duke and Duchess of Sussex, better known as Harry and Meghan, moved from a freshly renovated cottage on the Queen’s estate in March to a billionaire’s house in Los Angeles, Prince Harry gave up a share of £5 million allocated yearly to him and his brother, William, to support their official duties. But he kept a personal allowance.

Follow the money

The royal family receive funding from six main sources: 

1. The Sovereign Grant. A taxpayer-funded annual payment to the Queen. This reached £82.2 million in 2018-19 and goes to fund her staff, property maintenance and official travel. Of that sum, about £33 million was allocated specifically to refurbish Buckingham Palace as part of a ten-year £369 million programme.
2. The Royal Collection. The Queen earned an additional £17.8 million in 2018-19 from selling tickets to Windsor Castle and Buckingham Palace, as well as putting on other functions.
3. The Duchy of Lancaster. This is the Queen’s private estate, held on trust to provide her with an annual income. Last year the Duchy generated about £21 million in profits, which she used to fund some of the more minor royals, including Prince Andrew, as well as the upkeep of private property such as Balmoral.
4. The Duchy of Cornwall. This is a billion-pound real estate conglomerate created in 1337 by Edward III for his eldest son, the Black Prince. As heir to the throne, Charles is entitled to the Duchy’s profits but has no access to its capital. The Duchy rents out huge swathes of farmland as well as other properties including the Oval cricket ground in Vauxhall, and Dartmoor Prison. This year (2020) it handed £22 million to Charles, who uses the money both for official costs and personal outlays, including the employment of 116 full time staff, and to fund his sons, William and Harry.
5. Security. Paid for out of Home Office and Police budgets, the money spent on royal security and police protection is the most opaque of all. The total cost could be up to £100 million a year.
6. Private wealth. As David Mcclure, a royal finance expert, points out, there are “lots of trusts knocking around”. The Queen Mother is understood to have left a multi-million pound fortune when she died in 2002. Princess Diana left a sizeable inheritance to her sons William and Harry. Each of the royals has a financial advisor who handles their personal investments. The Sunday Times Rich list estimates that the Queen is personally worth £350 million.

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“Prince Charles will continue to offer private financial support”, was how one royal aide described it to us. In the context of royal finances, however, “private” can mean a lot of things. Would Charles subsidise Harry through the Duchy of Cornwall, the estate that funds both the heir’s official and personal activities? Or would the bulk come through more private investments? And how much was Harry benefiting from other sources of wealth, such as the sizeable inheritances left to him by his late mother, Princess Diana, and by the Queen Mother?

For years there has been a strange tension within the royal family over money: over the cost of their buildings, their lifestyles, and the control of their pursestrings. To understand the tensions between the Sussexes and the Cambridges, or between Charles and his broader family, or the motivation behind Prince Andrew’s vainglorious incursions into business, it’s essential to understand the financial situation of the Windsors.

But royal money is also of wider relevance. The monarchy is an employer, a freeholder, a retailer and an operator of attractions. Royal estates are landlords to hundreds of businesses, farmers and families; royal land is home to offshore wind-farms that might power a future British energy industry.

As Britain heads for a severe recession, demands for fairness and transparency in the public finances will only grow louder. So how we pay for the monarchy – an institution inextricably bound up in how the country sees itself – matters.

Our main findings have been:

• Reforms brought in by George Osborne  as Chancellor have led to the Queen’s annual taxpayer-funded grant rising from £31 million in 2013 to £86 million this year. Adding in ticket sales to Buckingham Palace and Windsor Castle, the monarch’s official income in 2018-19 hit £100 million for the first time;
• The Queen’s public income has risen so much that the Prime Minister is now legally able to reduce the size of her annual grant. Boris Johnson has declined to do so;
• Prince Charles is £4.4 million a year richer than he was in 2009 thanks to soaring profits at his semi-private estate, the Duchy of Cornwall, which is exempt from corporation tax. He has nearly quadrupled what he spends on his two sons and their spouses, from £1.7 million in 2009 to £8.2 million last year;
• Looking further ahead, the royals are only going to get wealthier: a future King Charles has the capacity to earn up to £500 million from offshore wind-farms built on the Crown’s land. There is no evidence that a promise made by Clarence House to “ring-fence” such earnings because of Charles’s personal interest in renewable energy has been acted upon.

Corona costs 

There is no doubt that Covid-19 presents a huge challenge to the monarchy – both operationally and financially.

This month, the Queen’s official birthday, with its traditional Trooping the Colour pageantry, was cancelled and she missed Royal Ascot for the first time in 68 years (it may have been some consolation that her horse, Tactical, won the £40,000 Windsor Castle Stakes).

In March it emerged that Charles had actually caught the virus – albeit in a relatively minor form. Since his recovery, the 71-year-old heir has warned we could see more global pandemics if we fail to tackle climate change and the loss of biodiversity.

On the money side, the next few days and weeks will see accounts published by several royal estates and charities that are expected to show multi-million pounds losses caused by the pandemic.

The Royal Collection Trust, a charity that provides the Queen with £7 million a year from selling tickets to Buckingham Palace and other state buildings, has shut up shop for the summer, potentially losing out on more than 3 million sales.

The family’s estates will also be hit by Covid-19 as they generate profits through renting out farmland and commercial properties. Last week, the Prince of Wales’ Duchy of Cornwall estate warned that “revenue surplus” next year would be down “by a significant amount”.

“The whole country is very likely to be impacted financially by the coronavirus,” a Buckingham Palace spokesman said earlier this month. “The Royal Household is no exception.”

Yet through the decade of austerity between 2010 and 2020, as average household incomes in Britain stagnated and most of us tightened our belts, the Royal Household has seen its earnings more than double.

The cash has allowed the Queen to spend an extra £45 million on property maintenance – in addition to the £369 million refurbishment of Buckingham Palace that began in 2016. Taxpayers have paid £1 million to resurface Kensington Palace’s driveway and £700,000 to install a “small boiler room” at Windsor Castle, in order to service its private apartments. Most famously, £2.4 million of public funds was used to restore Frogmore Cottage for the Duke and Duchess of Sussex.

Compared to 2013, she now employs 50 more people, funding the salaries of 463 full time employees through public money. On page 87 of Buckingham Palace’s accounts for 2018-2019 is a £3.2 million publicly-funded expense for “replacing a helicopter”.

Despite increasing costs, so much money has come into Buckingham Palace in recent years that its reserves have swollen to £65.8 million. The Royal Collection Trust, the charity which manages admissions to Windsor Castle, has itself built up reserves of £69.4 million, its accounts show.

In other words, the Queen is flush with cash.

In it together

When George Osborne announced a major reform of the royal finances in 2011, the then-Chancellor was clear. “The important thing,” he told MPs, “is that the amount of money going from the public purse to the royal household will broadly be the same.”

A Treasury briefing document went further. The new Sovereign Grant would be so low that “the Queen will have an effective pay cut until at least April 2015”, it said.

This language was in keeping with the “all in this together” mantra of the government’s austerity programme. And it was backed by Sir Alan Reid, the Queen’s treasurer, who said that the monarch was “keen that the Royal Household should play its part in reducing its expenditure”, after Osborne announced plans to slash public spending.

The reality turned out to be very different.

In 2012, the first year the Grant came into force, the Queen received £31 million. The following year she received £36 million. By 2016, the grant had risen to £42.8 million. This year – in 2020 – the Queen will receive £85.9 million from the taxpayer. Despite Sir Alan’s optimism, the Queen’s costs have also risen. Last year she spent £67 million, compared to £42.3 million in 2012.

For hundreds of years prior to 2011, the royal family received funding through a complex combination of sources, including something called the Civil List. Osborne told MPs that the Sovereign Grant was simply a device to consolidate royal funding.

Instead of four separate grants, the Queen would now receive just one sum per year, he said, calculated as equal to 15 per cent of the profits of the Crown Estate, a UK real estate business worth £14.3 billion. The company owns thousands of acres of farmland and huge swathes of central London, including the whole of Regent Street.

Although the Queen technically owns the Crown Estate, since 1760 the monarch has surrendered its income entirely to the Treasury. Osborne’s reforms linked its fortunes to the monarch’s own funding for the first time in 250 years.

As the Crown Estate’s profits increased, thanks partly to the soaring value of real estate, so the Queen’s coffers began to flood with cash. And the benefits were locked in. If profits ever decreased, the Grant would simply remain at the same level until they went up again.

“The Sovereign Grant was a deliberate policy by George Osborne to put the royal finances beyond parliamentary scrutiny and to give the monarchy a big increase,” Lord Adonis, a Labour peer, told us. “Changing it to a formula relating to the Crown Estate put the whole thing completely above scrutiny.”

A former senior civil servant agreed: “It was a trick,” they said. “A political piece of presentation to try and tell the British public that the royal family didn’t cost the nation anything. Osborne, in complicity with the palace, was trying to pull a fast one.” (Osborne declined to comment).

The size of the Grant is reviewed every five years by three people known as the royal trustees: the Queen’s treasurer, the prime minister and the chancellor of the exchequer.

By 2016, despite the Grant already rising from £31 million to £42.8 million a year, the three trustees at the time (Theresa May, Philip Hammond and Sir Alan) decided to increase it yet further to fund the refurbishment of Buckingham Palace.

Instead of receiving 15 per cent of Crown Estate’s profits, the trustees decided that the Queen would for the next decade receive 25 per cent: giving her a refurbishment pot of £369 million.

Parliament voted through their decision in a day, despite a petition signed by 150,000 people urging the Queen to pay for the repairs herself as “there is a national housing crisis, the NHS is in crisis and austerity is forcing cuts in many front line services.”

“The increase was subject to no oversight whatsoever,” Adonis said. “The monarchy is almost the only institution in the past 10 years that’s been exempt from financial efficiencies or oversight.”

David McClure, the royal finances expert, echoed these thoughts. “There was one small debate in parliament which was outrageously inadequate – and which allocated £369 million at a time of austerity.”

In 2011, Osborne promised MPs that a safety mechanism would prevent any “disproportionate rise in revenues for the Royal Household”. This allowed the size of the Sovereign Grant to be reduced if its surplus grew greater than half the value of what the monarch spent each year.

This year, that safety mechanism was triggered. Income so exceeded expenditure in 2019 that the grant’s reserve fund – where any leftover cash is put – ballooned to £44.4 million, significantly more than half the £67 million which the Queen had spent last year.

The Royal Trustees – at this point Boris Johnson, Sajid Javid and the Queen’s Treasurer, Sir Michael Stevens – therefore had a mandate to reduce the size of the fund for 2020-21 (Sir Michael, like his predecessor Sir Alan Reid, both worked for KPMG before joining the royal household).

And yet, we have learned, they declined to do so. This year’s grant will remain at £85.9 million – effectively giving the monarchy a £3 million pay rise even though reserves have swelled to record proportions, and amid a looming recession.

The trustees justified not implementing the safety mechanism because – they said – expenditure on the Buckingham Palace refurb would ramp up in the next 12 months, bringing the level of the surplus back below 50 per cent. But critics are far from convinced.

Good value?

At a Thinkin last Wednesday, Tortoise members discussed the royal finances and asked: is the royal family worth it?

For some in the discussion – and for many people in the country – the question is almost impertinent. Along with Sir David Attenborough, the Queen remains the public’s most admired figure. Her approval ratings are off the charts. According to some estimates, the royal family brought in £550 million for British tourism in 2019 alone. And – quite apart from money – the Queen is so central to British identity that her contribution to our cultural and political heritage is arguably incalculable. Against that background, what does it matter if the monarch’s taxpayer-funded grant is rising? Or that her books are not fully transparent? When it comes down to it, a lot of us feel like Katie Vanneck-Smith, our co-founder, who told the Thinkin members (twice): “I bloody love the Queen.” Even if you love the Queen, we believe there’s a public interest in looking into her finances. Not just because money is a lens through which we can understand the royal family better, although that’s certainly the case, whether you’re talking about Prince Harry or Prince Andrew. But also because royal assets touch the lives of thousands of people in Britain, from the offshore wind farms being built on Crown-owned land, to the tenants occupying Crown-owned property. And, as we prepare to enter a Covid-caused recession, expectations around fairness and accountability might also change. How we see the royal family might have to adjust accordingly. If they’re getting richer, then it’s important to know why.

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“The 2011 arrangement has become a one-way ratchet for significant and extra-parliamentary increase in the revenues of the Crown,” Lord Adonis said. “We’ve only got their word that it’s on time and on budget.”

A Buckingham Palace spokeswoman told us that the Sovereign Grant was approved by the Treasury and reviewed every five years. “The Royal Household publishes a detailed audited annual financial review.”

She added: “Since it came into effect, increases in the core Sovereign Grant have come with a commitment to address a historic backlog in the maintenance of the occupied Royal Palaces and since that date two thirds of the increase received has been allocated to property maintenance. In 2016 Parliament agreed that the Sovereign Grant would include a temporary uplift to fund a reservicing programme of Buckingham Palace from April 2017. The ten-year programme followed a report to HM Treasury identifying that the building’s infrastructure was in urgent need of an overhaul to avoid the very real danger of catastrophic failure.”

A windfall

The Crown Estate has enjoyed bumper profits in the last decade, thanks partly to its ownership of 9.9 million sq feet of real estate in central London. As its wealth has grown, so has the value of the Sovereign Grant.

But the estate has another, longer-term, asset which might prove even more profitable for the royal family: offshore wind.

Through a quirk of history, the Crown Estate manages the rights to virtually all the seabeds off the coast of the United Kingdom. Any energy company hoping to operate an offshore wind farm in British waters needs to lease its space from the Crown Estate.

Currently only a few wind farms are operational, generating £8.6 million last year for the estate’s coffers.

But this sum is likely to soar in future years thanks to the government’s promise to deliver up to 40 gigawatts of offshore wind capacity by 2030, equal to almost 50 per cent of Britain’s electricity demand.

Figures calculated for us exclusively by Jonathan Marshall, the head of analysis at the independent think-tank the Energy & Climate Intelligence Unit, reveal the scale of the potential windfall for the royal family when all the planned windfarms come online.

“The total cumulative annual revenue from all projects that are currently under construction, or that could be built, is £8.4 billion,” Dr Marshall said. “The Crown Estate would take two per cent of this as rent, or £168 million a year.”

Since the offshore farms are secured by 15-year contracts, the potential royalties flowing into the Crown Estate total £2.52 billion, he said.

Currently the Sovereign Grant is set at 25 percent of Crown Estate profits but the government intends that this will fall to 15 percent after the 10-year Buckingham Palace refurbishment programme is completed.

Plugging those figures in makes it possible to estimate that in the next two decades the monarchy has the capacity to earn up to £500 million just from offshore wind. The royals bear no risk and have contributed no capital in order to achieve this substantial gain.

Charles is well known for his support for renewable energy. At the time the sovereign grant was being debated in 2011, the Press Association news agency reported that the Prince had personally intervened in the discussions to “make sure there was no conflict of interest over his support for renewables.”

A Clarence House spokesman was quoted at the time as suggesting that any money generated from offshore wind would be treated separately from other Crown Estate profits and would not be used to assess the size of the royal grant.

“From the beginning the Prince of Wales personally insisted that any growth in income from offshore wind farms is ring-fenced as part of any settlement,” the spokesman told the PA.

We could find no evidence that any funds have been ring-fenced, however. Clarence House declined to comment.

Very few Britons have received a £6 million pay rise since the financial crisis of 2008. Prince Charles is a notable exception.

The 71-year-old and his immediate family are funded primarily by the Duchy of Cornwall, a billion-pound real estate conglomerate created in 1337 by Edward III for his eldest son, Prince Edward (known after his death as the Black Prince). The Duchy rents out huge swathes of farmland as well as other properties including the Oval cricket ground in Vauxhall, and Dartmoor Prison. As heir to the throne, Charles is entitled to the Duchy’s profits but has no access to its capital.

The Prince uses Duchy money to pay for his official costs – such as travel, the maintenance of his London residence and the cost of running his office. The leftover money – or surplus – is Charles’s to spend however he wants.

Analysis of the Duchy accounts reveals a remarkable pattern. While the Duchy’s overall profits have risen substantially – from £17 million in 2010 to £21.6 million today, Charles’s official costs have remained remarkably stable, settling each year at around £11 or £12 million. With these sums – on which the Prince pays no tax – he funds 116 official staff including four chefs, three chauffeurs, nine house managers, two valets, 18 gardeners and a butler.

As official costs have stabilised, it is Charles’s personal income that has most benefited from the growth in the Duchy’s profits. These earnings – after official costs are deducted – rose from £7 million in 2008 to £13 million today. Even after voluntarily paying tax on this proportion of his income, Charles is £4.4 million a year personally richer than he was twelve years ago.

Where has the majority of this money gone? On his two sons: William and Harry.

Former aides have told us that the Prince put pressure on the Duchy to boost its profits when his sons were young, in anticipation of them needing their own private offices.

“The big thing that changed when I was around is the extra strain on the Duchy created by a busier and more expensive Duke and Duchess of Cambridge and Duke and Duchess of Sussex,” one said.

“Everyone knew that when William and Harry got older and had their own offices and duties they’d require more cash. There was pressure to grow income to meet rising costs.”

The status of the Duchy is a matter of intense debate. On the one hand, it is accepted by the government as a “crown body”, allowing it to avoid paying corporation or capital gains tax as well as a host of other anachronistic perks that would never be available to a private company.

On the other hand, the Duchy insists it is a “private estate”, a status that allows it to avoid the scrutiny that would be applied to a public body. In the words of one academic, it tries to have its cake and eat it.

“The Duchy of Cornwall has been assiduous in avoiding public scrutiny,” John Kirkhope, the academic, said. “It has changed its status constantly, from being a Department of State and the government of Cornwall to being a ‘mere’ ‘private estate’ which has maintained its secrets for 700 years.”

This “special position” of the Duchy allows it greater privileges than simply tax immunity. The Duchy has the right to unclaimed shipwrecks off the Cornish coast, washed-up whale and sturgeon carcass, and 250 gallons of wine from boats docking at Cornish ports.

Prince Charles also inherits the possessions of anyone who dies in Cornwall without a will or next of kin, a power that in some years has yielded hundreds of thousands of pounds (he transfers any benefit to charity after deducting costs).

The Duchy’s defenders say it has made great strides promoting sustainable farming methods and living standards through building new towns such as Poundbury, in Dorset. Since Charles pays income tax on his non-official income, they say, there is no need for the Duchy to also pay tax. And they say that High Court decisions in 2013 and 2016 confirmed the Duchy’s status as a private estate.

But questions over its status remain.

“To describe the Duchy of Cornwall as a private estate is to use the term in a way which very few people would understand. It is a term used by Government and others without any attempt at explanation,” a 2005 parliamentary committee concluded.

“The estates of the Dukes of Westminster and Devonshire do not claim Crown Immunity; they have no right to consent to legislation which affects their personal property or other interests. They cannot make law, albeit bye-laws whose breach is a criminal offence. They are not asked to finance the official functions of the Head of State or pay the costs of the successor to the Head of State. They do not collect bona vacantia in Devon or Westminster.”

We shall meet again

The Queen celebrated her 94th birthday while the world was in lockdown. Her televised message to Britain – that we “shall meet again” – was widely welcomed by a scared populace.

More so than any other royal, the Queen engenders an admiration that has only continued to grow: a YouGov poll this year gave her a 78 per cent popularity rating across all age groups (the Prince of Wales was down at 48 per cent).

As Prince Charles takes on an ever greater number of royal duties and engagements in preparation for his eventual ascension, his staff are also preparing to take greater control of the royal household’s finances.

The shift will have repercussions across the whole royal family: for his brothers and sister and – indirectly – on his sons, as Prince William takes control of the Duchy of Cornwall.

Charles has already made clear that he favours a slimmed down monarchy: two former employees confirmed to us that as King he would cut down the number of official royals.

“He definitely thought about whether there would be a way of reshaping the monarchy to make it more cost effective,” one said.

“In practice, that meant fewer individual royals. The model would have meant the Duke and Duchess of Kent, the Duke of York, the Earl of Wessex and Princess Anne; they wouldn’t have been involved. He didn’t want the cousins to be a burden on the public purse.”

Will a slimmed-down monarchy mean a drop in royal costs, however? That remains far from clear. The main royal funding structures are geared towards growth: decreasing the Sovereign Grant requires a positive act by parliament or the royal trustees. If they leave it alone, then it will only go in one direction: up.

Illustration by Seamus Jennings. All photographs Getty Images