The funding of the monarchy is to be reduced from 25 per cent to 12 per cent of the Crown Estate’s net profits – but the Royal Household is still expected to benefit from a boost of nearly £80 million.
A change to the way the taxpayer-funded Sovereign Grant is calculated has been introduced following the Crown Estate’s new offshore wind deals, with its annual profits expected to soar above £1 billion.
Despite the new formula, the King will still receive almost £40 million extra a year in both 2025 and 2026, if projected profits prove correct.
It is understood the increase will be temporary and used to ensure the completion of the £369 million reservicing of Buckingham Palace – the major works to refurbish the royal residence which are due finish in 2027 – with the money part of that pre-agreed funding.
The changes came out of a review by the three Royal Trustees – Prime Minister Rishi Sunak, Chancellor Jeremy Hunt and Keeper of the Privy Purse Sir Michael Stevens – which was published on Thursday.
The King asked in January for the wind farm profits to be used for the wider public good.
The Treasury said, without the changes and if the rate remained at 25 per cent of the profits, the Royal Household’s income would have been £24 million higher next year and £130 million higher in both 2025 and 2026.
Extra profits will be used to “fund vital public services, for the benefit of the nation”, it said.
Republic, which campaigns for an elected head of state, called for the Sovereign Grant to be scrapped.
Graham Smith, chief executive of the group, said: “One minute the Government says there will be cuts to the funding, now we see that was simply never the case.
“The monarchy is set for a 45 per cent increase in funding on the new 12 per cent rate.
“That’s at a time when key workers are being denied real-terms wages increases.
“It’s time the monarchy was scrapped. In the meantime we need to slash its budget and get rid of the Sovereign Grant.”
The Sovereign Grant is based on funds two years in arrears.
The total Sovereign Grant for 2024/25 will remain flat at £86.3 million because of a caveat which means it cannot fall below current levels.
The Crown Estate profits in 2022-23 were £442.6 million, meaning had the 25 per cent formula continued, the monarchy would have received £110.7 million in 2024/25.
At the new 12 per cent formula, the monarchy would have received £53.1 million – but because it cannot be less than the previous year, it will remain at the current £86.3 million.
Predictions in the report set the expected Crown Estate profits in 2023-24 as £1.04 billion and 2024-25 as £1.05 billion, meaning the Sovereign Grant could be £124.8 million in 2025-26 and £126 million in 2026-27 – a jump of nearly £38.5 million and then £39.7 million, compared to the current rate.
This could mean the monarchy’s official funding increases by 45 per cent in 2025-2026.
If the 25 per cent formula had continued, the monarchy would have received £260 million a year.
The Sovereign Grant will be recalculated when the Palace building works are finished, the Treasury said.
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