The Queen already has her financial house in order

Why the finger pointing around royal expenses is misdirected
Britain’s Queen Elizabeth II as the Guards march pass outside Buckingham Palace after the Trooping The Colour, at the Horse Guards Parade in London, Saturday, June 15, 2013. Queen Elizabeth II is celebrating her birthday with traditional pomp and circumstance _ but without her husband by her side. More than 1,000 soldiers, horses and musicians are taking part in the parade known as ìTrooping the Color,î an annual ceremony. (AP Photo/Sang Tan)
(Sang Tan/AP Photo)

Queen Elizabeth II is “down to her last million,” her palaces are crumbling because her courtiers can’t control spending, she’s only saved five per cent of her budget, compared to government departments that have slashed up to a third. Those were some of the criticisms being lobbed at the Queen this week. Labour MP Margaret Hodge, the chairman of the House of Commons committee looking into royal household accounts says it needs to “get a grip” on the situation. “I don’t think we’d accuse anybody of profligacy but, what we are saying, is that we don’t think the Queen is served well either by the royal household or, indeed, by the Treasury,” Hodge told the BBC.

Those juicy sound bites echoed around the world, seemingly pointing out mismanagement on such an epic scale that the only solution was to throw a royal flunky or two into the Tower of London. Except, dig down into the data, and an entirely different picture emerges. One that politicians such as Hodge conveniently ignore in their rush to make headlines. In 1991-92, royal household expenditures were 77.3 million pounds. By 2010-11, that had plummeted to 32.1 million pounds (in 2010-11 prices), according to a Treasury briefing document.

First, some background. In 1990, the government fixed the cost of the Civil List, which covers Elizabeth’s costs as head of state and head of the Commonwealth and is largely spent on salaries, at 7.9 million pounds per annum for the next decade. The costs are largely spent on salaries; the Queen gets nothing for herself. When the Civil List funding came up for review in 2000, then prime minister Gordon Brown decided not to change the amount for another 10 years. Twenty years of frozen funding meant the original budget had been cut in half by inflation.

Yet, the Civil List budget was still in the black, largely because of a complete financial and organizational makeover that began with the appointment of David Ogilvy as lord chamberlain in 1984. Sure he’s got a title, 13th earl of Airlie and his sister-in-law is Princess Alexandra, the Queen’s cousin, but he also has a first-class mind and realized the palaces needed to be radically reorganized to increase efficiency. A 1,383-page report containing 188 recommendations was created. “Get on with it,” was the Queen’s reaction, Ogilvy told author Robert Hardman, whose 2012 book, Our Queen, minutely examined the changing monarchy and royal household. (And note the timing: this all started a half decade before the scandalous early 1990s, when critics stridently told the royal family to pay for more of their official duties.)

By that review in 2000, so much had been trimmed by “royal cost-cutting and prudent housekeeping,” Hardman noted, that there was a surplus of 35 million pounds. However, inflation meant expenditures kept rising, reducing that cushion year by year. By 2010, everyone recognized that the system of funding the monarchy had to change. It had become massively complicated, with various government department doling out grants for palace maintenance and travel. And the most important of those funds, a 15-million pound grant to maintain royal residences hadn’t changed since the 1990s, leaving an increasingly large backlog of maintenance. It’s not like the Queen could replace heritage windows with plastic versions from Home Depot, or sell off an Old Master or two to repair the leaking roof. Requests had to go through government departments and quite often the answer was no, even though BP, as Buckingham Palace is called, hadn’t been completely rewired since 1948. In total, the funding to pay the Queen’s expenses totalled around 35 million pounds.

A new deal was in the works, and it involved another uniquely British institution, the Crown Estate. Originally created with properties seized by William the Conqueror, it ebbed and waned through the centuries in various forms, used as a cash register for monarchs to run the kingdom. In 1760 George III surrendered control of the Crown Estate to the government in return for a civil list. It turned out to be an amazingly profitable deal for the government. By 2010, profits had exploded to 231 million pounds with all surplus revenues being funnelled directly into the Treasury.

In 2011, George Osborne, chancellor of the exchequer, announced the old multi-part system would be scrapped. Official duties and expenses would be funded by 15 per cent of the profits of the Crown Estate, though the Sovereign Grant Act. “In real terms it is an around nine per cent cut over the Parliament,” Osborne admitted. Yet it would give officials the flexibility of deciding exactly where and when to spend the overall budget. So much-needed repairs to heritage buildings wouldn’t be held to the mercy of government officials and politicians, but could come from once-separate pots of financing.

And that’s the situation today. Royal officials have spent the last three decades hacking and slashing budgets. The Queen, already having hacked official expenditures by more than 50 per cent, would have to live with the much-reduced finances. The backlog of repairs would have to come from that same pool.

So to have politicians and analysts dump on the Queen, finger wagging about how she has to economize like the rest of government, is the galling. After all, their salaries and expenses have exploded, while the Queen reined in hers. For example, the prime minister’s salary quadrupled between 1990 and 2010.

And there has been scandal after scandal about members of Parliament—who can forget the politicians who thought nothing of making taxpayers pay for moat cleaning and duck houses? In 2009, the Telegraph revealed that Margaret Hodge, the same woman who told the Queen to get her palace in order, had what seemed to be thousands of pounds in dubious expenses:

Margaret Hodge, the MP for Barking, claimed more than £2,200 for “PR support” from Chilli and Spice, a firm based in Chelmsford, Essex, between May and August 2007. The company is run by Janet Coull, who worked as a press officer for Mrs Hodge when she was a junior employment minister between 1998 and 2001.

Under House of Commons rules, MPs are barred from claiming expenses for “self-promotion or PR” for individuals or political parties. Mrs Hodge insisted on Monday that she had paid Ms Coull for “articles, reports and speech writing”, not PR. However, receipts from Chilli and Spice submitted to the Commons fees office by Mrs Hodge specify that they provided “PR support”.

And a check of Hodge’s own parliamentary expenses reveals the “costs incurred by the MP in carrying out their parliamentary duties” were 165,246 pounds in 2012-13, up from 128,646 pounds in 2010-11. So while she berates the Queen, her own expenses have shot up 28 per cent in two years.

Perhaps Margaret Hodge needs to “get a grip” on her own fiscal situation.