Palace expenses force King Charles to dip into the reserve fund

LONDON — King Charles III has vowed to streamline the royal family, making it less of a burden on British taxpayers. But a report on the family’s finances, released on Thursday, shows the target remains elusive, with the king having to dip into reserves to meet rising costs in a year of major royal changes.

The death of Queen Elizabeth II and the inflation-driven cost of renovating Buckingham Palace pushed the family’s official spending to more than 107 million pounds ($135 million) last financial year. This forced Charles to withdraw 20.7 million pounds ($26 million) from the reserve fund to cover the shortfall between the costs and the annual grant the family receives from the government.

The report – an annual report on the palace’s running costs – found the royal family grappling with a cost-of-living crisis, albeit one of a different kind than the skyrocketing gas bills and soaring mortgage rates afflicting ordinary Britons. Charles is in the middle of an expensive home improvement project at Buckingham Palace, which means he and Queen Camilla are still living at his nearby Clarence House residence.

A series of ceremonies – from the Queen’s platinum jubilee celebrations to her state funeral last September to planning for the King’s coronation in May – have also added to costs. The funeral cost the palace itself 1.6 million pounds ($2 million), while the jubilee, which marked Elizabeth’s 70th year on the throne earlier in 2022, cost 700,000 pounds ($885,000).

It was “a year of sorrow, change and celebration the likes of which our country has not witnessed for seven decades,” said Sir Michael Stephens, who oversees the royal family’s finances as keeper of the privy purse, according to the text of the document. he held a briefing for journalists.

But Mr Stevens said everyday adversities such as double-digit inflation in Britain were also contributing to the cash crunch. Due to rising food and fuel costs, he said, the royal family’s operating expenses were up five per cent on the previous financial year, which is about half of the consumer price index.

Buckingham Palace is also falling short of its goal of recruiting a more diverse workforce. The palace said 9.7 percent of its staff were from ethnic minorities, missing the 10 percent target until this year. King has set a new goal: By 2025, 14 percent of all employees must be minorities.

Diversity has been a major issue for the palace since last year, after the queen’s former maid of honor repeatedly questioned Ngozi Fulani, a black woman of British descent, about where she came from at a palace reception. The maid of honor, Susan Hussey, resigned and later apologized to Ms. Fulani face to face.

As Charles begins his reign, royal watchers say they expect him to make the royal family more accessible and reflect the country’s diversity. But reducing the family’s financial footprint will be more difficult, they say, given the personal sensitivities and complexity of the royal family’s finances.

The palace has confirmed that Charles has evicted his estranged son Prince Harry and his wife Meghan from their Frogmore Cottage residence. But it remains unclear what the king plans to do with the home, which sits in a park near Windsor Castle and has undergone a $3 million renovation that the couple paid for after their 2018 wedding.

London newspapers reported that Charles wants his younger brother, Prince Andrew, to move to Frogmore from the much larger Royal Lodge, which could then become the residence of the king’s heir, Prince William, and his wife, Princess Catherine. But Andrew is reportedly resisting it.

For now, Frogmore sits empty, joining the list of empty or underused royal estates. Buckingham Palace has been without a monarch since the Queen left it at Windsor Castle in early 2020 as the pandemic subsided. Charles and Camilla are scheduled to move in when a 10-year, $467 million renovation is completed in 2027. But they say they prefer the cozier Clarence House.

Royal experts say the king is receptive to the idea of ​​opening up more of Buckingham Palace to paying visitors, which could turn it into a lucrative tourist attraction. But that raises another potential problem: If a family demonstrates it can cover a significant portion of its running costs by opening a palace or other residences, it could jeopardize the “sovereign grant,” as their government subsidy is known.

Under the agreement, which dates back to 2012, the king transfers to the government the income from the Crown Estate, the vast collection of land and real estate owned by the monarch. In return, the family receives a fixed sum – currently 86.3 million pounds ($108 million) – calculated as a percentage of the estate’s profits.

This number has remained unchanged for the past two years, and costs continue to rise. The palace supplements the grant with profits from the Royal Collections Trust, which charges for visits to royal residences such as Holyrood Palace in Edinburgh. But the pandemic has reduced those numbers.

The Crown Estate, which receives rental income from a variety of sources including designer shops on Regent Street and a wind farm off the British coast, is a reliable source of cash. But he has also had setbacks: In his annual report, also published on Thursday, he said his London property holdings had lost 500 million pounds ($629 million) in value due to the pandemic.

Much about the royal family’s finances remains shrouded in mystery. This week’s report does not cover the cost of their security, which is huge and borne by the government. Last month, for example, the Treasury said the Queen’s funeral cost the government 162 million pounds ($204 million), about half of which went to security.

Citing the transitional nature of this year, the palace did not disclose William’s spending, as it did with Charles when he was Prince of Wales. And the report does not touch on Charles and William’s tax accounts or their private fortunes. Each owns vast properties through duchies that bring in millions in profits.

“Transparency is limited at the best of times,” said Peter Hunt, the BBC’s former royal correspondent. “The royal family’s finances are such a toxic issue for the government. Both sides want to limit parliamentary control.”