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British government funding provided to support the monarchy’s official duties will be reduced to 12 per cent of the Crown Estate’s net profits next year, down from 25 per cent.
This reduction in the percentage of profits handed to the sovereign, revealed in a review by the royal trustees published on Thursday, means the Royal Household’s budget will be £24mn lower in 2024 than it would have been, and £130mn lower in each of the two following years.
Money saved from slashing the grant “will instead be used to fund vital public services, for the benefit of the nation”, the Treasury said.
King Charles had announced in January that the royal family would redirect profits from the Crown Estate’s new and lucrative wind farm deals to the “wider public good”.
Last month, the Financial Times revealed that offshore wind developments had driven a 42 per cent surge in the profits of the estate, which owns the seabed surrounding Britain up to 12 nautical miles.
The Crown Estate said it had generated profits of £442.6mn in the last financial year, up by £129.9mn on the previous year.
Option fee income from six offshore wind farm licences, which came into effect at the start of the year, drove much of the increase and offset an overall decline in the British monarchy’s legacy property portfolio.
UK prime minister Rishi Sunak, chancellor Jeremy Hunt and keeper of the privy purse Sir Michael Stevens — who collectively form the royal trustees — made the decision to recalculate the sovereign grant in response to the windfall.
Profit projections in the trustees’ review show the grant is forecast to increase in 2025 to £124.8mn, and will remain at a similar level in 2026, when it is projected to reach £126mn.
The review said the trustees felt this rise would be “appropriate” given “several preceding years of flat grant levels” which had “constrained” maintenance on the royal family’s property portfolio and the renovation of Buckingham Palace.
The grant for next year will remain flat at £86.3mn, with part of the money funnelled towards a 10-year project to renovate Buckingham Palace, due to complete in 2027.
The next recalculation of the sovereign grant, reducing it further, is expected to take place after the renovation is finished.
Hunt said: “For almost 300 years, kings and queens have surrendered the profits from the Crown Estate to the British people, and in return the government has provided a fraction of that to properly support the King in undertaking his official duties.”
The chancellor said the new sovereign grant rate “reflects the unexpected significant increase in the Crown Estate’s net profits from offshore wind developments”.
The system for financing the monarchy was overhauled in 2011 by then prime minister David Cameron. The sovereign grant, which links royal funding to Crown Estate profits, replaced a fixed annual expenditure approved by MPs and reviewed each decade.
The Crown Estate is a public corporation that manages the King’s multibillion-pound land and property portfolio. It is run independently of the monarch and the government.