Pandemic makes a £35 million hole in the Queen’s purse

The Queen is facing a £35 million (NZ$68m) shortfall in her finances as a result of the pandemic, but her staff need not fear for their jobs.

Buckingham Palace has revealed that income will fall by £5 million a year for the next three years because Windsor Castle and other tourist attractions were forced to close during lockdown.

The Queen will also receive £20 million less for the renovations to Buckingham Palace, a ten-year project that was expected to cost £369 million. Instead the palace expects to have to carry out the work for £349 million or less.

Despite the shortfall the palace said it had no plans to lay off staff and hoped to cover losses with efficiency savings.

The palace’s day-to-day finances have been hit because of a fall in income for the Royal Collection Trust (RCT) from a projected £77 million to £13 million. The trust runs the public opening of the Queen’s official residences, including Buckingham Palace, Windsor Castle and the Palace of Holyroodhouse in Edinburgh, and contributes £14 million a year to the palace coffers. The sum is part of the £20.2 million that the palace received in supplementary income from outside sources in 2019-20, up from £17.8 million a year earlier.

Over the past 20 years the trust has contributed £80 million to the royal household finances, said Sir Michael Stevens, who as Keeper of the Privy Purse is effectively the Queen’s chief financial officer.

Launching the annual review, Sir Michael said: ‘‘We are expecting a significant reduction in income from the Royal Collection Trust due to the impact Covid-19 has had on their visitor numbers. This forms the bulk of a projected shortfall in income which we estimate will be around £5 million per year for the next three years.’’

A second shortfall is a result of a fall in commercial rents because of the pandemic. The Queen’s taxpayer income, the Sovereign Grant, is calculated on the basis of the profits of the Crown Estate. In normal times the grant is set at 15 per cent of the profits. If the Crown Estate profits decline the Sovereign Grant is not allowed to fall and instead remains at the previous year’s level. The budget for the palace building works was based on the assumption that Crown Estate profits would continue to rise.

Sir Michael said that the Crown

Estate reported a slight increase in its profits for 2019-20, meaning that the Sovereign Grant for 2021-22 would be £86.3 million – a core grant of £51.8 million and a reservicing grant of £34.5 million. The grant for 2019-20 was £82.4 million.

The reduction of royal activity because of the pandemic, including overseas tours, would help to offset some of the shortfall, a royal source said. – The Times