The Royal accounts are printed in red and gold

6th February, 2014

The monarchy costs the same as the milk the nation pours on its cereal, says Tim Harford

‘Britain’s Royal Household spent more than it received last year and is doing too little to improve the management of its finances, a parliamentary watchdog says.’, Financial Times, January 28

What – parliamentarians have condemned deficit spending and poor financial management?

They are the experts on such things, I am sure. This is Margaret Hodge MP’s public accounts committee at work. It has a reputation for shaking things up but I’ve never been able to take Ms Hodge seriously since her complaints about a cap on housing benefit.

What was risible about a cap on housing benefit?

Nothing risible about that as such. But because the cap would particularly affect Londoners claiming the benefit, Ms Hodge was among those complaining that it would change the shape of London. She called it “a massive demographic and social upheaval the likes of which have never been seen before”. Since the London mayor’s office – which also opposed the policy – estimated that fewer than 0.2 per cent of the capital’s families would have to move home as a result, that suggests an alarmingly shaky grasp of the numbers for someone whose job is to oversee value for money in public spending.

You’re an unforgiving sort. In any case, Ms Hodge’s committee is concerned about the way the world’s largest housing benefit cheque is being spent.

Yes, the Royal Household receives £31m – a slice of the income from the Crown Estate.

Isn’t that the Queen’s money?

The Estate is nominally the property of the Queen but George III signed over its revenue to parliament.

Wasn’t he the mad one?

Not at the time he gave up the revenues from the Crown Estate. In any case, the current arrangement is only a couple of years old. The Royal Household gets 15 per cent of the income from the Crown Estate. That income, I might add, is sharply rising.

So all this talk of the Queen being down to her last million is nonsense?

It is obviously jolly amusing and has provoked many enormously original jokes. The Queen’s cash reserve has indeed fallen to £1m – not much relative to the scale of the spending required to run the Royal Household. But since income is rising, both from the Crown Estate and from admissions to the likes of Windsor Castle, and spending has been steadily falling, the Royal Household is about to go into surplus. That is more than you can say for the government.

But you can understand why parliament takes an interest. There’s serious money at stake. Think of the hospital beds you could provide for £31m.

Oh, absolutely. You could keep the English National Health Service running for almost three hours for that kind of money.

I’m getting the sense that you’re a monarchist.

Not particularly, but one thing I’m sure of is that the case for or against the monarchy can’t depend on £31m, which is roughly the cost of the milk the nation pours on its cornflakes each morning, plus a bit of tea and toast. This has been reported in all the papers for roughly the same reason that Kim Kardashian’s latest celebrity exploits are reported everywhere.

Why is that, by the way?

Because we’re all monkeys, and we’re fascinated by other monkeys with higher status than us.

But the public accounts committee thinks the real monkeys are the ones in charge of maintaining Royal Household properties – that whoever is in charge of electrical repairs, repointing the bricks, that sort of thing, has been letting things fall into ruin.

Yes – the committee’s view is also that the Royal Household needs to take responsibility for itself and the Treasury needs to take responsibility for it; that it is successfully saving money but should save more; and that it is successfully raising money from tourists but should raise more from tourists. Basically, just think really hard about whatever you already believe is true about the Royal Household, and I am sure I can spare you the trouble of reading the committee’s report.

And do you agree that maintenance of Household properties is lax?

I don’t know because they’ve never invited me in to poke around the plumbing. But it wouldn’t surprise me. There isn’t much competition, and as the great economist John Hicks said: “The best of all monopoly profits is a quiet life.” That may well be how the courtiers felt – until the public accounts committee came along.

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