Sovereign Grant Bill: main provisions
Clause 1: The Sovereign Grant (Clause 1)
At present, funding for the monarch’s official duties comes from three different sources:
- Civil List from the Exchequer;
- Grant-in-aid for royal travel by air and train from the Department for Transport; and
- Grants-in-aid for the maintenance of royal palaces and for communications and information from Department for Culture, Media and Sport.
In future, there will be a new system, the Sovereign Grant, which will combine all three sources of funding into one payment from the Treasury Estimate.
Clause 2: Accounts of the Royal Household
Currently, the Permanent Secretary to the Treasury audits the Civil list. The Comptroller & Auditor General (C&AG) has no access to Civil List expenditure, nor does he audit the grants-in-aid expenditure, though he can and has, carried out value for money studies on them. The C&AG has no access to the Civil List reserve.
Clause 2 provides that Sovereign Grant expenditure will be subject to audit by the Comptroller & Auditor General from 2012. The Treasury will set the form of the accounts and the C&AG will audit them. The Grant accounts will be laid before the House and will be open to full parliamentary scrutiny, including by the Committee of Public Accounts. The C&AG will, in addition be empowered to carry out value for money studies of Royal Household expenditure.
Clause3: The Reserve Fund
Clause 3 sets up a Reserve Fund. It will contain Sovereign Grant not used for the year for which it is made. Similarly, in years when use of resources exceeds the amount of the grant, drawings from the reserve will supplement the Sovereign Grant.
Clause 4: Accounts of the Reserve Fund
Clause 4 provides that the Reserve Fund will also be subject to the same accountability arrangements as the Royal Household. Thus the Treasury will set the form of the Reserve Fund accounts and will be audited by the C&AG. The Reserve Fund will also be subject to value for money studies.
Clause 5: Annual Report as to the amount of Sovereign Grant
Clause 5 requires the Royal Trustees to prepare a report about the determination of the Sovereign Grant. They must calculate the amount of Sovereign Grant for the coming financial year and explain how it has been calculated. Because the report is published and laid in Parliament, the whole process will be transparent. The Royal Trustees are the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse.
Clause 6: Determination of the Sovereign Grant
This clause set out how the Sovereign Grant is to be determined. Initially, the Sovereign Grant for a given year will be equal to 15% of the Crown Estate’s net revenue in the financial year two years prior.
To ensure the Grant remains at an appropriate level, the clause provides that the amount will be subject to following safeguards:
- A capped reserve fund managed by the Royal Trustees. If the Grant proves greater than required in a given year, the surplus will be paid into a reserve fund, which may be drawn down in future years as required. The Trustees must set the sovereign grant to prevent the Reserve Fund remaining above 50%. If the Reserve is above this level, the Trustees may specify a lower grant amount than would otherwise have been implied by the formula;
- A cash terms floor. The grant amount is not normally allowed to fall in cash terms on the amount in the previous year. That is unless the Trustees have specified a lesser amount to manage the reserve in the way described above; and
- Regular reviews by the Royal Trustees. The Trustees will be bound to consider the suitability of the percentage at intervals of seven years and to propose a new percentage where necessary. The Treasury would present an order to implement the change. Affirmative resolution would be required for an increase.
And so, the final level of the Sovereign Grant in a given year is either:
- The greater of: 15% of Crown Estate profit in the year two years prior; and the amount of Grant in the previous year; or
- An amount lower than that, if deemed necessary by the Royal Trustees, in order to maintain the Reserve at a permissible level.
Clause 7: review s by Royal Trustees of Sovereign Grant
Clause 7 requires the Royal Trustees to consider every 7 years whether the percentage remains appropriate.
Clause 8: Power to change level of Sovereign Grant
Clause 8 applies if the Royal Trustees’ review in clause 7 calls for a different percentage to be used in the formula in clause 6. It requires the Treasury to implement the conclusions of the review. The clause requires the Treasury to lay an order to amend the percentage in clause 6. An affirmative order is required if the percentage is to be increased. But there would only need a negative order for a decrease.
Clause 9: Duchy of Cornwall income and grant to the heir to the throne
Clause 9 ensures that equivalent financial provision is made for heirs to the throne, whether Duke of Cornwall or not.
It provides that, if the heir is not the Duke of Cornwall and is over 18, the heir is given a grant equal to the Duchy revenues, unless Duchy revenues are more than the Sovereign Grant. The monarch would receive the Duchy revenues, and the Sovereign Grant would be reduced by an equal amount. In effect, the heir would receive the Duchy income.
If the Duke of Cornwall is a minor, 90% of the revenues of the Duchy would go to the monarch and the Sovereign Grant would be reduced by an equivalent amount.
Clause 10: repeal of certain financial provisions
Clause 10 repeals certain financial provisions in the Civil List Acts of 1952, 1972 and 1975.
Clause 11: Maintenance of Royal Palaces and related land
This clause removes the responsibility of the Secretary of State for the Department of Culture, Media and Sport to maintain the Royal Palaces and related land that are in future to be maintained by Her Majesty out of the Sovereign Grant.
Clause 12: Meaning of “the audited net relevant resources”, “the value of the Reserve Fund” and “the income account net surplus of the Crown Estate”
This clause explains the meaning of certain terms in the Bill.
Clause 16: Duration of Sovereign Grant provisions
Powers in previous civil list legislation have been set to expire six months after end of a monarch’s reign. In this time Parliament must enact primary legislation for the successor sovereign. Clause 16 allows future incoming monarchs to extend the new grant provisions for their reign by Order in Council, and thereby signify their willingness to put their hereditary revenues at Parliament’s disposal.
Miscellaneous provisions: Annuities
Provisions in Clause 10 and Schedule 1 repeal a number of annuities that are payable to other members of the Royal Family to relieve expenditure incurred in connection with official duties. They are currently repaid by the Queen from Her Privy Purse. Her Majesty has indicated that She will continue to provide equivalent financial support.
There is no change to the annuity paid to the Duke of Edinburgh. The Parliamentary Annuity for HRH Prince Philip (£359,000 p.a.) will continue to be payable from the Consolidated Fund on a calendar year basis.
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