Is the Royal Family Worth It to the UK Economy?

BusinessIs the Royal Family Worth It to the UK Economy?

Is the Royal Family Worth It to the UK Economy?

As Prince Harry and Megan Markle’s wedding approaches and U.K. businesses stand to clean up from the sudden wave of tourism, some are looking at the Royal Family’s bigger picture.

The Cost of the Wedding

This Saturday, 19 May, Prince Harry will marry Meghan Markle.  The ceremony will take place in Windsor Castle’s St. George Chapel.  The Royal Family has decided on the wedding budget, including everything from the food to Markle’s Ralph & Russo Couture gown. They will be covering that bill. However, the public will be paying for the security costs surrounding the event.  They have been estimated at over £20 million.

The Gain from the Wedding

At the same time, Prince Harry and Meghan Markle’s wedding is drawing thousands upon thousands of additional tourists from other countries. These tourists will spend on everything from airline tickets to accommodations, from restaurant meals to attraction tickets and, of course, the souvenirs they will be bringing home.
This shot in the arm to local spending by tourists from abroad will help to offset some of the public costs of the wedding. In fact, some have gone so far as to say that the memorabilia sales will help to give the economy as a whole a much needed boost.
That said, as is the case after every major event of this nature, the cost or benefit of the Royal Family itself is being called into question.  How much is the British publish spending on its monarchy. Is it enough of an asset to the U.K. economy to make it worthwhile? Is the Royal Family a cost to the taxpayer for which he or she is not being adequately compensated in return?

The Sovereign Grant

The monarchy’s official expenditure receives its direct funding through what is known as the Sovereign Grant. In 2012, the Sovereign Grant was implemented as a replacement for the Civil List and grants-in-aid from various British government departments.  It is meant to be reviewed every five years.
The Sovereign Grant for 2016-2017 was £42.8 million.  This increased to £76 million in 2017-2018 as a result of an increase in funding required to renovate Buckingham Palace.  On average, the cost to every U.K. taxpayer is about £1 per year.

That said, this total does not include additional security costs required for protecting members of the Royal Family.  According to the estimates of one republican pressure group, once the security costs are included, the total rises significantly. Their estimates are that the total would be closer to £100 million and that the public actually pays closer to £350 million per year to cover the total cost of the Royal Family.

Where Does the Money Go

A considerable portion of the aforementioned money is spent on funding the official duties of Royal Family members.  This includes such responsibilities as traveling the country, traveling abroad, holding chairperson positions at charities, opening buildings, and hosting events.
Furthermore, certain members of the Royal Family, such as the Queen and Prince Charles, have private incomes.  These incomes are generated by their own financial assets and private landed estates and not from public taxation.
The Queen also receives “The Privy Purse,” which is the revenue drawn from The Duchy of Lancaster, a landed estate. In 2016-2017, the sum from that revenue was £19.1 million.

Paying the Royal Taxes

Despite the fact that the Queen is not obligated to pay taxes, she has voluntarily done so since 1992. Queen Elizabeth has volunteered to pay both income and capital gains tax on her private income and on the revenues she receives that are not used for financing her official duties.
Since 1993, Prince Charles has also volunteered to pay income taxes on his Duchy of Cornwall landed estate. In 2016-2017, the Duchy of Cornwall brought Prince Charles a £22.5 million revenue.  He paid £4.76 million in taxes from that revenue.

Queen Elizabeth Prince Harry William Royal family Buckingham Palace London June 2015
The royal family in Buckingham Palace, London June 2015.

That said, most of Prince Charles’s revenue from the Duchy of Cornwall pays for his official duties.  It also pays for Camilla, William and Kate, and Harry’s official duties. As a result, Prince Charles’s tax liability from his Duchy of Cornwall landed estate income is offset.
Among Prince Charles’s direct family members, any of the “working royals” receive Sovereign Grant revenues to some degree.
Moreover, some of the Privy Purse given to the queen is used to pay for her official duties, meaning that she does not pay income tax on that amount.

How Does it All Add Up?

On the flip side of the coin, the Royal Family is also an important draw in terms of tourism.  VisitBritain estimates that tourism connected with Windsor Castle, Buckingham Palace and other royal residences brings in an annual 2.7 million visitors from abroad.  Furthermore, the Brand Finance consultancy estimated that the monarchy brought £1.8 billion into the country last year. It boosted tourism revenue by an estimated £558 million in tourism.  It also increased trade when members of the Royal Family served as ambassadors, which is estimated to be worth approximately £150 million per year.
In 2016, visitors from abroad spent an estimated £22.5 billion visiting the United Kingdom. Total exports that year reached £543 billion. Comparatively, revenues produced by the Royal Family’s contributions are significantly smaller than this total figure.
That said, it would still be difficult to determine how much harm would be done to U.K. tourism without the presence of the Royal Family. Many wonder if visitors would be as interested in visiting British historic sites if they were no longer active residences of the Queen and her family. To that end, the question of whether or not the Royal Family is a worthwhile contributor to the British economy is less a matter of strict numbers, but is instead a much broader and less measurable issue.