Taxpayers will receive a boost from profits generated by the Royal family’s wind farms.
The Sovereign Grant, money used to fund the royals on engagements across the globe, is linked to the net profits generated from the Crown Estate.
The Crown Estate is made up of land and property controlled by the Royal family. In January, it struck an energy deal that will rake in gross revenues of around £1 billion a year for at least the next three years.
This will come through six lucrative offshore wind projects, reports the Telegraph. And King Charles has reportedly asked for the cash to be pumped back into the public purse.
It means the proportion of Crown Estate profits that will be handed back to the Royal family by the Government has dropped form 25% to just 12% for the next four years. They will receive a flat rate of £86.3 million for the next two years.
There is a projected increase in profits, almost £40 million for the 2023/24 year as well, which will provide an increase in funding for the next two years, as the Sovereign Grant is tried to Crown Estate profits two years in arrears.
It means the new deal could leave taxpayers around £346 million better off over three years. The Telegraph claims Buckingham Palace sources say the funding would enable the completion of a 10-year renovation at the property.
The work is forecast to cost £369 million in total. It is expected to be completed on time – in 2027 – and on budget.
After that, the Sovereign Grant will be cut once again to reflect the significant profits generated by offshore wind deals and to ensure that taxpayers benefit from the excess.
The latest reduction was made following a review of royal finances by Royal Trustees, Rishi Sunak, the Prime Minister, Jeremy Hunt, the Chancellor, and Sir Michael Stevens, the Keeper of the Privy Purse.
The Treasury told the Telegraph: “Cutting the rate to 12% is expected to reduce the Sovereign Grant by £24 million in 2024/25, compared with the rate staying at 25 per cent, and over £130 million lower in each of 2025 and 2026. This money will instead be used to fund vital public services for the benefit of the nation.”
The review of funding to the Royal family took into account their current income and expenditure, the levels of reserve cash, and the cost of major projects.
It will come into effect once legislation changing the rate has passed in the autumn and be used in the calculation of the grant for four years from 2024/25, when the palace renovation will be finished.
The Sovereign Grant was introduced by former chancellor George Osborne in 2012. It replaced the Civil List, a fixed annual allowance that was voted on by Parliament and reviewed every 10 years.
The amount given back to the royals is reviewed every five years now. It was upped from 15% to 25% in 2017 to support the refurbishment of Buckingham Palace.
The increase was expected to last for around a decade. The new energy deal has however changed the landscape, meaning the King has now asked the profits go straight into the Treasury’s coffers.
The six wind farm projects – three of which are located off the North Wales, Cumbria and Lancashire coast, with three in the North Sea off the Yorkshire and Lincolnshire coast – are believed to be able to generate enough electricity to power around seven million homes.
The Crown Estate will receive around £1 billion annually during construction, which could take around a decade. Afterwards, it will receive income-based rent.