James Wild

The background to this motion dates from 1760, when the agreement was reached with George III to surrender the Crown Estate revenues to the taxpayer in return for Government support, but it was not until the Sovereign Grant Act 2011 that financial support was delivered through the sovereign grant. The purpose of the Act was to bring together a patchwork of funding streams and arrangements into a more transparent system with greater accountability to taxpayers. The motion that the Minister has moved proposes three important changes: it sets the baseline for the sovereign grant for next year, it updates the percentage and, finally, it creates a mechanism to allow the Treasury to set the grant in future years in certain circumstances, which includes potentially reducing the amount in the sovereign grant. Given that the grant funds the duties of the monarch and the royal household, we support this approach and the motion. It is worth reflecting that in an era when many institutions struggle to find public support and respect, the monarchy continues to play a unique role in our lives. Whether it is representing Britain overseas, supporting charitable organisations, strengthening diplomatic relationships or bringing communities together at moments of celebration or national reflection, the royal family performs an indispensable public service. We saw that in the response following the death of the late Queen and in the support that His Majesty the King has had as he has taken on the responsibilities of the Crown. I should note that His Majesty is a constituent when he is resident at Sandringham in my constituency—[Hon. Members: “He can’t vote!”] He cannot vote. Although Sandringham is a private residence, it hosts official events that are covered by the grant. The value of the royal family is not simply symbolic. Independent analysis has shown the substantial soft power and economic benefits flowing from the institution, whether it is trade, tourism, cultural influence or the prestige associated with royal warrants, which many firms in our constituencies are fortunate to benefit from. The grant enables those benefits to be realised. For this financial year, the sovereign grant stands at £137.9 million, with £97 million of that in core funding and £40 million as the final payment for the Buckingham Palace reservicing programme. When many construction projects—I could mention a number—seem to miss their budget and targets, it is right to acknowledge the National Audit Office’s finding that the 10-year programme has managed to remain in budget, despite challenges, by making trade-offs, actively managing risk and learning lessons. Despite the completion of the reservicing programme, without these proposed changes the funding would remain at the £137.9 million level in 2027, which clearly could not be justified. That is what lies behind the resetting of the baseline to £99.9 million, with the reference percentage raised to 20.5% for the period through to 2031-32. At first glance, that looks like a significant reduction from the current level, but it comes after the completion of the 10-year programme, and core funding has actually increased to £97.6 million this year, from around £52 million in 2024-25. According to the House of Commons Library, if it had simply increased with inflation from 2016, it would now be £59.4 million. We have to ask what lies behind that growth. The jump from £52 million to £72 million in 2025-26 was largely driven by property maintenance, higher payroll and other spending, alongside a top-up to the reserve sovereign grant after a period of largely flat grants. More than half the total grant was allocated to the preservation of the occupied royal houses, which must be right. The further rise to £97.6 million appears to mainly relate to royal travel, digital services, housekeeping and hospitality, although I would welcome the Minister shedding some more clarity on where the remaining costs come from. As we move forward, there is a considerable backlog of maintenance at the occupied royal palaces, a need to modernise ageing systems, to improve cyber security and to invest in more energy-efficient infrastructure. I am grateful to the royal household and the Keeper of the Privy Purse for the constructive conversations I have had with him on behalf of His Majesty’s Opposition regarding the settlement, which does two things: preserve the historic national buildings and run a modern, secure, fit-for-purpose operation. I have a few points that I would like the Minister to clarify. First, ahead of Second Reading, when we will be able to get far more into the detail than we can this evening, will he commit to writing to me with a breakdown of the planned expenditure behind the new £99.9 million figure? For example, why is payroll expected to rise by £7 million between 2026-27 and 2031-32? Core property maintenance rises by 25%. The case for addressing maintenance, particularly in stateroom areas, is clear. Is he confident that the broader programme reflects value for money? Can he confirm that any capital expenditure above £6 million, such as replacing the boilers at Windsor, would require Treasury approval of a business case? Encouragingly, income supplementing the grant is forecast to increase by a quarter over the period. How confident is the Minister in those projections? It is important that there is a focus on efficiency. What external benchmarking of the royal household cost base has there been? Which comparator organisations were used, and what specific efficiencies have resulted or are planned as a result? The reserve, as I have mentioned, fell with the impact of covid and now stands at £21 million. Is there a formal target reserve level that the household is managing toward for resilience purposes, distinct from the statutory 50% reduction trigger threshold? If so, over what timeframe is that expected to be reached? The motion provides for the reference percentage used to calculate the grant rising from 12% to 20.5%, as the Government have set out. That is described as being calibrated to the household’s expected costs for that five-year period. What specific cost forecast underpins that rate? Has it been independently tested or benchmarked, or is it effectively set simply by reference to the household’s own submitted budget? For those who may be concerned that this settlement is too generous, the reality is that there will be a real-terms reduction as the grant remains flat in cash terms over the period. One of the significant parts of this motion, which we will scrutinise carefully in the legislation, is a mechanism to allow the sovereign grant to decrease when circumstances warrant it. This reforms a long-standing feature of the existing system, the “golden ratchet” provision in section 6 of the 2011 Act, under which funding cannot decrease in cash terms. The Government’s briefing note on the King’s Speech tells us that the proposed change means that “the Grant can be reduced from one year to the next, preventing inappropriately high funding”. Of course it is important for all taxpayer funding to represent value for money, but can the Minister elaborate on the rationale for that, given that the settlement is expected to be flat cash over the period? In what circumstances would a reduction be considered appropriate, and what role would Parliament have in scrutinising any such decision? We support the motion and the resetting of the sovereign grant following the completion of the Buckingham Palace works. It is important that we establish a sustainable funding framework for the years ahead. However, there are important questions that I have raised about the increases in the last year ahead of the setting of this new baseline, and in what circumstances the Government may look to reduce the funding. Those questions are asked in the spirit of supporting both the institution of the monarchy and the principle of responsible stewardship of public money.