The Sovereign Grant has always been theoretically open and accountable – but also to many has felt fairly incomprehensible. This annual public payment for the running costs of the monarchy is based on a percentage of the Crown Estate’s profits.
But the money does not come from the Crown Estate, which is an independent property business but rather from the Treasury.
Adding another layer of complexity, is that the Sovereign Grant had been increased to pay for 10 years of building work at Buckingham Palace, with a particularly sharp two-year rise which has brought the grant to almost £138m this year, a record high level.
For the first time since it was introduced in 2012, the grant is now going to be lowered, down to the figure of £99.9m and will stay like that for five years.
This is an authentic reduction in the headline figure. And it’s a decision that has been signed off by Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves, in what might be one of their last big changes of the current administration.
There is a complication though. While the total Sovereign Grant is being lowered, the underlying core amount is going to be much higher than before the building work began. It’s coming down, but not to where it was before, even taking into account inflation.
It’s something like how petrol prices soar because of some international incident, and even when they come down from a peak, they don’t seem to go back to where they started.
Before the initial increase for the building work, the Sovereign Grant in 2016-17 had been about £43m, which taking into account inflation, would now be about £58m, using figures from the House of Commons Library.
So the “lower” figure of £99.9m compared to £138m is still considerably higher than the equivalent amount from before the rise was introduced to pay for the palace building works. It has been reduced, but to a much higher level than before.
More recently, in 2024-25, the core amount of the grant, without extras for building, was about £52m – significantly lower than what will become the new base level of funding from next year.
