Front Burner - The Cost of the Crown

Episode Date: May 5, 2023

On Saturday, pomp, circumstance and royal wealth will be on display in the official crowning ceremony of King Charles III. The ceremony’s estimated price tag is 100 million pounds and comes at a time when so many people are struggling to put food on the table. This has led to questions about just how wealthy the royal family is and why they aren’t footing the bill. Reporter David Pegg has worked with The Guardian on a comprehensive investigative series into the royal finances called Cost of the Crown. Today, he takes us through where the monarchy gets its money, explains the secrecy around the Windsor fortune and breaks down the confusion about what belongs to the royals and what belongs to Britain. For transcripts of this series, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Alex Panetta. Elizabeth II was crowned as queen in an elaborate ceremony in 1953. It lasted almost three hours.

The procession into Westminster Abbey included 250 people, among them church leaders, Commonwealth prime ministers, members of the royal household. But there was another VIP on display that day. The crown jewels. For many of the representatives of countries of the world gathered now on each side, this will be the first moment during which they have been able to see some of the priceless and wonderful regalia of our land.

For the keeper of the jewel house's representative bears on his cushion the ring, the sovereign's ring, the armills, the two bracelets representing sincerity and wisdom, and the jeweled sword. You see it glittering there, one of the loveliest of all the pieces of the crown jewels.

You see it glittering there, one of the loveliest of all the pieces of the crown jewels. On Saturday, that royal wealth will be on display again in King Charles III's official crowning ceremony. It's the first coronation of the 21st century, and there will be pomp and circumstance. But Charles has reportedly requested the event be toned down. Many Brits are struggling with inflation and the high cost of living. The price of food alone has gone up nearly 20% within the last year. And if soccer fans at the Scottish Cup semi-final are any indication of the public mood around Saturday's ceremony,

let's just say reviews are mixed. In a survey run by YouGov, a majority of Britons said they don't really care about the celebration. A new poll in Canada by Abacus Data says about the same thing. In fact, most Canadians say they'd drop the monarchy altogether. The coronation's estimated price tag of £100 million at a time when so many people are struggling has led to questions about just how wealthy the royal family is and why they aren't footing the bill for this. I don't give a beat

because the royal family ain't doing nothing for us. They're feeding the rich. And the poor are getting poorer, so it's all about them. They're spending so much on a coronation. It just feels like a kick in the teeth. Answers about the Windsor family's wealth do not come easy. And that's why the Guardian has launched an investigative series into those royal finances called The Cost of the Crown.

David Pegg is part of that investigative team, and he's going to take us through where the monarchy gets its money, he'll explain the secrecy, and he'll break down the confusion about what belongs to the royals and what belongs to the British people. Hi, David. Hi there. How are you doing? Very well, thank you. This is extraordinary reporting, and we'll get into the details of it in just a moment. But Charles has been king for eight months since his mother's death,

and the issue of Charles' inheritance actually was a hot topic in the days after the queen's death. But we don't actually know how much Charlesles got because his mother's will was confidential uh but from what i understand the monarch's will hasn't always been kept private so what changed over time yeah that that's right so two things really one is that queen victoria was like fanatical about secrecy i mean if you thought these guys were bad then queen victoria was something else this is like in60, a law gets passed called the Crown Private Estates Act. And it basically says, in terms, the monarch's will will be secret. You know, that's passed by Parliament. You know, it's a law. Would we pass it today? Probably not. The rest of the family is much more murky so in 1911 queen mary's i think it's his brother francis of tech he dies and in his will he leaves his mistress a load of jewels and queen mary thinks

this is extremely embarrassing and it's going to get the times and oh my god and so they a hearing is held in front of kind of senior judges in london which decision has made that they are going to seal the will and you know nobody normally in i don't know what it's like in canada but like here if you if you leave an estate of over 325 000 or whatever you know you it goes into what's called probates where it can be divvied up and it's public you know you can go and look at anybody's will because that's so that you can find out if you're a beneficiary. That's the law. Except for the Windsors, who, this isn't part of some piece of statute. This is just something that judges have done in secret

hearings for the last hundred years. When a member of the Windsor family dies, the executor goes in front of the family court and says, well, they're a member of the Windsor family, so you have to seal the will. And the judge just kind of rubber stamps it. So that's kind of gone from being just a law to cover the monarch's will, whatever you think about the merits of that, through to this kind of extra legal thing that's happened for 100 years. So the Windsor family is actually immune, from what I understand, to any inheritance tax as well. How did they pull off that immunity from inheritance taxes?

Yeah, that's an incredibly sweet deal. And I think we described it as like their single most valuable financial asset. That was actually kind of a victory that was plucked from the jaws of defeat in a way. So in 1992, there is this huge fire at Windsor Castle. 150 firemen have been battling the blaze, which has caused millions of pounds worth of damage. The Duke of York joined scores of people who formed a human chain to save one of the greatest collections of art treasures in the world. It's kind of old-fashioned, the wiring was kind of old and a bit duff, and there's a huge fire and a part of it burns down.

The order is slowly being restored after the weekend's chaos. Throughout the day, soldiers who guard and protect the castle have been returning some of the priceless arteiceless artifacts hurriedly removed from the scene. But royal watchers believe the calm of the Queen's favorite weekend retreat will not be restored so easily. It is then sort of announced that, oh, by the way, you know, the British taxpayer will pick up the bill for repairing it. And this was also at a time when finances weren't great. You know, the cost of living wasn't good. The economy wasn't in a happy place.

And people had just had enough. People got quite cross. And several newspapers were running campaigns for this not to happen. And under pressure in 1993, the monarchy strikes a new deal with the prime minister, John Major. Again, this is like not a legal there's no

law is passed laws are never passed in this stuff it's all kind of off the books in this weird kind of way uh anyway as part of that deal in order to assuage public anger they announced that they will start to pay income tax for the first time voluntarily which they hadn't done before um however to sort of tucked away into that deal is also this statement that they won't pay any inheritance tax as long as the money goes from monarch to monarch and the reason for that the official reason for that is that the monarchy should be sort of financially independent from the government of the day i don't think it's really worked out that way because the family still is financially dependent upon the taxpayer it gets like 86 million pounds a year. So A, I don't think that part of the deal

has really worked on its own terms. But B, it's just an unbelievably sweet deal in terms of, I mean, anyone else would have been, would have paid hundreds of millions of pounds in inheritance tax to the taxpayer off the back of that kind of inheritance. And for other like aristocratic and wealthy families, you know, the effect of inheritance tax

is it stops inequality from getting so glaring that it becomes, you know, a huge, huge problem. You know, like it kind of just chops down the amount that gets left from generation to generation. Not so with the Windsors. It just grows and grows and grows, and it never gets cut. And to paraphrase the local car salesman, if you think that deal's sweet, wait, there's more.

The secrecy around the royal family extends to things beyond inheritance. So what kinds of other privileges do they have that allow them to keep their finances hidden from the public? One of the really striking things about this is that over the past 50 years, as the British government got generally more transparent and more accountable, and certainly not just legally, but like culturally as well, you have politicians like publishing bits of their tax returns now and things like that. With the Royal Family, it went the other way. So every 10 years, there'd be a vote in Parliament on how much money the Royal Family should get.

And you could see in the vote, like how much each person got, like Prince Andrew, how much is he going to get? And in 2010, that changed. So you now, Parliament, you can see like a single total figure. But if you ask them, well, how much of that got given to Prince Andrew

or Prince Anne or whatever, they won't answer. That's now secret. They used to be a kind of shell company at the Bank of England that we discovered a few years ago was set up at the behest of the queen's lawyer who's presumably acting on the queen's advice and the government set this very strange entity up called bank of england nominees the idea being

that it would hold all of their shares and investments so the british public couldn't see what they were that you know they're immune to kind of standard transparency laws like the Freedom of Information Act and things like that. So, I mean, take it individually, any one of these special privileges would be quite an obstruction to a journalist who wanted to assess the wealth of a public figure. When you put them all together, it creates this enormous shield

of borderline impenetrable secrecy that is A, kind of really frustrating and weirdly anachronistic. I mean, no other kind of entity in public life in 21st century Britain is protected like this, but is also kind of compelling. You know, for an investigative journalist, that is painting a bit of a target on yourself. Well, through the hard work of you and your colleagues at The Guardian, we've learned that since his mother's death, Charles's personal fortune has grown to about 1.8 billion pounds.

I'm hoping we can get into some of the specifics of how you came to that number. How did you find these sources of funding? So just kind of a couple of things at the outset, right? So like this is looking at their private wealth like their private assets so it's it's not taking into account that sovereign grant that 86 million pounds that they get each year that's just to pay for their public duties but they also have like an array of assets that are in and of themselves either very very valuable or which they've kind of financialized in a way that pay them a regular income. And those are the bits that are really, really kind of hard

to perceive. And those are the bits that we've tried to kind of strike out at. So we've looked at about, I can't remember the top, it's like seven or eight, I can't remember precisely, different types of assets. And those are the things that we've kind of looked at and tried to, you know, and in some places I tried to value. And in some places, like it's much easier to tell them than others. But in some places it's so well hidden that you can you're necessarily working in the dark a little bit. But we think we've come up with estimates that are a pretty informed and be quite conservative. So, you know, we're pretty confident in this figure. The fundamental and ultimately quite frustrating truth,

if I'm being completely honest, is that nobody knows exactly how rich King Charles is. And the ironic thing is that that probably includes him. You mentioned the Sovereign Grant. Can you talk to me about what that is and how does it work? So Sovereign Grant is their annual payment from the taxpayer. Sovereign Grant covers their public duties. So if they go and like open a hospital or a village hall or an event or something like that, the costs and the expense of doing that day in, day out,

royal appearance stuff, that's the sovereign grant. It was 86 million pounds last year, I think. And that's a considerable increase on what it was 10 years ago. It does now contain a bit of extra cash to refurb Buckingham Palace. But even if you deduct that's a considerable increase on what it was 10 years ago it does now contain a bit of extra cash to refurb buckingham palace but even if you deduct that it's gone up you know quite considerably um one of the things that's really interesting and slightly controversial about the

sovereign grant is it contains this golden ratchet clause what they get paid is tied to something called the crown estate which is like a kind of national property estate. It pays its money to the treasury, and they would get a slice of it. And the idea being that by linking what you paid to the monarch to this national property estate, it would effectively mean that their income was like a barometer of how economically healthy the United Kingdom was. And so when the UK was doing well, the money would go up. And when the UK was struggling, the money would go down. Problem is, this golden ratchet clause kind of obliterates that from the off, because it

effectively says that the money can go up. But if the profits go down, you have to pay them what you paid them last year, i.e. what you paid them can go up, but it can never go down. That's another really important thing to remember in the context of the coronation, right? You mentioned earlier, like, cost of living is really biting people. But for the past 10 years, government has been operating on an austerity principle that means that they spend less on public services as well. So not only have you got less money to buy things yourself, but what the government will give you in kind of health or welfare, all of those things have been cut. And so whereas everything else in the state has kind of shrunk and gotten more anorexic, the payments to the monarchy have just gone the other way and grow and grow and grow and grow and legally cannot stop growing. One of the facts that most

surprised me was this detail about the crown literally owning parts of the ocean floor along with mineral rights off the the coast of the united kingdom can you can you walk me through the crown literally owning what's under the ocean what is difficult to understand about this it's totally normal like i mean it's one of these kind of slightly odd british things like you know the king owns all the swans and stuff like that. I mean, the crown estate, which is this, again, like I referred to earlier, this national property company, although it's like, it's dressed up as being sort of held by the king in trust for the nation, blah, blah, blah, blah, blah. In practice, that's a load of nonsense. It's just, it's owned by the treasury, it pays its revenues to the treasury, and the treasury

gives them some money occasionally, right? Like that's been the deal for hundreds of nonsense. It's just, it's owned by the treasury. It pays its revenues to the treasury and the treasury gives them some money occasionally, right? Like that's been the deal for hundreds of years. So the Crown Estate owns also, what do they call it? I think it's called the foreshore. This is literally like, you're right, it's like the ocean floor. It's the ocean floor surrounding the island of Britain. So there's quite a lot of it which was an entirely uninteresting and not particularly lucrative thing for the national property company to own until about the last 10 years when offshore winds became a thing and now it's hugely profitable huge like absolutely mind-blowingly so there was like the most recent auction of offshore wind rights um raised like a billion pounds or something and because of this sovereign grand deal logically you know some of that then it should immediately be carved off and handed over to the

king and this is like so embarrassing uh that the king has said oh actually you know you don't have to give me that you can change the deal like this is finally the part where they're like actually you know what this is too much public money you can you don't have to give me that. You can change the deal. Like, this is finally the part where they're like, actually, you know what, this is too much public money. You don't have to give us that bit. But it's one of the ways in which like the kind of wealth of the monarchy is wrapped up with kind of the British political economic situation in a way that is just, again, like, quite strange and quite anachronistic. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about money for 20 years.

I've talked to millions of people, and I have some startling numbers to share with you. 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Okay, so you touched on one big flaw in the sovereign grant, which is that it doesn't account for the royal family's other income, like their profits from two land and property estates, the Duchy of Cornwall and the Duchy of Lancaster.

Can you briefly take me through what those are? What are these duchies and where do the prophets come from? The Duchy of Lancaster and the Duchy of Cornwall are these two extremely weird entities. They're not corporations, although they sometimes behave like that, and they're not tax-like corporations. They are these sort of hereditary estates that date from, I think it's the 14th century. They were created by King Henry III or something. Some baron had the temerity to rise up against him and there was a brief conflict and the baron was put down.

And Henry III declared that the lands seized in that exchange would henceforth be the Duchy of Lancaster. And the monarch would be the Duke of Lancaster and its profits would go to him. And then theuchy of cornwall was created about 100 years later and all of its profits would go to the heir to the throne and i mean they used to be just like aristocratic estates right they used to be large swathes of land and you would rent the fields out to farmers or whatever and there were occasional rows in Parliament about how really it should have been

handed over to Parliament at the same time as the Crown Estate was. Two things, I think, changed about the Duchies, right? One is, we just live in the 21st century now. I mean, it is just really, really difficult on like a democratic level to say no in exchange for your public role you're going to get a 21 million pound salary no other individual in public life gets a 21 million pound salary and the second thing is that they like they are vastly more profitable than they used to be so i mentioned before they're like aristocratic states right they're land holdings they're large large expanses of field up until about the 60s or 70s where they suddenly become much much much more commercial in part because prince charles was

so hands-on in managing it and and transformed it from this kind of slightly lazy bucolic rural fiefdom into you know it owns like a waitrose warehouse it has like commercial property and urban property and things like that so you, the amount of funds it generates have increased like tenfold since 1952. And it's now unbelievably valuable. So it's effectively a hereditary, a tax-free hereditary property company that pays all of its property in private income to the monarch and the heir to the throne to spend as they like. And, yeah, again, I mean, I just I say it aloud and it sounds slightly mad, but no, you know, that is fair. That is what it is. You know, it's just that they're really strange entities. They're really, really odd. Yeah. Charles also inherited property from his mom. The king and

his queen concert, Camilla, now have more than a dozen homes with a total of 2000 rooms. Places like Buckingham Palace aren't technically Charles's property. They belong to Britain, but there are a couple of rural estates that are valuable. And where does the king make money off of those properties? So something like Sandringham or Balmoral, they were both acquired by Queen Victoria and just passed down through the family privately. Again, used to be like not particularly impressive. Indeed, like Sandringham was actually sniffed at when the Windsors first bought bought it it was described as like 6 000 acres of sand or something like everyone was like why have you bought this ridiculous estate on the coast of norfolk uh however again like it's been

they've been transformed into something much more you know commercial so you can go and visit sandringham now you can go and you pay like a 30 pound entrance fee and you can totter around and you know look at the tea cozies or whatever but they're also rental and agricultural estates as well so you know people that they own houses that they rent out to people to live in and your landlord is the king um or you're a tenant farmer on the sandringham estate and you you know you have your agricultural land that you farm but the owner is the king um and so sandringham is worth about 250 million, we think. Balmoral, about 80 million pounds.

I mean, that's got like commercial deer stalking. If you want to shoot pheasants or whatever, you can do that on either of them. You're fishing, forestry. But again, they're not really taken into account when Parliament is setting how much it pays them. And that, I think, is where the political question arises, right? Like, if this family is privately so rich, shouldn't that be taken into account when you're taking money from the British public to give to them?

There's so much more in your investigation, David. It also includes a look at the muddy rules around royals receiving gifts. You wrote about 11 pieces of jewelry worth 80 million pounds. There are also stamp collections, a fleet of fancy cars, racehorses, artwork by Monet, Dali, and Chagall. But I really have to ask you about the connection your investigation found between the royal's wealth and the trade in enslaved people. What has King Charles said about those ties? My colleague David Cohn was talking to a historian called Brooke Newman, who has been writing about the historic links between the British monarchy and the transatlantic slave trade, she had found a document that was a share transfer from a slaver called Edward Colston. Edward Colston, maybe not internationally famous, but he's really famous in Britain because his statue used to be up

in Bristol. You know, he gave a lot of his money made from the slave trade charitably to Bristol. And there's a kind of civic life in buildings that were made using Colston's money. And there was a statue of him. That was pulled down in the Black Lives Matter protests a couple of years ago. Cast in bronze, now daubed with graffiti. One of Bristol's most famous sons.

This had begun as a Black Lives Matter demonstration. But it ended in the historic docks where Colston's ships once sailed. It was a very kind of visual moment. A lot of people saw it. Brigham Newman found a share transfer from 1689 showing the transfer of £1,000 of shares in the Royal African Company, which was the royal sanctioned slave trading company from Edward Colston to William III, the king at the time, William of Orange. I mean, four monarchs were chairs of their slave trading companies.

It's an important point to state, right, which is that that was a long time ago. There's nothing that we can point to that kind of proves to us conclusively that any of their money in their bank accounts or whatever is still that same money that they made from their investments in the slave trade. But there are two ways in which this is still really relevant. One is that a lot of the kind of finery and opulence

that's still associated with the royal family today, specifically Kensington Palace, where several of them live, that was built and commissioned by William III, using funds voted to him by Parliament, but at the same time as he was operating in this way. And, you know, there are statues and objects in kensington palace that refer to this time that refers to this sort of very dark period in history and the secondly is like the monarchy's argument for itself you know this is the monarchy on its own terms like the one of the advantages of the monarchy is that it's it provides this kind of slightly intangible sort of sense of continuity like it's a thread through our history it It's always present. It's always there. And you can trace Britain's past back through it. That's sort of double-edged,

you know. It's not just a link back to the bits of the past that we're proud of. It's a link back to the bits of the past that are dark and that we're ashamed of and we wish we hadn't done, you know. And that's true of the monarchy in a very direct way, because they were so involved in the transatlantic slave trade. And so, I mean, you asked me how the king reacted to it. I mean, when we went to them and said, look, we've got this share transfer document, they came back with a statement saying the king takes this stuff very seriously. And they pointed to a speech they had made in Rwanda last year. I cannot describe the depths of my personal sorrow

at the suffering of so many as I continue to deepen my own understanding of slavery's enduring impact. The family has expressed sorrow. It hasn't apologised, but it has expressed kind of deep and lasting sorrow. And it also said that it had opened the Royal Archives, which is the kind of the family and lasting sorrow and it also said they had opened the royal archives which is the kind of the family's you know private history of itself um to an independent

researcher who's writing about some of some of the early kings that and their links to the slave trade so this is effectively the first time that an independent review into the monarchy's links to slavery is going to be supported you know a step removed, perhaps, by the royal household itself. You know, that's King Charles's big challenge, I think, for the next 10 years. He's got to wrestle Britain that doesn't necessarily want to feel bad about its own history with Commonwealth realms that actually really want a serious conversation about this. That's going to be quite hard. You alluded to the institution itself, and that's where I'd like to conclude, just looking at the bigger picture and the international

picture. Because it's not just Britain that's on the hook for funding the royal family. Canada's ties to the monarchy cost this country about $58 million a year. And that's for things like running the governor general's office, maintaining buildings, royal visits. A lot of people probably think this is a lot of money. The counter argument is, well, it's actually not that much money to maintain our constitutional order. You know, if there's a crisis in parliament, someone has to play referee. And in our system, this is the crown. So I'll ask you, what's the mood in Britain? Do people want to keep this institution? And do they want it reformed, perhaps? I think the simple answer to that is yes, but, you know, like those arguments around stability are really compelling. Britain had Brexit in 2016, which precipitated three or four years of probably the most, certainly the most miserable period in British politics than I can remember.

And so, you know, the idea that British people are going to voluntarily, you know, get stuck into some huge constitutional upheaval, I mean, I think it's pretty unlikely. But people are really sensitive to this thing about money and the contrast between the opulence of the wealth that the family lives in and the relative lack of wealth that ordinary British citizens increasingly find themselves living in. There was a lot of residual affection for Queen Elizabeth II.

You know, she was like the nation's grandmother. Charles doesn't have the benefit of that. You know, it's kind of like a hard reset on Britain's relationship with the monarchy in some respects. Everything's got to be earned again. And I think you're not going to be able to take for granted that residual affection from

certainly some people, you know, some people will always be unconditional in their support of it. You know, reasonable people can think that. The argument that you mentioned about stability is a really compelling one, but that can't necessarily come at the expense of a blank check. You know, people won't accept that. And that's a great place to conclude. Thank you so much for making this time for us and for the reporting you've done.

That's really kind of you. Thank you very much. Well, that's all for this week. FrontBurner was produced this week by Imogen Burchard, Derek Vanderwyk, Lauren Donnelly, Rafferty Baker, and Jody Martinson. Our sound design was by Matt Cameron and Sam McNulty. Our intern is Constantino Varlacostas. Our music is by Joseph Chabison. The show's executive producer is Nick McCabe-Locos.

I'm Alex Panetta. Thanks for listening, and we'll talk to you next week.