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The Queen’s real estate portfolio is hit by the coronavirus. The taxpayers will save them

Sir Michael Stevens, the Queen’s Treasurer, confirmed in a statement Friday that the size of the Sovereign Grant, a major source of income for the royal family, will not be affected by an expected decline in profits from the Crown Estate’s investments.
The Sovereign Grant is a government lump sum payment that covers official travel, staff, and palace expenses. The grant is generated by Crown Estate, a real estate company that has an extensive collection of farmland and prime real estate in central London. Most of the revenue from the Crown Estate goes to the state coffers, but 25% is paid by the government to the Queen in the form of the Sovereign Grant.

Last week the Crown Estate reported record earnings of £ 345 million ($ 440.2 million) for the year ended March 2020 but cautioned that earnings for the fiscal year ended March 2021

would be “well below that amount due to the impact of” The pandemic will be in his portfolio.

Much of central London was turned into a ghost town earlier this year as the lockdown kept millions of workers, shoppers and tourists away. Activities began to pick up during the summer months, but new restrictions put in place this week to tackle a second wave of the virus are likely to hurt that recovery.

But the Queen is not going to cut wages even if Crown Estate income falls this year. The way the grant is calculated means that she will receive her portion of £ 345m – £ 86.3m (US $ 110m) – in the year through March 2022. Your payout will remain at this level for years to come, even if the Crown Estate’s profit remains under pressure as the law governing the grant does not allow it to fall in absolute terms.

“In the event of a decrease in Crown Estate’s profits, the sovereign grant will be set at the previous year’s level,” a Treasury Department spokesman told CNN Business. “The Sovereign Grant finances the official business of the monarchy and does not provide any member of the royal family with a private income,” said the spokesman.

So less money would flow into the treasury from the Crown Estate, but payments to support the royal budget would remain stable. Taxpayers would make the difference.

The expected bailout has been criticized by some economists on social media.

“Insane. Landlords (including the Crown Estate) have made high-risk investments: if returns (rents) can rise quickly in good times, they should fall in bad times. But as a society we don’t seem to understand that,” Laurie Macfarlane tweeted. a fellow from the UCL Institute for Innovation and Public Purposes.

The Sovereign Grant is reviewed every five years by the Prime Minister, Treasury Secretary and the Queen’s Treasurer. The review is scheduled for next year, which hypothetically means the tax subsidy could be reduced.

The news comes that UK companies are shedding nearly 700,000 jobs between March and August and more layoffs are expected if government support for wages is scaled back significantly over the next month. The British also face the prospect of higher taxes on soaring national debt, which topped £ 2 trillion ($ 2.5 trillion) for the first time last month.

Royal accounts will not be entirely spared from the pandemic, however. The reduced growth of the Sovereign Grant will save £ 20 million ($ 25.5 million) out of the £ 369 million ($ 471.2 million) budget spent on renovating Buckingham Palace, while decreasing visitor numbers to the Palace and other venues such as Windsor Castle will result in an estimated loss of income of £ 15 million (US $ 19 million) over the next three years.

Stevens, the treasurer, said the royal budget “has no intention” to ask for additional funds and “will seek to deal with the implications through our own efforts and efficiency”.

The financial report released on Friday shows that sovereign grant-covered expenses, including payroll, property maintenance and travel expenses, rose 3.6% to £ 69.4 million through March 2020 . USD) have risen. In comparison, consumer price inflation ranged between 1.5% and 2% over the same period.

The hit of the pandemic underscores the “weaknesses of the funding system,” said journalist David McClure, who is currently producing a documentary on royal finances. The real problem with the sovereign grant is that there are no incentives to encourage cost reductions.

“There seems to be a separation between requirements and revenues,” he added.

– Max Foster contributed to this story.

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