Royals cost of living crisis: Palace forced to dip into savings to plug £15m shortfall

30 June 2022, 00:20 | Updated: 30 June 2022, 08:01

Royal's feel the cost of living crisis
Royal's feel the cost of living crisis. Picture: Alamy

By Megan Hinton

Royal accounts have revealed the Queen overspent by £14.9million last year and had to dip into reserves but sources say the family are "extremely conscious" of the cost-of-living crisis affecting the nation.

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The Prince of Wales is said to be paying very close attention to the crisis and is sitting down with farmers to hear their lived experience to "see what we can do to try to help them, support them".

Royal accounts published on Thursday showed the monarchy's taxpayer-funded spending came to £102.4 million during 2021/22 - an increase of £14.9 million, or 17%, on the previous financial year.

The palace managed to raise a further £9.9 million through visitor openings and other money-generating schemes. But there was still a shortfall of £14.6 million in the royal finances, which was met by dipping into the palace "reserves".

Sir Michael Stevens, Keeper of the Privy Purse, outlined the challenges facing Buckingham Palace itself following the pandemic and due to inflation.

"Looking ahead, with the Sovereign Grant likely to be flat in the next couple of years, inflationary pressures on operating costs and our ability to grow supplementary income likely to be constrained in the short term, we will continue to deliver against our plans and manage these impacts through our own efforts and efficiencies," Sir Michael said.

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The cost to the public in the UK of funding the total Sovereign Grant amounts to around £1.29 per person.

Official royal travel amounted to £4.5 million, housekeeping and hospitality to £1.3 million, utilities £3.2 million and payroll costs £23.7 million.

The most expensive official trip was the Cambridges’ controversial visit to the Caribbean in March at £226,383.

Whilst property maintenance soared by £14.4 million to £63.9 million, as the 10-year project to renovate Buckingham Palace continued.

Prince of Wales cash donations latest

Defending the spending a senior royal source said: "It goes without saying, in terms of the environmental credentials, that not only are we looking at consumption, but also we have an eye on - in terms of the cost of living - one of the big increases that is coming and is happening now is utilities.

"So we're looking very much at how we can be innovative in reducing consumption and consequentially as a by-product reducing costs as well to ensure that we can live within and operate within the funding envelope that we are anticipating."

Another royal source described heir to the throne Charles as taking a very close interest in how inflation and the cost-of-living problems were impacting people, particularly the Duchy of Cornwall's tenants, and their welfare.

Charles has spent time with farmers "sitting around the farmhouse table" discussing the challenges while visiting Duchy districts to work out ways to help them, the source said.

"He wants to hear from them, what is their lived experience, so we can see what we can do to try to help them, support them along the way because to roll the question into a wider point about the living crisis, the family are extremely conscious of this - the Prince of Wales is paying very close attention to this indeed," the source added.

Read more: Prince Charles would 'never again' handle large cash donations for his charities

Prince Charles paid a £5.9million tax bill last year
Prince Charles paid a £5.9million tax bill last year. Picture: Alamy

But campaign group Republic lambasted the figures, with chief executive Graham Smith saying: "As always, while the rest of us face a cost-of-living crisis and continued squeezes on public services, the royals walk off with hundreds of millions of pounds of taxpayers' money."

He added: "We need to put the monarchy on a proper budgetary footing, just like any other public body. We need to slash that budget down to below £10m, and only fund what's required for the functions of the head of state."

Its supplementary income from the Royal Collection Trust was £9.9 million in 2021/22, which is 50% below pre-pandemic levels, with the figure not expected to rebound until two or three years' time.

Read more: Meghan Markle reveals Harry's 'guttural' reaction to Roe v Wade ruling

Efficiencies within the royal household have included a pay freeze and a recruitment freeze, with a close eye being kept on energy use, ahead of the expected rise in energy costs.

The prince and the Duchess of Cornwall have shown support for vulnerable communities through their engagements, including trips to high streets where the retail sector is struggling, the source said.

Charles's Prince's Trust has worked for many years to help young people with skills to find employment, with the source adding that making sure they are "best equipped to get the best jobs they can" will be "the best insulation against these economic shocks when they come".

The figures released on Thursday show that Buckingham Palace has yet to hit its diversity target, with its proportion of ethnic minority staff standing at just 9.6%.

The figure last year was 8.5%, with the Royal Household having set a goal of 10% for 2022.

The percentage of ethnic minority staff was published for the first time last year in the wake of the Duke and Duchess of Sussex's accusations of racism against the royal family in their Oprah Winfrey interview.

A senior royal source said of the Buckingham Palace figures: "We've still got a little way to go... but we have achieved a 9.6.

"We recognise we're not where we want."

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