Coronavirus: Pandemic punches $63.3m hole in Queen’s purse

She’s a woman who loves her handbag, and coronavirus has made it a lot lighter. But the Queen’s staff need not fear.

Queen Elizabeth II, carrying one of her beloved purses at Royal Ascot last year, has hunkered down for much of the pandemic, but her finances have taken a huge hit. Pictures: AFP

The Queen is facing a $63.3 million shortfall in her finances as a result of the pandemic, but her staff need not fear for their jobs.

Buckingham Palace has revealed that income will fall by $9.04 million a year for the next three years because Windsor Castle and other tourist attractions were forced to close during lockdown.

The Queen will also receive $36.17 million less for the renovations to Buckingham Palace, a ten-year project that was expected to cost pounds $667.4 million. Instead the palace expects to have to carry out the work for $631 million or less.

Despite the shortfall the palace said it had no plans to lay off staff and hoped to cover losses with efficiency savings.

The palace’s day-to-day finances have been hit because of a fall in income for the Royal Collection Trust (RCT) from a projected $139.2 million to $23.5 million. The trust runs the public opening of the Queen’s official residences, including Buckingham Palace, Windsor Castle and the Palace of Holyroodhouse in Edinburgh, and contributes $25.3 million a year to the palace coffers. The sum is part of the $36.5 million that the palace received in supplementary income from outside sources in 2019-20, up from $32.2 million a year earlier.

Over the past 20 years the trust has contributed $144.7 million to the royal household finances, said Sir Michael Stevens, who as Keeper of the Privy Purse is effectively the Queen’s chief financial officer.

Buckingham Palace’s renovation budget has been trimmed. Picture: Tolga Akmen/AFP

Launching the annual review, Sir Michael said: “We are expecting a significant reduction in income from the Royal Collection Trust due to the impact COVID-19 has had on their visitor numbers. This forms the bulk of a projected shortfall in income which we estimate will be around $9.04 million per year for the next three years.”

A second shortfall is a result of a fall in commercial rents because of the pandemic. The Queen’s taxpayer income, the Sovereign Grant, is calculated on the basis of the profits of the Crown Estate. In normal times the grant is set at 15 per cent of the profits.

If the Crown Estate profits decline the Sovereign Grant is not allowed to fall and instead remains at the previous year’s level. The budget for the palace building works was based on the assumption that Crown Estate profits would continue to rise.

Sir Michael said that the Crown Estate reported a slight increase in its profits for 2019-20, meaning that the Sovereign Grant for 2021-22 would be $156 million — a core grant of $93.6 million and a reservicing grant of $62.4 million. The grant for 2019-20 was $149 million.

Addressing the forecasts of reduced growth, Sir Michael said: “The likely contribution from the Sovereign Grant to the reservicing program will be over $36.1 million short of the agreed $667.4 million ten-year budget. We have no intention of asking for extra funding and will look to manage the impact through our own efforts and efficiencies.” The reduction of royal activity because of the pandemic, including overseas tours, would help to offset some of the shortfall, a royal source said. “But clearly there is more work to do as we reset our budgets and our forecasts in the current year to assess the impact on finances. We are looking at opportunities for savings,” the source said.

Prince Harry and Meghan Markle have paid of the $4.3 million cost of renovations to Frogmore cottage — which they left to move to the US. Picture: Getty Images)

The money given by the Prince of Wales to the Duke and Duchess of Cambridge and the Duke and Duchess of Sussex rose by about $904,000. Funding for the couples, together with capital expenditure and transfers to reserves, rose to $10,141,460.

It also emerged that the Duke and Duchess of Sussex have paid the rent on Frogmore Cottage several years in advance. The rent was paid when the duke paid off the $4.3 million cost of refurbishment recently.

A source said: “The Duke and Duchess of Sussex have made a substantial contribution to the Sovereign Grant.”

The Times