Where Did Princess Margaret Get £20m and the Queen Mother’s £70m?

Where did Princess Margaret get £20m and how about the Queen mother’s £70m legacy? In his controversial new book, MP Norman Baker examines the family’s finances as he accuses the Windsors of Right Royal Robbery.

The British Royal Family is the original Coronation Street – a long-running soap opera with the occasional real coronation thrown in. Its members have become celebrities, like upmarket film stars, attracting often fawning coverage.

So it’s easy to feel that we know the Windsors and that, in some ways, they are just like us. Yet the truth is that the disconnect between the Royals and the public is vast, not least in terms of the extraordinary fortunes they have quietly amassed for themselves.

Some Royal wealth is conspicuous. Take Balmoral Castle and Sandringham House, for example: both were bought with public funds and qualify for taxpayer support when they are used for official business. They remain the Queen’s private property, all the same.

Queen Elizabeth II and Princess Margaret

Less obvious are the breathtaking tax breaks, the lavish state subsidies and an all-encompassing secrecy that hides the Windsors’ gluttonous excesses.

Along with parlour games and practical jokes, it seems there are few things they enjoy more behind closed doors than looking after the pennies, certain in the knowledge that they will rapidly turn into pounds, and many millions of them.

As a former MP and current member of the Privy Council, I thought I knew a good deal about the inner workings of the Royal Family, but even I have been shocked by what I have discovered in the course of researching my new book.

The reality is best summed up by Prince Charles himself, when he said: ‘I think it of absolute importance that the monarch should have a degree of financial independence from the State… I am not prepared to take on the position of sovereign of this country on any other basis.’

Which is to say that the State should provide him with copious amounts of public money, free from taxation – or other irritations such as accountability.

We as citizens should worry that our future king has subscribed to a view familiar to autocrats down the ages, one more in line with the practices of his ancestor Henry VIII than a modern democracy.

Just how much money have the Windsors accumulated? Regular attempts to nail down the private wealth of the Queen and her family are rebuffed by courtiers who argue that these are private matters.

I take a different view: if their wealth has in part been created by unique tax breaks to the disadvantage of the public purse, or from simple exploitation of public money, then the Windsor millions are very much a public concern.

In 2001 this newspaper calculated that the Queen was worth £1.15 billion, excluding those items held in trust for the nation by the Crown, with her investment portfolio valued at £500 million. Her stamp collection alone was put at £100 million. It is a safe bet to assume her wealth has increased substantially since then. Exact figures are hard to come by, however, and no wonder: the Royal Family likes it like that.

The highly unusual way they treat legacies is a good example. Wills are public documents, as everyone knows. Indeed, they have always been open for inspection in this country as an essential safeguard to prevent theft and malpractice.

Ever since 1911, however, the Royals have been allowed to ‘seal’ selected wills – or declare them private – in the interests of upholding the dignity of the Crown.

The catalyst was the death of Prince Francis, brother of George V’s wife Queen Mary, in 1910. Prince Francis’s will had scandalously left prized family jewels to his mistress, the Countess of Kilmorey, with whom he was rumoured to have had a child. The Royal Family responded in characteristic fashion: they hushed it up.

Queen Mary persuaded a judge to ban public access to the will and the countess was paid £10,000 – around £700,000 today – to return the jewels. A precedent was set and today, Royal wills are locked up in a metal safe behind an iron cage in Somerset House.

The power to seal wills is certainly useful for those wishing to avoid awkward questions.

In May 2002, I asked the then Prime Minister Tony Blair to publish the Queen Mother’s will after her death earlier that year. He refused, referring to ‘the longstanding convention’ that Royal wills are private.

The will of the Queen’s sister, Princess Margaret, who also died in 2002, was similarly ruled out of bounds. Why, we might wonder? Is the Royal Family pathologically wedded to secrecy or would it have been embarrassing to reveal just how much money was sloshing around?

Although the details of Margaret’s will remain inaccessible to this day, it was eventually estimated that the Queen’s sister had left an estate of some £7.6 million – having previously disposed of £12 million of assets to her family, including her house on the Caribbean island of Mustique, to minimise death duties. Where did the heavy-spending Princess get £20 million? The Royal Family is not inclined to tell us.

If Margaret’s fortune raises eyebrows, the Queen Mother’s reputed £70 million legacy raises serious questions. Take the case of the valuable jewellery that she had supposedly given to her grandchildren back in 1993. This was more than seven years before she passed away, which meant that no death duties were payable.

All these items were found in one of her cupboards after her death, which might be construed as deception, yet the Inland Revenue decided to let it go. So where did the Queen Mother’s £70 million come from?

Perhaps part of the answer to the mystery can be found in a 1942 windfall, when she was left a large hoard of jewels by an heiress to the McEwan brewing fortune, a collection known as the Greville inheritance.

Was this hoard given to her personally or as consort to George VI? Did the jewels truly belong to her, or to the State? And why were no death duties paid on the £70 million? It could be, of course, that there is nothing untoward in these wills. If so, why seal them?

The Windsors have almost complete exemption from the Freedom of Information Act, too, and special protection from the National Archives at Kew.

The National Archives are releasing ever more of our historical documents as the years go by, and from earlier and earlier. But some stay locked up beyond 30 years and it is no surprise that the biggest proportion of these relate to Royal matters. When I visited Kew, I found there were 3,629 closed files on the Royal Family.

There was no fooling the Royal Family on April Fools’ Day in 2012. Far from it. Because this was the day the Sovereign Grant Act came into force, sweeping away the long-established Civil List and replacing it with a remarkably generous new source of public funding.

The figures speak for themselves. Between 2001 and 2010, the old Civil List had been set at £7.9 million annually. In 2011, it grew to £13.7 million.

But then, in 2012, the first year of the Sovereign Grant, financial support to the Royals more than doubled to £31 million, and this was just the start of a cash bonanza.

In the most recent financial year, 2018-2019, the Sovereign Grant payout to the Royal Family reached a staggering £82.8 million.

This method of paying for our monarch and her family was not merely novel, it overturned more than 250 years of a settled scheme.

In 1760, on ascending the throne, George III did a deal with the government: he would surrender land across Britain to the nation in return for money from the government to support him and his lifestyle.

As part of the deal the government would take over responsibility for funding the Armed Forces, the secret service, the judiciary and other public functions.

Over the years, however, some Royals – especially Prince Charles – have looked with envy at the performance of this land and property, which is today known as the Crown Estates. They have seen it prosper and have started to regret George III’s arrangement. If only the clock could be turned back…

Successive governments of all colours resisted this suggestion until, that is, George Osborne became Chancellor and agreed that the Civil List should be replaced by a scheme whereby a percentage of the profits of the Crown Estates went to the Royals.

This was initially set at 15 per cent, but has subsequently been upped to a munificent 25 per cent.

For the icing on the cake, a hugely beneficial condition was inserted. If in the unlikely event the Crown Estates’ income fell one year, the Royals would continue to be paid the same money as the previous year. Which is to say that their cut would never actually go down.

The abolition of the Civil List has proved hugely profitable for the Royals.

In July this year – to take just one example – the Crown Estates, which holds the rights to the seabeds across Britain, announced an auction for the biggest offshore windpower development in the world.

This will provide a bumper windfall of hundreds of millions for the Queen, a vast sum that, before George Osborne’s disastrous intervention, would have gone back to the Treasury.

It is not as if the Royals are cheap to run. They demand expensive security, for a start, even for minor Royals who most people have barely heard of. Then there are the official properties – way in excess of what is needed to sustain a constitutional monarchy.

The State supports not just Buckingham Palace but also St James’s Palace, Clarence House, Marlborough House Mews, Kensington Palace, Windsor Castle, Frogmore House and Hampton Court Mews, to name but a few.

In total, the taxpayer pays for more than 100 Royal buildings.

Meanwhile, the public purse funds the whole sprawling network of 99 Lords Lieutenant (not to mention hundreds more deputies) who act as the Queen’s representatives.

Of course, if Charles really wants to recreate the position before 1760, that would require the monarch once again to personally fund not only the expenses of the Royal Family but also the salaries and pensions of Ministers, judges and civil servants, and the costs of the Armed Forces and secret services, too.

It was to lose that heavy burden that George III agreed to a new arrangement. But the current heir would appear to be interested only in the beneficial side of the equation that would enrich the Royals, not the one that would entail liabilities.

The Duchy of Cornwall and its companion piece, the Duchy of Lancaster, were not surrendered as part of the 1760 deal entered into between George III and Parliament as they were regarded as insignificant at the time.

These two vast estates are still effectively controlled by the Royal Family – and today they are hugely profitable.

The first of these, the Duchy of Lancaster, comprises well over 40,000 acres, including highly valuable swathes of land such as the Savoy Estate off the Strand in London, ten castles and land in several counties across England.

Money derived from the Duchy goes straight to the monarch, as it has done for well over 500 years.

The Duchy of Cornwall, which dates from 1337, owns a third of Dartmoor National Park, about 160 miles of coastline, lots of rivers and riverbeds, and residential and commercial properties galore.

This includes highly valuable London sites such as the Oval cricket ground in South London. Its profits go to the Prince of Wales, as do many ancient privileges.

Prince Charles has the right to scavenge shipwrecks and to catch Royal fish, including whales, porpoise, grampuses and sturgeon.

He has the right to wine from every ship that lands in Cornwall and the seizure and confiscation of enemy ships in times of war.

As recently as 1973, Charles received his feudal dues of a hundred silver shillings and a pound of peppercorn from the Mayor of Launceston.

From the village of Stoke Climsland, the Duke – which is to say Charles – received a daily bounty of a salmon spear (an instrument used to catch the fish) and a bundle of firewood while he was in residence locally, a bow made of alder from Truro, a pair of white gloves from the village of Trevalga and a pair of greyhounds from the manor of Elerky in Veryan. A cottager near Constantine baked a lamprey pie with raisins in lieu of rent.

Some of these ancient privileges have very modern advantages. Under the right to create mines, for example, the Duchy registered in 2012 extraction rights for tungsten and iridium, a rare and valuable metal used in modern technology.

The right to foreshore gives a nice steady income from tourists parking on some Cornish beaches, or from surf schools that have been established. There are other advantages, too. The Crown was given exemption from the 1967 Leasehold Reform Act, which was then also claimed by the ‘private estate’ that is the Duchy of Cornwall.

That means that tenants of the Duchy do not have the automatic right – unlike just about everybody else – to buy their property outright or secure a lease extension.

And when a company located in either the Duchy of Cornwall or Lancaster is dissolved, its assets are transferred not to the Treasury, as would be normal, but directly to the Queen or Prince Charles.

Most significant of all, however, is the cold hard cash. Prince Charles receives more than £21 million annually from the Duchy of Cornwall, which has net assets of more than £1 billion. The value of the Duchy of Lancaster, too, has ballooned and its holdings are now worth £533.8 million. Profits have grown from £12.9 million in 2012 to just over £20 million in 2018.

It is true that members of the Queen’s family, who used to receive money direct from the Civil List, now get their handouts from the Duchy of Lancaster’s income. But in every Royal cloud there is a silver lining.

The Queen claims these payments as a deductible expense, even though the rest of her family play no role in the Duchy. The result is to reduce significantly the tax bill she (voluntarily) pays.

Although it is termed a ‘private estate’, the Duchy escapes paying any corporation tax, an example of the Royals alternating between private and public status according to what benefits them in any given circumstance.

Given that the Duchy of Lancaster has its own government Minister, it seems clear to me that it is, in fact, a public asset, not a private one, and the profits it generates should go not to the monarch but straight into the public purse. For the monarch to keep them is Royal robbery.

If, on the other hand, it is argued that it is indeed genuinely private, then it should be subject to the same rules as any other private estate, notably in terms of taxation. The Royal Family should not have it both ways, but the problem is it seems they can and do.

Another giant wheeze is the exemption from inheritance tax for bequests from a king or queen to the heir who succeeds them.

For example, the Treasury is estimated to have lost out to the tune of between £20 million to £25 million on the death of the Queen Mother in March 2002. Tax-free gifts to her daughter included a priceless Fabergé egg collection, her string of racehorses and a valuable collection of paintings.

Naturally, whatever is held in trust by the monarch but which belongs to the nation is exempted from death duties, and rightly so. This would include buildings such as Buckingham Palace and treasures such as the Crown Jewels and the Royal Collection.

But why should inheritance tax not be applied to a monarch’s personal property, just as it is for every other person in the country? Why has it never been applied to private Royal possessions such as Balmoral and Sandringham?

There are those who believe that much of the Queen’s so-called private estate should be returned to the nation anyway.

Sandringham, Balmoral and the Osborne estate on the Isle of Wight were purchased by Queen Victoria from monies given to her by Parliament through the Civil List.

As a result of Albert’s regular pleadings of poverty they were given more than they needed to enable Victoria to carry out her constitutional duties, but then hung on to the cash and invested it in property.

Earlier this century, the public was rightly horrified when the grisly details of the abuse of expenses by MPs were uncovered.

Here were people in high office taking public money designed to support them in their job as elected representatives, and instead using it to provide duck houses, clear ivy off buildings, clean moats, buy luxurious furniture and the rest.

For the Royals to use Civil List money to buy and help amass a private property portfolio is no different: it is fiddling their expenses.

© Norman Baker, 2019

Abridged extract from “… And What Do You Do? What The Royal Family Don’t Want You To Know,” by Norman Baker, published by Biteback on Tuesday, priced £20. Offer price £16 (20 per cent discount) until November 12, 2019. 

To order in the UK, call 01603 648155 or go to mailshop.co.uk. FREE delivery on all orders – no minimum spend.

By Norm Baker for The Mail on Sunday