For Commonwealth and Country: The Economic importance of the Monarchy’s Uncommon wealth
No other privilege matches the majestic wealth of the late Queen Elizabeth II like her admirable health. The British sovereign stood and served till the last week of an unprecedented 70-year reign.
However, what many of her subjects found unhealthy about their monarch was the stealth attached to her wealth, the privileges of tax exemptions that her crown estate enjoyed while her people’s incomes and inherited assets were probed and taxed.
The same goes for her successor, the incumbent King Charles III. “King Charles III built his own empire long before he inherited his mother’s”, the New York Times reported.
“Charles, who formally acceded to the British throne on Saturday, spent half a century turning his royal estate into a billion-dollar portfolio and one of the most lucrative moneymakers in the royal family business.
“While his mother, Queen Elizabeth II, largely delegated responsibility for her portfolio, Charles was far more deeply involved in developing the private estate known as the Duchy of Cornwall. Over the past decade, he has assembled a large team of professional managers who increased his portfolio’s value and profits by about 50 percent.
“As king, Charles will take over his mother’s portfolio and inherit a share of this untold personal fortune. While British citizens normally pay around 40 percent inheritance tax, King Charles gets this tax free. And he will pass control of his duchy to his elder son, William, to develop further without having to pay corporate taxes.”
Various estimates put Queen Elizabeth II’s worth at a minimum of $520 million. The wealth of King Charles III, her heir is also estimated to be $420 million.
Going by this estimate, King Charles III is over 3,000 times wealthier than the median wealth of an adult in the UK which is put at $131,522.
The Late Queen too was worth 4000 times the value of wealth of the adult at the middle when her 53 million adult subjects are ranked from the poorest to the richest.
While opulence is the brand of all monarchies, the opacity of the British monarchy’s acquisition of financial assets and the inequality that its fiscal dealings with the state may entrench has led many more people to ask: what is the economic value of the crown to commonwealth and country?
Does the Monarchs’ Uncommon Wealth Interfere with the Welfare of her subjects?
At face value, it does not. In fact, as far as economic growth is concerned, the country’s fortunes improved tremendously under the last sovereign.
A Bloomberg analysis showed that The UK economy has grown 5 times bigger than it was 70 years ago, when the late queen ascended the throne of her forebears.
The analysis showed further that the UK as a whole is richer and healthier despite its current travails.
People born in 1952 had incomes higher than the average of their fellow citizens throughout their lives, according to the Institute for Fiscal Studies
At age 70, men and women can both expect to live seven years longer than they did seven decades ago
Women form about half of the workforce, compared to a third in the early 1950s
However, such fixed intergenerational disparity in incomes between the 1952 generation and the other generations point at some deeper and wider income inequality in the UK.
Still, it could be argued that the Monarchy does not have a direct influence on the economic policies that brought about this quintuple economic growth in the UK output (real GDP) over the 70 year period, and may not also be held responsible for the intergenerational income inequality.
Thus, to measure the economic importance of the Monarchy requires a method that involves the royal more directly.
Is the Monarchy a Financial Asset or Liability to the UK
This inquiry and the next would show that what can be directly measured with certainty is the British Monarchy’s financial burden on taxpayers and not its financial benefits to the economy.
“As stated in the latest Sovereign Grant accounts: "Since the United Kingdom has no codified constitution, the role of Monarchy is defined by convention – a non-legal but nevertheless binding rule.
“These roles are supported financially by UK taxpayers via the 'Sovereign Grant'”, Statista wrote on the occasion of Queen Elizabeth’s Platinum Jubilee celebrations earlier in June.
According to the Institute for Government, the royal family gets most of its funds from three different sources:
Government funding: paid to the royal family each year through the Sovereign Grant, to support official royal duties such as royal visits.
Private property owned by family members by virtue of their royal position: primarily two private collections of land and property – the Duchy of Lancaster and the Duchy of Cornwall – owned by the monarch and the monarch’s eldest child, respectively.
Private wealth and investment income owned by family members personally: money or assets that members of the royal family inherited through historic family wealth rather than by virtue of their role, and the income received from investing that.
On the other hand, the royal family also generates economic benefits to the country. However, the Institute for Government cautioned that any estimate of the size of these benefits is highly uncertain.
One such widely publicised estimate of the Monarchy’s benefit to the UK economy was one by Brand Finance, a business valuation consultancy.
This estimate, also cited by Statista, has been contested to be overvalued. Be that as it may, the Institute for Government suggests that the Monarchy’s contribution to the UK economy may include:
Royal-themed products – such as memorabilia, royal-themed food, copycat royal clothes and other goods (estimated by some as worth tens of millions of pounds, as well as TV shows such as The Crown.
Tourism – as seen, for example, with the 28% increase in Eurostar train bookings to the UK before the Duke and Duchess of Cambridge’s royal wedding. Tourists then spend money with UK businesses.
Trade – with the royal brand supporting UK products both directly – through royal warrants (trademarks granted by the royal family) – and indirectly – supporting a brand of ‘Britishness’, for which the royal family sometimes functions as ambassadors by attending industry events internationally.
While the British Monarchy’s cost to the public purse can be clearly measured, its benefit to the people is uncertain.
Yet, in the UK, Financial Secrecy correlates with Inequality
While the UK peformed well with the rest 15 Sustainable Development Goals, it ranked poorly in SDGs 10 and 17.
SDG 10 relates with the developmental goal of reduced inequality while the SDG 17 measures the efforts of the government, among other goals, in reducing Financial Secrecy, deals in Corporate Tax havens, and Shifted profits of multinationals.
The Sustainable Development Report 2022 shows that the government of the United Kingdom faces major and significant challenges in its tolerance for Corporate Tax havens, Financial Secrecy, and Shifted profits of multinationals.
Off course, the Monarchy too was involved in the tax avoidance schemes the SDG 17 seeks to curb. The BBC reported that “The Duchy of Lancaster, which provides the Queen with an income, held funds in the Cayman Islands and Bermuda.”
Details of the Duchy's investments came to light in the Paradise Papers. The leaked documents showed that about £10m of the Queen's private money was invested offshore. The two funds invested were based in British overseas territories with no corporation tax and at the centre of the offshore financial industry.
This dismal oversight failures coincides with the country’s worsening inequality, as measured by the “Gini Coefficient, Palma ratio, and Elderly poverty rate”.
The New York Times makes the same connection between the growing covert incomes of the privilege few and the growing inequality in the UK - and links it with the Monarchy:
“The growth in the royal family’s coffers and King Charles’s personal wealth over the past decade came at a time when Britain faced deep austerity budget cuts. Poverty levels soared, and the use of food banks almost doubled.
“His lifestyle of palaces and polo has long fueled accusations that he is out of touch with ordinary people. And he has at times been the unwitting symbol of that disconnect — such as when his limo was mobbed by students protesting rising tuition in 2010 or when he perched atop a golden throne in his royal finery this year to pledge help for struggling families.”, the New York Times reported.
Linking the Monarchy directly to the UK’s challenges with SDG 17, The Republic, a republican movement in the UK said, “The huge waste and extravagance of the monarchy is a symptom of the main problem: the palace is totally unaccountable and is able to operate with a far greater degree of secrecy than any other part of the state. It also clearly has considerably lobbying clout within government, which explains why the government hasn't cracked down on royal spending.
Racial Discrimination also contributes to inequality in the UK, and it is widely held that the British Monarchy is the symbol of socio-economic exclusivity, marked by class divide and racial discrimination.
The Guardian stumbled upon papers at the National Archives that reveal “how in 1968, the Queen’s chief financial manager informed civil servants that “it was not, in fact, the practice to appoint coloured immigrants or foreigners” to clerical roles in the royal household, although they were permitted to work as domestic servants.
It added that, “The Queen and Britain's royal household negotiated an exemption from 1970s-era laws on race and sex discrimination that still exists today.
“In March the Duchess of Sussex, the family’s first mixed-race member, said she had had suicidal thoughts during her time in the royal family, and alleged that a member of the family had expressed concern about her child’s skin colour.
“The allegation compelled her brother-in-law, Prince William, to declare that the royal family was “very much not” racist.”
High Disparities in the Wellbeing of people in the Commonwealth
Like the widening poverty and inequality in the UK, people in the commonwealth do not have a common wealth too. A greater inequality exists within the Commonwealth today than the global average.
The only two things that cohered in the 70 years that the Queen headed the Commonwealth were her own vast body of wealth and her very healthy body.
And today, wealth and wellbeing are becoming more uncommon among the people in King Charles III’s duteous realms and doting republics.
Globally, 60% of the 5.12 billion adults in the world do not have up to $10,000 to their name. In the Commonwealth, it is 65% of its 1.57 billion adults that have less than $10,000.
Also, the average wealth of an adult in the world which is put at $75,499 exceeds the average wealth of an adult in the Commonwealth.
Worse still, the 50th richest person among 100 in the world has a wealth of $29,493. This exceeds the $27,221 wealth of the 50th richest adult in the Commonwealth.
Overall, the Gini coefficient which measures inequality shows greater inequality of 79% in the Commonwealth as a whole than the global coefficient of 77%.
The Commonwealth also harbours the world’s spectacle of inequality, Brunei. “According to the Credit Suisse ‘Global wealth Report 2021’, Brunei had the highest Gini coefficient in 2021 (91.6%), therefore the wealth distribution in Brunei is vastly unequal.”
Ironically, Slovakia, the country where people have the closest to a common share of wealth in 2021 is not in King Charles III’s Commonwealth.
“Slovakia had the lowest Gini coefficient in 2021 (50.3%) out of all countries, which makes Slovakia the most equal country in terms of wealth distribution”, according to the Global Wealth Report 2021.
Commonwealth Countries ranked by Wealth Distribution among Adults
Nigeria sits at the bottom of the first 30 Commonwealth countries with a median wealth of $1,474 despite a $6,451 average wealth. While 92% of Nigeria's 95.93 million adults have less than $10,000 dollars to their name, less than 1% of Nigerian adults have more than $100,000 worth of wealth.
Sierra Leone is the poorest country in the Commonwealth, with an average wealth of $995 and a median value of $370. Besides, 99% of its 4 million adult population do not have a wealth up to $10,000 in their lifetime.
Commonwealth Countries ranked by Wealth Distribution among Adults
Hence, overall, there is no evidence that the Monarchy has directly contributed any economic benefit to commonwealth or country.
Also, regarding the British Monarch’s headship of the Commonwealth, there is no evidence that a country’s membership of the Commonwealth provides its people any advantage than other non-Commonwealth countries.
Affirming this, the Commonwealth office admits that Commonwealth countries “are among the world’s biggest, smallest, richest and poorest countries.”
In its recent Press Release, The UK Republican wrote, “A lot of myths and misunderstandings are recycled through our news media. Please keep three things in mind:
The monarchy is a political institution, steeped in power and vested interest
There is no evidence that the monarchy is good for tourism or a benefit to the UK economy
Broadcasters have a duty to report the monarchy impartially and in the same manner they would report any other political issue.”
While data shows there is no evidence that the Monarchy benefits the people, tax payers and the Elderly, there is sufficient evidence that the royal institution entrenches “financial secrecy” and deals in “Corporate Tax havens”.
This behaviour from the Royals frustrates the Sustainable development goals (SDGs) 10 and 17, and correlate with growing income inequalities in the UK.
The Monarch passed away at 96, leaving behind a country enmeshed in a cost of living crises.
King Charles III now reigns over subjects who have refused to work due to falling standards of living. From the warehouses to the sea port, from the railway worker to the delivery man, workers all over the UK are going on strike.
Apart from these negative effects of the Monarchy on the UK’s sustained economic development, it is hard to deny that the British Monarchy appeals to the human sense of grandeur, pageantry, history, and heritage.
Richard Fitzwilliams, a royal commentator captured the sustained allure of the monarchy well: “The colourful ceremonial of monarchy with links to the past, royal anniversaries, weddings and state visits is much loved by the public as it attracts both national and international attention”.