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A cast of characters: The Monarchy (part 12)

By Dr George Venturini

If being poor in Britain in 2012 was brutal, it continued to be brutal in 2018.

If not reading the papers, what were the occupiers doing at the Palace? Counting money, perhaps.

The Queen’s personal fortune has been the subject of speculation for many years. And the personal wealth must be distinguished from the expenses necessary to run the show.

The ‘work’ of the Royal Family is financed by the ‘hereditary revenues of the Crown’. The British Parliament employs a percentage of the Crown Estate, a part of the Crown’s hereditary revenues belonging to the sovereign which is placed at the disposal of the House of Commons, to meet the costs of the sovereign’s official expenditures. It is not an easy operation.

The expenses include the costs of the upkeep of the various royal residences, staffing, travel and state visits, public engagements, and official entertainment.

But there are other sources of income and these include, as will be seen, revenue from the Duchies of Cornwall and Lancaster, a parliamentary annuity, and income from private investments.

It is all enveloped in arcane language. Hence it is for The Keeper of the Privy Purse to be The Head of the Privy Purse and Treasurer’s Office and to carry overall responsibility for the management of the sovereign’s financial affairs. And where there are changes the language becomes rococo. So on the occasion of consideration of the latest reforming arrangement, the Queen would not say a plain ‘thank you’ – She would send a ‘gracious message: ‘The Sovereign’s gracious message to the House of Commons re: The Sovereign Grant Bill’, Buckingham Palace. 29 June 2011 (pdf).

There was in the past what was referred to a as the Civil List. Historically, until 1760 the monarch met all official expenses from hereditary revenues, which included the profits of the Crown Estate – the royal property portfolio. King George III agreed to surrender the hereditary revenues of the Crown in return for the Civil List, and this arrangement persisted from 1760 until 2012.

The Civil List was paid from public funds and was intended to support the exercise of the monarch’s duties as head of state of the United Kingdom. In modern times the Government’s profits from the Crown Estate always significantly exceeded the Civil List. Under the Civil List arrangements the Royal Family faced criticism for the lack of transparency surrounding Royal finances. The National Audit Office was not entitled to audit the Royal Household. (R. Verkaik, ‘First look at royal finances fails to satisfy MPs’. The Independent, 28 June 2002).

Under such arrangements the Queen would receive an annual £7.9 million a year from the Civil List between 2001 and 2012. The total income of the Royal Household from the Treasury was always significantly larger than the Civil List because it included additional income such as Grants-in-Aid from the Treasury and revenues from the Duchies of Cornwall and Lancaster. The total Royal Household income for the financial years 2011-12 and 2012-13 was £30 million (AU$53,726,453.56 at mid-June 2018) per annum, followed by a 14 per cent cut in the following year. However, the Treasury provided an additional £1 million to pay for Diamond Jubilee celebrations in 2012.

Royal expenditure differs from income due to the use of a Reserve Fund, which can be added to or drawn from. The official reported annual expenditure of the Head of State was £41.5 million (AU$74,320,492.93 at mid-June 2018) for the 2008-09 financial year. This figure did not include the cost of security provided by the police and the Army and some other expenses. (‘Cost of Royal Family rises £1.5m,’ BBC News, 29 June 2009).

The way of funding the Royal Household by a mixture of Civil List payments and Grants-in-Aid was amended by the Sovereign Grant Act of 2011. From 1 April 2012 a single annual Sovereign Grant has been paid by the Treasury. The level of funding for the Royal Household is now linked to the Government’s revenue from The Crown Estate.

The Sovereign Grant Annual Report provided that the Sovereign Grant was £31 million (AU$55,357,623, as at 30 June 2018) for 2012-13, £36.1 million (AU$64,477,714) for 2013-14 and £37.9 million (AU$67,689,723 as at 30 June 2018) for 2014-15. The amount of the Sovereign Grant is 15 per cent of the income account net surplus of the Crown Estate for the financial year which began two years previously. The Sovereign Grant Act provided that the arrangements would have been reviewed by 2016 and a mechanism to prevent the amount of the Sovereign Grant increasing beyond what is necessary because of the growth in Crown Estate revenue. Under the Sovereign Grant Act the National Audit Office is now empowered to audit the Royal Household.

On 18 November 2016 a plan was announced to increase the Sovereign Grant from 15 per cent to 25 per cent to renovate and repair Buckingham Palace. The percentage is set to revert to 15 per cent when the project is finished in 2027.

The Duchy of Cornwall is a Crown entity holding land and other assets to produce an income for the monarch’s eldest child. The Duke of CornwallCharles, Prince of Wales – receives revenue towards charitable work and official activities, supported by the Queen’s Grant-in-aid funding to provide assistance with official travel and property. These financial arrangements also cover the official expenditure of some members of his immediate family. The Duchess of Cornwall, the Duke and Duchess of Cambridge and Prince Harry all have their official expenses paid from Duchy income, assisted by grants-in aid from the Queen. For the fiscal year 2011-12 – the Diamond Jubilee year – the Duchy was valued at £728 million AU$1,300,075,577 as at 30 June 2018) with an annual profit of £18.3 million (AU$32,678,877 as at 30 June 2018) paid to the Prince.

The Duchy of Lancaster is the private estate of the British Sovereign – that is Queen Elizabeth II – consisting of land holdings and other assets. As it is held in perpetual trust for future generations of Sovereigns, the Sovereign is not entitled to the estate’s capital. The revenue profits of the Duchy are presented to the Sovereign each year and form part of the Privy Purse, providing income for both the official and private expenses of the monarch. In the financial year ending 31 March 2015, the Duchy was valued at £472 million (AU$843,122,237 as at 30 June 2018) , providing £16 million (AU$28,578,541 as at 30 June 2018) in income.

In 2017 the Paradise Papers revealed that the Duchy held investments in two offshore financial centres, the Cayman Islands and Bermuda. Both are British Overseas Territories of which Queen Elizabeth II is monarch, and nominally appoints governors. Britain handles foreign policy for both islands to a large extent, but Bermuda has been self-governing since 1620.

The details of the Queen’s offshore dealings come from a leak of 13.4 million files from two offshore service providers and the company registries of 19 tax havens.

The material was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with partners including The Guardian, the BBC and The New York Times.

The Duchy’s investments included First Quench Retailing off-licences, Threshers and rent-to-own retailer BrightHouse. (H. Osborne, ‘Revealed: Queen’s private estate invested millions of pounds offshore’. The Guardian, 5 November 2017).

In 2005 the Duchy invested US$ 7.5 million in Dover Street VI Cayman Fund LP, according to files from the offshore law firm Appleby. The fund invested in and profited from a company which developed fingerprint technologies for mobile phones and made investments in other high-tech and pharmaceutical companies. Other investors included British and American universities, a United Arab Emirates bank and charitable foundations. In June 2008, the Queen’s estate received about US$360,000 from its investment.

The Cayman fund also invested in a private equity company which controlled BrightHouse, a U.K. rent-to-own firm which has been criticised by consumer watchdogs and members of Parliament for selling household goods to disadvantaged Britons on payment plans with annual interest rates as high as 99.9 percent. From at least 2004 to 2010 the Duchy also invested in the Bermuda-based Jubilee Absolute Return Fund.

The Queen’s offshore investments have not been disclosed in annual financial reports of the Duchy, which is not obliged to reveal the details of her personal wealth. (Queen Elizabeth II | ICIJ Offshore Leaks Database, The International Consortium of Investigative Journalists,

The International Consortium of Investigative Journalists is a global network of more than 190 investigative journalists in more than 65 countries who collaborate on in-depth investigative stories. The International Consortium of Investigative Journalists database contains information on almost 500,000 offshore entities which are part of the Panama Papers, the Offshore Leaks and the Bahamas Leaks and some from politicians featured in the Paradise Papers investigation. The data cover nearly 40 years up to early 2016 and links to people and companies in more than 200 countries and territories.

“The Duchy has an ongoing investment in the Cayman Island fund and was not aware of the investment in BrightHouse”, a spokeswoman for the Queen told The Guardian, an ICIJ media partner. She also confirmed the Duchy’s investments in two additional offshore funds. “The duchy’s investment policy is based on advice and recommendations from our investment consultants and asset allocation rather than tax strategy,” the spokeswoman said.

Though the Duchy characterised its stake in BrightHouse as negligible, it would not disclose the size of its original 2005 investment, which coincided with a boom in the company’s value. BrightHouse has since been accused of overcharging customers, and using hard sell tactics on people with mental health problems and learning disabilities. In October 2017 it was ordered to pay £14.8 million in compensation to 249,000 customers.

The Duchy also disclosed investments in “a few overseas funds”, including one in Ireland, and would be under pressure to give details of where the money is being held.

Although the estate said it received no tax advantages from investing offshore, the revelations about the finances of the Queen, one of the world’s richest women, will likely re-energise campaign groups and some MPs who have demanded greater scrutiny of royal spending. The disclosures also highlight the lack of transparency that has been a concern for critics, who have railed against the moral ambiguities of the offshore sector and demanded major changes. (‘Revealed: Queen’s private estate invested millions of …’,

The most recent filings by the Duchy show it had assets worth £519 million at the end of March 2017. The Paradise Papers offer an unprecedented glimpse of the way the Duchy invested some of its money, including details of complex offshore arrangements not set out in the royal household’s annual statements.

According to the leak, the Duchy used offshore private equity funds designed to shield United Kingdom investors from having to pay United States tax on their holdings.

Investors who do not pay tax in the U.K. can face a tax bill if they invest in certain types of funds in the United States, although the Duchy said it gained no tax advantage from investing via the Caymans.

The stakes in Threshers and BrightHouse can be traced back to an investment into one of these schemes by the Duchy in 2005. The papers show it committed £7.5 million to Dover Street VI Cayman Fund LP.

The Duchy became a limited partner in the scheme at the same time. Dover Street VI Cayman Fund LP is a “feeder” for another American fund, which invests in venture capital and private equity funds around the world.

Letters in the Paradise Papers show how the Duchy’s money sluiced through various funds, and where it ended up. Managers from Dover Street set out what cash they needed and where they had been putting it on behalf of investors.

In a letter dated September 2007, they explain that they have taken an interest in a private equity vehicle called Vision Capital Partners VI B LP. The Dover Street fund was one of 27 limited partners making an investment.

The letter explains that this was “formed by Vision Capital Partners to acquire a portfolio of two retailers in the United Kingdom.” Two months earlier, Vision Capital Partners VI B LP had bought BrightHouse and Threshers.

The investment in Vision Capital Partners by the Dover Street fund was among several outlined in the managers’ call for funding, to which the duchy was asked to contribute US$450,000 – 6 per cent of its commitment.

The Dover Street VI fund was set up to run until the end of December 2014 and since then has been selling off its holdings and returning funds to investors. It is unclear from the leak what has been returned to the Duchy. The Paradise Papers show only one payout from the fund, a letter from June 2008 explaining the duchy was entitled to US$ 361,367.

It seems to have received the distribution after paying a tiny amount of tax – 0.4 per cent – which it appears to have offset against the next payment into the fund.

BrightHouse, with more than 270 stores across the United Kingdom, had been accused of overcharging customers and using hard-sell tactics. It had previously denied claims as to its conduct and accused critics of misrepresenting the business. But it has been under investigation by the Financial Conduct Authority, which in October 2017 said that it was not a responsible lender.

The company was also forced to change the way it checked customers’ finances before granting them loans, in order to keep its consumer credit licence.

BrightHouse has limited its tax bill through a large loan to a Luxembourg holding company. Between 2007 and 2014, it reported £1.6 billion in revenue and made an operating profit of £191 million, but paid less than £6 million in corporation tax, analysis by Private Eye found. The Duchy’s chief finance officer, Christopher ‘Chris’ Adcock, told The Guardian it had been unaware of the indirect holding in BrightHouse.

“Investors commit to a fund for a given period and are not party to its ongoing investment decisions,” he said.

The Paradise Papers show that through the same indirect investment, the Queen’s money was invested in Threshers before it went into administration in 2009.

When asked what other offshore holdings the Duchy has, Adcock said it “invests in a fund domiciled in Ireland”, but declined to give details. In a second statement, the Duchy admitted it “operates a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimised.”

The Duchy would not give details of the size of the original stake in 2005, or what had been taken out since then.

“The Dover Street investment was bought in 2005 and forms only 0.3 per cent of the total value of the Duchy. The duchy investment in Brighthouse is through a third party and equates to £3,208,” it said.

Adcock confirmed that the duchy invested £5 million in the Jubilee Absolute Return Fund, which invests in hedge funds. At the time of the investment in June 2004, the fund was based in Bermuda. In 2006, it moved to Guernsey.

At the outset, the fund’s manager, Fauchier Partners, sought assurance that it would not be taxed in Bermuda on its income or any gains until 2016. The fund, which has been invested in by a string of charities and council pension funds, is now run by a different manager and has been renamed the Permal Absolute Return Fund, one of the world’s largest funds of hedge funds.

The papers do not make clear what money, if any, the Duchy made from this arrangement. Adcock said that the Duchy had redeemed its stake in the fund in 2010, but its investment in the Dover Street fund was expected to last for another two to three years while the fund was wound up.

There are some revelations, several concerning the ‘Royal Family’, from the Paradise Papers:

1) Millions of pounds from the Queen’s private estate have been invested in a Cayman Islands fund – and some of her money went to a retailer accused of exploiting poor families.

2) Prince Charles’s estate made a big profit on a stake in his friend’s offshore firm.

3) The 6th Dukes of Westminster, Major General Gerald Cavendish Grosvenor, KG CB CVO OBE TD CD DL (1951 – 2016), a British landowner and businessman had pumped millions into secretive offshore firms.

And, just by way of digression, but equally significant, Cambridge and Oxford universities and top American universities invested offshore, with some of the money going into fossil fuel industries.

‘The Palace’ did not comment on the revelation that the Duchy of Lancaster, which handles the Queen’s private wealth, used offshore investments.

A spokesperson for the Duchy of Lancaster said: “We operate a number of investments and a few of these are with overseas funds. All of our investments are fully audited and legitimate.” … “The Queen voluntarily pays tax on any income she receives from the Duchy.”

Labour Party Leader Jeremy Corbyn posited whether the Queen should apologise, saying anyone with money offshore for tax avoidance should “not just apologise for it, [but] recognise what it does to our society.” A spokesman for the Duchy said that all of their investments are audited and legitimate and that the Queen voluntarily pays taxes on income she receives from Duchy investments. (‘Paradise Papers: Queen should apologise, suggests Corbyn’, BBC, 6 November 2017).

Prime Minister Theresa May said that the ‘UK [was] already acting’ on offshore tax havens. She insisted that efforts were already under way to obtain revenue from offshore tax vehicles, adding: “We want people to pay the tax that is due.”

Speaking at the CBI Conference Centre, the Prime Minister said that Her Majesty Revenue & Customs had already collected £160 billion by tackling tax avoidance, evasion and non-compliance since 2010.

Mrs. May’s spokesperson said: “It is important to point out that holding investments offshore is not an automatic sign of wrongdoing, but H.M.R.C. has requested to see the papers urgently so it can look into any allegations.”

But when asked, Mrs. May did not commit to a public inquiry into tax revenue lost through offshore tax avoidance schemes.

Mr. Jon was Thompson, Chief Executive and Permanent Secretary of H.M. Revenue and Customs vowed “to chase down” anyone trying to hide money offshore and evade tax.

He told the Commons Public Accounts Committee that H.M.R.C. had asked to see the leaked Paradise Papers in order to “look at every case of tax evasion very seriously.”

Mr. Thompson said that there were 66 ongoing criminal investigations into the Panama Papers, which in April 2016 exposed tax avoidance and evasion, saying £100 million could be retrieved. “That gives you some sense about how long quite complicated tax cases take to bring to some sort of fruition,” he added.

The Crown enjoys tax-exemption because certain acts of parliament do not apply to it. Crown bodies such as The Duchy of Lancaster are not subject to legislation concerning income tax, capital gains tax or inheritance tax. Furthermore, the Queen has no legal liability to pay such taxes. The Duchy of Cornwall has also a Crown exemption and the Prince of Wales is not legally liable to pay income tax on Duchy revenues.

A ‘Memorandum of understanding on Royal Taxation’ was published on 5 February 1993 and amended in 1996, 2009 and 2013. It is understood that the arrangements in the memorandum will be followed by the next monarch. The memorandum describes the arrangements by which the Queen and the Prince of Wales would make voluntary payments to the Her Majesty’s Revenue and Customs in lieu of tax to compensate for their tax exemption. The details of the payments are secret. The Queen voluntarily pays a sum equivalent to income tax on her private income and income from the Privy Purse – which includes the Duchy of Lancaster – which is not used for official purposes. The Sovereign Grant is exempted. A sum equivalent to capital gains tax is voluntarily paid on any gains from the disposal of private assets made after 5 April 1993. Many of the Sovereign’s assets were acquired before that date but payment is only made on the gains made afterwards. Arrangements also exist for a sum in lieu of inheritance tax to be voluntarily paid on some of the Queen’s private assets. Property passing from monarch to monarch is exempted, as is property passing from the consort of a former monarch to the current monarch.

One can see that everything is private, secret, confidential – away from the eyes of the subjects. Why? No one should dare asking!

Continued Wednesday – A cast of characters: The Monarchy (part 13)

Previous instalment – A cast of characters: The Monarchy (part 11)

Dr. Venturino Giorgio Venturini devoted some seventy years to study, practice, teach, write and administer law at different places in four continents. He may be reached at


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  1. Phil

    Oh I do wish the subjects would stop rubbishing mummy about her loot. It has been taken from the subjects to put to better use. The subjects would only waste it on luxuries like food and clothes and they waste money on this absolutely disgusting concoction called beer which, they seem to consume in large quantities whilst watching games only savages would play, like cricket and what was it? Oh yes football. I must introduce the subjects to Polo as I’m often reminded how spirited the game is when I am riding Camilla.

    The thing is we can’t live like the subjects. Take food for instance. Our stomachs are very particular about the nosh it can digest, anything other than Russian sturgeon caviar and fine French cheese gives me a very bad tummy upset and a case of the Royal trots (Oh dear the Royal horses again) like you wouldn’t believe. On a recent trip to watch the ‘ Blackpool Lights ‘ I had the misfortune of eating some of the local ghastly Fish & Chips I had a case of the trots that was unbearably uncomfortable, my man servant Jeeves flat out refused to wipe and powder my Royal posterior.

    Then there are the private schools. Terribly expensive. I myself would have perished in a public school. At Timber tops a school I attended in the Antipodes. I had my own ‘ Fag ‘ there who was irreplaceable, he would run my bath at just the right temperature and cut my toe nails like a highly skilled surgeon. He would read to me at bed time and excite me with the works of Dickens. Some ghastly story I remember well was ‘ Oliver Twist ‘ I was not aware such poverty existed in the realm. I will see what Mummy can do. . She is rather busy at the moment with a sore thumb. She gets terrible arthritis in her hand from cutting ribbons.

    As you can see being a Royal is not all beer and skittles.

    Your humble servant


  2. Phil

    On a serious note, the Royals and the Tories have salted away enough wealth from the exploitation of their own people and the people of foreign lands to keep them in luxury for a thousand years. I remember a Doco where a bank in London opened some of its private security boxes containing gold and jewels brought back from the pillages of the Spanish Main. The British Empire was ruthless in its pursuit of riches and it still is. When they can’t trade for what they want, they will plunder it. As an aside I see the Indian government is pursuing some of the jewels back, that are currently in the hands of the Monarchy. Good luck with that.

  3. Michael Taylor

    Phil, later in the series Dr George reveals the worth of these royal leaches. You’ll be aghast.

  4. Phil

    Michael Taylor
    June 30, 2019 at 12:32 am

    ‘ Phil, later in the series Dr George reveals the worth of these royal leaches. You’ll be aghast.’

    Indeed do tell me more. On a more serious note when I was a child about fifty five years ago, I would refuse to stand for what was then our national anthem. ‘ God save our Queen ‘. My teachers no doubt thought I must need the services of a psychologist. Not only did I suffer psychologically for my indifference to the Royal family, I suffered physically. That the English still ‘ Doff the cap/hat to these parasites is one of those strange realities that does not make sense. It must be the Scottish blood that runs through my veins.

    Now beginning my dotage, I spend a lot of time in my Doctors waiting rooms and in X ray money printing presses disguised as waiting rooms. I pick up the reading material and there it is in living colour in the magazines, the trials and revelations of the Royal family. The reelection of Morrison explained in a ‘ Women’s Weekly Magazine ‘ politics has never been so simple.

  5. Josephus

    Well our previous PM never suffered either for his Cayman Islands salting away of funds . The whole system is rotten. Even the Bolshevik revolution simply replaced one corrupt and greedy lot of leeches for another. Solzhenitsyn once said that in the West citizens could complain and protest but no one listened, whereas in his home country when you complained and protested you usually landed up in jail or worse, as he did. I suppose the former is a bit less dispiriting!

  6. Phil

    July 1, 2019 at 9:48 am

    Well our previous PM never suffered either for his Cayman Islands salting away of funds . The whole system is rotten.

    Indeed it is. Come the revolution which unfortunately wont be in my life time I could pull the lever on the public gallows and send most politicians and other public servants to eternity and not loose a minutes sleep. Of course some of them would have to be done in private, their screams for their mothers would haunt me. We all analyze the system and will do so until the cows come home. Some of us know what is going on but the majority are blissfully unaware that politicians with few exceptions are in it to get cashed up for doing five fifths of F.A. and damn the rest of us in the process. I remember when Medibank started as it was known then and the belly aching of the Doctors with their ‘ Socialized medicine ‘ routine. I think it was about sixty Doctors got charged for fiddling it in its first month. Btw I am under no illusion every one that comments here would have a file on them. Don’t ask me how I know I just do. We live in a police state anyone that thinks otherwise is a moron.

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