King Charles III is to receive a huge pay rise from the UK taxpayer, according to government plans to boost public funding of the monarchy by 45% from 2025.
Details of the increase, which comes against the backdrop of a cost of living crisis, were contained in a review of royal funding published by the Treasury on Thursday. It revealed the royal family’s grant is due to increase from £86m to £125m.
The monarchy’s annual budget, known as the sovereign grant, is pegged against the profits from a national property portfolio called the crown estate.
The review of the royal funding settlement was heavily spun by the Treasury to give the impression that the king would be taking a pay cut so that crown estate funds could instead be spent on public services.
In fact, the report reveals the monarchy is due to receive a huge pay increase, although the rise will not kick in for another two years.
Next year, the sovereign grant will remain unchanged at £86.3m. However, in 2025, the king’s public funding will increase by a projected £38.5m, giving the monarchy an annual stipend of £124.8m. In 2026, it will be £126m.
Contacted by the Guardian, Buckingham Palace and the Treasury did not dispute that the sovereign grant was expected to significantly increase in the coming years.
Lord Turnbull, a former cabinet secretary, Whitehall’s most senior civil servant, who was involved in official discussions over royal financing, accused the Treasury of seeking to obfuscate how the monarchy was funded.
He said that linking the royal finances to the profits of the crown estate was “silly” and was motivated by a desire to promote the idea that the king was paying for himself and was reducing the burden on the taxpayer.
“You get people writing in saying: ‘Isn’t it a good thing that the king is so sensitive to public opinion that he has waived some of the money he could have had?’ I think it’s bollocks. It is deliberate – that’s really what makes me so cross about it. It is a deliberate attempt to obfuscate how the thing works.”
The complicated formula used to determine the sovereign grant was introduced in 2011 by the then prime minister, David Cameron, and his chancellor, George Osborne. Removing parliament’s centuries-old control over royal funding, they created a new formula that tied the monarch’s funding to a percentage of the profits of the crown estate.
Under the arrangement, that percentage is decided by the so-called royal trustees: the prime minister, chancellor and the king’s financial adviser. Since 2017, they have set the percentage at a rate of 25% of the estate’s net profits, resulting in a steady increase in funding for the monarchy as its profits increased.
However, Buckingham Palace and the Treasury have for months been wrestling with the dilemma of how to manage projections of an enormous increase to crown estate profits, resulting from the sale of leases for offshore windfarms by the estate.
The anticipated profits are forecast to more than double from £443m this year to more than £1bn next year.
The trustees’ decision was announced on Thursday. The Treasury emphasised a reduction in the percentage of crown estate’s profits to which the king would be entitled, from 25% to 12%.
The government declared the royal household’s budget would be “£130m lower in both 2025 and 2026, than if the rate remained at 25%”. It added: “Cutting the rate to 12% is expected to reduce the sovereign grant by £24m in 2024-2025 … This money will instead be used to fund vital public services, for the benefit of the nation.
Missing entirely from the Treasury press release was any mention of how, by receiving a smaller slice of a much larger pie, the king was still in line for a huge pay rise.
Graham Smith, the chief executive of the anti-monarchy group Republic, who was arrested while attempting to peacefully protest at Charles’s coronation, described the Treasury’s announcement as “grossly misleading”.
Another prominent republican, Norman Baker, a former Liberal Democrat minister, condemned the massive net increase in funding going to the king.
“This is a time when people are having difficulty putting food on the tables,” he said. “We’re actually providing more largesse for the royal family, who are really bloated in terms of their money.”
Baker observed that Britain’s royal family was considerably more expensive than other European monarchies. “The royals always plead poverty,” he added. “They always say that any changes to the arrangements are beneficial for the taxpayer. They never are. The arrangements that are made are beneficial for the royal family. It’s always been the way.”
Asked for comment on whether it was appropriate for the king’s pay to increase so significantly amid the cost of living crisis, a Buckingham Palace spokesperson pointed out that the sovereign grant had remained flat at £86m for several years, which she said was a real-terms cut when considered against inflation.
The spokesperson did not dispute that the sovereign grant would be £124.8m from 2025. However, she said that the increase would be “temporary, only for the financial years of 2025-6 and 2026-7” and would be used to complete renovation works at Buckingham Palace.
The modernisation of the royal palace has long been used to justify increases in the sovereign grant, which was just £31m when it was first introduced in 2012-2013. Under a “golden ratchet” clause in the Sovereign Grant Act, the amount of money handed to the monarch can never fall, even if the crown estate’s profits decrease.
A Treasury spokesperson said: “The grant has been largely unchanged since 2020 and this temporary increase covers the remainder of the Buckingham Palace refurbishment. We will review the grant in 2026, expecting to bring it back down in 2027.”
