The Treasury has moved to dampen down the row over Scotland’s share of the Queen’s income by insisting that the royal household’s grant will be protected despite a cut in funding from the crown estate.
Senior figures in the royal household have claimed that new powers for the Scottish parliament to take control of the majority of the crown estate’s land and property in Scotland would mean the Queen could lose more than £2m a year in funding.
Buckingham Palace officials also accused Nicola Sturgeon’s government in Edinburgh of reneging on an undertaking – made before the independence referendum by Alex Salmond, her predecessor as first minister – that Scottish funding would continue in full if it took control of the crown estate.
But the Treasury insisted on Wednesday it would ensure the proposal to devolve control over most crown estate assets to Holyrood – a measure to help increase Scottish tax and policy-making powers in the Scotland bill – would not lead to a cut in royal funding.
Scottish National party sources were also furious. One senior source said Salmond’s discussions with palace officials were based on Scotland becoming independent, not on the current devolved settlement where funding of the royal family was a reserved matter for the Treasury.
“Of course independence would have changed things, so we made a clear commitment,” he said. “But nothing changes to the grant after a no vote because responsibility for it remains reserved to Westminster.”
The row hinges on the terms of the Sovereign Grant Act, which sets the royal household’s state funding. It pegs 15% of the Treasury grant to a share of the surplus from the crown estate’s property investments.
This year, that grant was nearly £40m, while the revenue from crown estate properties and land in Scotland, including large areas of seabed used for renewable energy projects, was £14.5m.
Under the current formula, which led to a pro-rata share of £2.2m to the sovereign grant. Sir Alan Reid, the Queen’s keeper of the privy purse, told reporters on Tuesday there were now real doubts about whether that funding would continue.
“The transfer of the Scottish assets of the crown estate to the Scottish government does confuse the issue of renegotiating the percentage in due course because the total assets under the crown estate management will fall, and therefore 15% will be less than it would be if the transfer of the Scottish assets had taken place,” he said.
But the Treasury insisted he was wrong, because it would ensure the same sums would come from general taxation; a new review of that grant was also under way to protect the royal household’s income.
“Scottish taxpayers will continue to fund a full and fair share of the sovereign grant, paid via the consolidated fund,” the Treasury said.
“The grant will not be adversely affected by devolution – under the Sovereign Grant Act it cannot be reduced and the statutory review of the grant will ensure that it continues to provide the resources needed to support the Queen’s official duties.”
The Scottish government supported the Treasury position. “Scotland will continue to make the same financial contribution to the monarchy as at present – there will be no reduction in the sovereign grant as a result of devolution of the crown estate,” the first minister’s spokesman said.
The dispute has erupted months after this issue was flagged up last year by all of Scotland’s political parties sitting on the Smith commission, the UK-government run study into giving Holyrood new tax and policy-making powers.
A palace source told reporters on Tuesday: “Originally, Alex Salmond did imply that might happen. But the new leadership said no.”
However, the commission was staffed by UK civil servants, including senior Treasury officials, and included senior figures from the Conservative party, which as the new government is overseeing this transfer of powers on the crown estate assets.
The Smith commission report in November, which was unanimously agreed by the five parties on it and accepted in full by the UK government, stated there were a number of issues that needed cross-government agreement after devolving the crown estate assets in Scotland.
Those included protecting critical infrastructure such as oil and gas installations as well as UK security. Its final point was that “responsibility for financing the sovereign grant will need to reflect this revised settlement for the crown estate”.
The Scottish parliament’s devolution committee warned earlier this year that this issue had been omitted from the UK government’s command paper, which confirmed the Scotland bill would go ahead, closely following the Smith commission recommendations.
