Sovereign Grant analysis: Tourism good, inflation very, very bad

The Royal Train is being scrapped as royal officials eek out savings wherever they can

Jun 30, 2025

The Sovereign Grant was frozen at £86.3 million for the fourth year in a row. In the fiscal year 2024-25, the royal household received £51.8 million for the core Sovereign Grant and another £34.5 million designated to the multi-year renovation of Buckingham Palace (which they call “reservicing”).

The stagnation of the overall Sovereign Grant in recent years is noticeable — it has only increased by five percent in seven years, while inflation has nibbled away its purchasing power by more than one-fifth from its recent high. Details about the grant, which funds the official duties of the royal family and maintenance of occupied royal palaces, were released on June 30. (My analysis of last year’s Sovereign Grant is here)

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The need for royal fiscal retrenchment means that even historic conveyances are on the chopping block. The King is scrapping the Royal Train, which “will be decommissioned, ahead of the current contract expiring in March 2027, following a thorough review into its use and value for money,” the palace explains. It was an increasingly expensive and rarely used luxury for the monarchy.

Still, they did get some good news — the royal household’s balance sheet was bolstered by a supplement of £21.5 million, thanks to a blockbuster summer tourism season at Buckingham Palace, including the newly opened East Wing.

Even better, the decade-long Buckingham Palace Reservicing is both on time and on budget (£369 million). It should be completed in 2027, with £91.6 million expected to be spent over the next two years.

Now the bad news.

While the overall amount of core funding for the Sovereign Grant has flattened, inflation has really began taking its toll on royal finances. By adjusting each year’s amount to account for the effects of inflation, one can compare funding, which pays staff salaries, property management, and other essentials) across the years on an apples-to-apples basis (I chose to use 2017 constant pounds as that’s when the renovations started).

What the inflation-adjusted data shows is that the surge of inflation in recent is eating away at the royal finances. The 2024-25 raw number of £51.8 million for the core Sovereign Grant is the equivalent of £38.7 million pounds in 2017 constant pounds.

That means that the funding needed to maintain those core functions of the monarchy is down 22 percent from its peak in 2020-21, using those constant pound calculations.

The stagnation in the overall Sovereign Grant illustrates a flaw in the system — at some point, the Royal Trustees that oversee the calculations are going to have to “rebalance” the formula to account for the corrosive effect of years of inflation. That’s going to be distinctly unpopular in an era where every pound in desperately needed by multiple essential services (NHS, military, etc.).

Or the royal household may have to retrench even further. In Jane Austen’s Persuasion, the Elliot family had to rent out their home and move to bath to lower their expenses. What would that look like on a royal scale?

BACKGROUND TO THE NUMBERS AND CHANGES

In July 2023, as part of a regular review of the Sovereign Grant and its funding, the Royal Trustees Report revealed that, as of 2024-25, the profit share would drop to 12% of the Crown Estate profits of the two previous years (again, without decreasing from previous amounts).

That need to redo the formula is because of a massive windfall of profits due to the Crown Estate signing agreements for offshore wind farms (it owns the seabed). That surge in profits could have sent the actual amount of money in the Sovereign Grant share soaring so the King asked for the Sovereign Grant share to be recalculated (down to 12%), with the excess profits that would have flown into the Sovereign Grant to be used for “the wider public good.”

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In March 2024, a Royal Trustees Report set out how those new calculations would work (including Annex A that walks through the needed five steps)

On June 30, 2025, Buckingham Palace revealed that the Sovereign Grant was £86.3 million, based on a Crown Estate surplus of £442.6 million for 2023-23.

WHAT IS THE SOVEREIGN GRANT?

The Sovereign Grant Act of 2011 is designed to fund the official duties of the monarch and maintain the occupied royal palaces. (Side note: unoccupied residences, such as Hampton Court Palace, are maintained by the non-profit Historic Royal Palaces; the Prince of Wales funds his family through the ancient Duchy of Cornwall; and the monarch supports the rest of the working royals through the Duchy of Lancaster.) The Sovereign Grant was fixed at a share of the profits of the Crown Estate, which are held “in right of the Crown.”

The Crown Estate is important to understanding where the money comes from because, at the start of each reign, there’s been a tradition that the official expenditure of the monarch is met from public funds in exchange for the surrender by the sovereign of the revenue from the Crown Estate to the government.

In 2017, that Sovereign Grant profit share was increased to 25% as a temporary 10% was added to finance the “Reservicing of Buckingham Palace,” as they call the extensive renovations needed throughout the historic building. That means that the other 75% of the Crown Estate’s profits stays in the government’s coffers.

But that historic deal expired upon the death of Elizabeth II. So, following his accession in September 2022, King Charles III “confirmed his willingness and intention to continue this tradition,” a subtle reminder that the Crown Estate ultimately belongs to the Crown, not the government.

While the Sovereign Grant can grow as the Crown Estate’s profits increase, it can’t decrease. In July 2023, as part of a regular review of the Sovereign Grant and its funding, the Royal Trustees Report revealed that, as of 2024-25, the profit share would drop to 12% of the Crown Estate profits of the two previous years (again, without decreasing from previous amounts). That need to redo the formula is because of a massive windfall of profits due to the Crown Estate signing agreements for offshore wind farms (it owns the seabed). That surge in profits could have sent the actual amount of money in the Sovereign Grant share soaring so the King asked for the Sovereign Grant share to be recalculated (down to 12%), with the excess profits that would have flown into the Sovereign Grant to be used for “the wider public good.”