Queen’s income to drop by 14% but there is £1m for jubilee

The Queen will reduce her spending by 14 per cent within the next two years ahead of a radical shake-up of state funding for the royal household.

Under plans unveiled by the Chancellor, the grant given to the royal family will be frozen at £30 million this year, next year and 2012.

A special, one-off £1 million grant to help celebrate the 2012 Diamond Jubilee will remain intact. The royal household spent £36 million this year, with the help of a £6 million top-up from reserves built up over the past 20 years.

However, with no further reserves available in future years, its income will drop to £31 million in 2012/3 — a fall of £5 million or 14 per cent.

The bigger change announced by George Osborne today was a complete overhaul in the way the royal family is funded by the Government. At present the £7.9 million Civil List for individual members of the royal family is part of the annual £30 million overall grant. A new sovereign support grant will replace the current system and will be linked to the income from the Crown Estate, the property nominally held by the Queen but which pays its cash to the Treasury.

A spokesman for Buckingham Palace said: "The household obviously has some challenging times ahead. We welcome the announcement of the sovereign support grant as a more transparent and simpler way of funding the head of state."

Mr Osborne said that the current 10-year settlement expired this year and "no provision for a new settlement had been made when we entered office".

"Her Majesty graciously agreed to a one-year cash freeze in the Civil List for next year. Going forward, she has also agreed that total royal household spending will fall by 14 per cent in 2012-13 while grants to the household will be frozen in cash terms.

"In order to support the costs of the Diamond Jubilee, which the whole country is looking forward to celebrating, there will be a temporary additional facility of £1 million," he said.