Royal Legacy: How the royal family have made, spent and passed on their wealth

by McClure, David

  To add to the unconventionality, he was also reportedly father of an eleven-year-old boy from a previous relationship. But according to the bride’s godfather, Roger Wellesley Smith, the groom's background was of no concern to her parents: "The only question they have asked is will she be happy and they feel she will be…The Duke and Duchess are people of today's world and things are very different to the way they were two generations ago."32 The groom is reported as saying of his new in-laws that they were "no different to anyone else's.” Once more, the ceremony was a low key affair. A spokesman for the royal household explained that "the Queen will not be attending. They are having a quiet private wedding."

  As “a person of today’s world” the Duke of Gloucester could often be seen riding around central London on his Honda 600cc motorcycle.33 As a car enthusiast too, he was president of the Institute of Advanced Motorists for many years until he was obliged to resign in 2005 after being banned from driving for six months for speeding

  For the most part, the duke fulfils his royal duties quietly, efficiently and to use his mother's phrase with a minimum of fuss. On the official royal website he records a normal working day as catching a train out of town, being met by the Lord Lieutenant of a county or district and then opening a new building – it could be a large factory or simple village hall. Using his expertise in architecture he sat for many years on the Historic Buildings and Monument Commissions (today English Heritage) and he is now President of Cancer Research UK and St Bartholomew's Hospital as well as a patron of ASH (Action on Smoking and Health). A passionate anti-smoker he sets himself apart on this issue from the traditionally nicotine-addicted royal family. Both his uncles (George VI and Edward VIII) of course died of smoking related diseases.

  This more modern approach to royal duties may supply an answer to the mystery of why Princess Alice's will was not sealed: the royal making the decision on this occasion was a person of today's world. No doubt he wondered why his mother’s will should not be open to the public like everyone else’s in Britain. There might also have been a changed class element - Alice's generation worried about finding staff but did not talk about money or inheritance while the thrifty Richard without a chauffeur got round town not in his father's Rolls-Royce but a modest moped.

  In keeping with the spirit of a greener age, there have been plans to build a wind farm on his ancestral land not far from Barnwell Manor which could bring in £120,000 a year in rental fees.34 But the prospect of unsightly giant turbines has caused consternation among more conservative residents in the locality. No one can be certain how Princess Alice would have responded to the plans, but she might well be now spinning in her grave.

  17.CHARLES’S CASH COW – 2010-2014

  "He loves spending money… God knows how much money he would spend if he ever got his hands on Sandringham"

  Anonymous palace source on Prince Charles’s lifestyle1

  If an absence of cash has obliged Prince Richard to prune his property portfolio, an abundance of funds has encouraged his distant cousin Prince Charles to go in the opposite direction - for maximum growth. In the course of his six decades’ wait to be crowned, the oldest Prince of Wales in history has been able to build up an extensive network of houses in all four corners of his future kingdom.

  The jewel in the crown, Highgrove House, lies in the heart of middle England, just outside of Tetbury in Gloucestershire. The former home of Maurice Macmillan, MP, the son of the Conservative prime minister, was purchased for £865,000 in 1980 in preparation for Charles's marriage to Diana. The neo-Georgian house with its nine bedrooms, eight bathrooms and four reception rooms (as well as an outdoor swimming pool) was ideally suited to entertaining and inviting friends to stay.

  It was also surrounded by three hundred and fifty acres of farmland including the Duchy Home Farm and thirty-seven acres of relatively uncultivated grounds which soon became the focus of Charles’s zeal for gardening. With expert advice from his friend and horticulturalist Lady Salisbury, he laid out the garden with honeysuckle, jasmine and other scented plants and created an experimental flower meadow, a walled kitchen garden and an orchard of rare varieties of apples. This labour of love (“I have put my heart and soul into Highgrove,” he once told a Telegraph reporter) has grown into a personal garden of Eden.2 It became the place where he was most at home, an oasis away from the pressures of palace life.

  “A combination of unlimited resources and exquisite taste” is how the Labour MP Chris Mullin described Highgrove after a parliamentary visit in June 2006. “Everywhere little memorials, busts of friends, of the Prince himself and in a glade among the trees a delicate sculpture of the murdered daughters of the Tsar, there is even a little memorial to a dead dog. There is only one glaring omission – Diana. Of her, no mention.”3

  During the many low points in his marriage to Diana, Charles found Highgrove conveniently close to his long term mistress and future second wife Camilla Parker Bowles who lived a fifteen minute drive away at Bolehyde Manor. After her divorce from Andrew Parker Bowles in 1995, she reportedly sold this home and moved to nearby Ray Mill House in Laycock, Wiltshire where her father lived.4

  If Highgrove in the heart of England is one of Charles’s oldest properties, then the newest is located on one of the most westerly points of the British mainland. In March 2007 he paid £1.3m for a Carmarthenshire farm in Llwynywermod, near Anglesey and spent another £1m or so transforming the coach house into a three-bedroom farmhouse-like home and converting the adjoining farm building into a reception area and dining room. He even recruited his sister-in-law, Annabel Elliot, to help with the interior design and furnishing of his holiday accommodation with the Duchy of Cornwall accounts for 2008 recording that she was paid "the sum of £103,000 (2007: £182,000) in total for consultancy fees and the purchase of furniture and furnishings." The purchase of the property as a whole was justified on the grounds that the Prince of Wales should have a house within the principality given that there had been no permanent royal base in Wales for him since the 17th century.

  Charles has also leased a property on the northern-most tip of Britain. Every year usually in August he paid a week's rent to use the Queen Mother's former country retreat, the Castle of Mey - Britain's most northerly inhabited castle - at Thurso on the Pentland Firth – and attended the Mey Highland Games with its tug-of-war competition initiated by his grandmother between the castle staff and a team from the local British Legion. His charity, the Prince of Wales Foundation, encourages rich donors to contribute to its upkeep, with one Canadian heiress giving £1m in 2007 to build a new visitor centre.

  Another of the Queen Mother’s former Scottish properties, the fourteen-bedroom Birkhall lodge on the Balmoral estate, has been used in the summer by Charles who has paid rent to the Queen. Under the guidance of his second wife, Camilla, he also reportedly spent hundreds of thousands of pounds refurbishing the interiors.5 It was here that he used to find a place of refuge during the worst days of his marriage to Diana.

  When the Queen Mother died in 2002, he also moved into her St James's home Clarence House which became his official London residence. Being one of the royal palaces held in trust for the nation, the state paid £4.5m to modernise the house for the prince and he paid the remaining £1.6m. He has furnished the house with his personal artefacts and treasures from the Royal Collection – including the Monet and several paintings by Piper that once belonged to the Queen Mother.

  To maintain this diverse portfolio of properties as well as to organise the prince's official duties, a large staff is required. Their numbers (and costs) have swollen considerably in the last two to three decades. Eyebrows were raised in 1992 when Charles's biographer Jonathan Dimbleby revealed a staff of 84 people - a number incidentally that so enraged his then estranged wife Diana that sometime after 1992 she reportedly sent to The News of The World a copy of the royal phone directory listing all the staff and advisors who worked for Charles.6 But that is nothing compared to the army of 148 who ass
ist him today (including 20 who work solely on his charitable projects at Clarence House). The breakdown of personnel from the official report makes interesting reading, particularly his 60-strong private household who include: 1 equerry, 1.3 butlers, 2.5 valets and dressers, 3 chauffeurs, 4.6 travel coordinators, 5.3 chefs and kitchen porters, 3.7 orderlies, 10.8 house managers and housekeepers, and 21.3 gardeners and estate workers.

  There were another 31.7 people working in his official office (private secretaries etc), 20.4 in the finance and personnel office, 3.8 in the charity office and significantly for someone whose public image had taken something of a battering since the Diana divorce 11.8 in the press office. Some are on generous salaries - particularly those based at Clarence House where the average pay is reportedly £40,000 per annum.7 Part of this growth in staff numbers can be explained by the new responsibilities brought by the transition process, the extra needs of his two adult sons (after the marriage of William and Kate, an extra press team became a necessity) and his new wife as well as by the expansion of Highgrove and its gardens and farmlands.

  Charles lives lavishly and to some people's eyes even more grandly than the Queen. Few would deny that he appreciates food far more than she does. While his mother famously eats her breakfast of Special K off Tupperware bowls, Charles is known to be to be very discerning when it comes to his boiled egg. According to a story told to Jeremy Paxman, his staff were so worried about ensuring that the food was of the correct hardness that they resorted to cooking a variety of eggs which they laid out in an ascending row of numbers beginning with the most runny.8 Even if this tale might have grown taller in the telling and it was officially denied by a royal spokesman, there is no disputing that Charles likes the finer things in life. At one plush dinner attended by donors to the newly restored Scottish stately home, Dumfries House, he was observed by a Time Magazine reporter to enjoy along with the sea bass and risotto a fine Puligny-Montrachet, Chateau Sarget de Gruaud Larose and pink Champagne.9

  He drives a £60,000 Aston-Martin, owns or leases a fleet of top of the range Audis and for official functions uses a Bentley or a Jaguar XJ diesel. All of his personal wear is of the highest quality. His bespoke suits have come from Anderson Sheppard of Savile Row, his shoes from Lobb and his guns from Purdey. Even when he had to splash through the sodden fields of the Somerset Levels on a visit to flood victims in February 2014, he still managed to look immaculately turned out in his Argyll Wellington Boots, Barbour-styled jacket and Windsor-knotted tie.

  He also pushes the boat out when it comes to travel and holidays. He enjoys summer Mediterranean cruises on friends' luxury yachts, takes a regular skiing vacation in Klosters and often hires private jets for his journeys when he is not using the personal planes of billionaire friends. In 2010 Charles was reported to have run up a bill of £29,786 for a plane to take him to Balmoral for a four day holiday. In April 2009 he spent £14,756 taking the Royal Train from London to Cumbria to launch the Red Squirrel Survival Trust and in 2014 he had to take a £246,160 charter flight to South Africa to be in time to attend the funeral of Nelson Mandela. Overall in 2014 his spending on official travel went over the million pound mark to £1.235m.

  So, how can he afford to live in such a luxurious manner? Admittedly, he does receive £2.1m in public funding from government departments and the Sovereign Grant to cover his travel and other official costs but that makes a relatively small dent in balancing the books. The real solution to the mystery, however, lies in his private milch cow - the Duchy of Cornwall - which is the official owner of Highgrove House and all of his other private properties. The lion’s share of his personal wealth derives from the revenues from the duchy which in 2014 paid him an annual income of £19.5m. But if you trace the accounts back sixty years the duchy has not always been as high-yielding a cash cow as it is today.

  The first trickle of the revenue came on stream when Charles was three. On the accession of the Queen in 1952, Charles became heir to the throne and 24th Duke of Cornwall thereby gaining access to the duchy income. Being a minor, he was allocated only one ninth of the profits with the rest going to the Treasury which offset it against Civil List spending. By the time he was eighteen he was receiving the relatively small sum of £21,000 a year. The big payday came on his 21 st birthday as he gained access to the total annual income of £248,000 and then volunteered to pay income tax at 50% (a considerable saving since the top rate at the time was over 90%).

  In 1969 the Duchy of Cornwall was hardly in the rudest of financial health. Failure to invest in modern farming machinery and new agricultural techniques had resulted in relatively low rents on long leases and to balance the books, the duchy was obliged to sell land on such a scale that when Charles took over the reins the duchy was actually contracting rather than growing.10 Some hoped that the newly-invested Prince of Wales would take on the white knight role performed by Prince Albert a century earlier and restructure the duchy holdings. But despite some subtle hints, Charles was perfectly happy to take a backseat and delegate the decision making to senior executives while he formally chaired the non-executive board of the Prince's Council. Over time more skilful managers were recruited who addressed the problems of the high costs and the low yield from long term rural leases and then developed a new investment strategy of switching from residential and rural properties into more lucrative commercial property.

  In the late seventies the prince became more closely involved in the running of the duchy. Its financial health had by now begun to improve as the new investment strategy bore fruit. By the time of Charles's marriage to Diana in 1981 its capital reserves were large enough to buy him Highgrove House for £865,000 and marriage gave him the extra benefit of a reduction in the voluntary income tax from 50% to 25% to take into account his additional costs of a larger household. By 1992 duchy revenues had climbed to £3.4m but when under a new tax regime announced in that year the Queen agreed to pay income tax, Charles was obliged to pay tax at 40% himself and since his free use of Highgrove could now be seen as a taxable benefit in kind, he agreed under the Memorandum of Understanding with the prime minister to pay rent on the property (by 2013 it had risen to £375,548). Although Charles had to pay rent at a market rate, it made little real difference to his net income as the rental money went straight into the duchy's revenue account. In effect, he was paying it back to himself.

  In 1998 he undertook another circular transaction with the Duchy of Cornwall. In July he sold to the duchy timber for £2,300,000 which in an odd arrangement he had grown privately on duchy-owned land. Why was someone who was already in receipt of a yearly income of £7m so short of cash that he needed to sell a pile of wood? The stated explanation from the duchy was that the timber would by its nature require harvesting at some time and since he had to sell it to someone, why not use the duchy which was already building up a portfolio of forestry land. But another factor may well have been his recent divorce settlement. Although the Queen is widely reported to have paid for the bulk of the £17m settlement since Charles’s wealth was not sufficiently liquid to finance it himself, it is not beyond the realms of possibility that some of the proceeds of the timber sale might have been used as repayment of the loan from his mother. Charles would already have had some private funds (to the value £2m in 1994 according to his biographer), but they would not have been enough to pay for the divorce settlement - whether directly or as a repayment of a loan to his mother. When questioned by a parliamentary committee in 2013 about the curious timber purchase, a duchy official said “it was a one-off” and “it certainly has not happened again.”11

  At the turn of the millennium the duchy was producing a surplus for Charles of £6.9m - a doubling in profits in ten years - but the big jump in profitability would come in the following decade or so when the surplus would almost treble. In 2000-01 the surplus was £7.5m but by 2010-11 it was £17.8m. In short, Charles received an extra ten million pounds in ten years.

  The remarkable financial growth can in part be
explained by the property and stock market boom of the nineties and early 2000’s. But skilful new management was no doubt also a key ingredient as the duchy's investment portfolio was further restructured into commercial properties (which today represents around 45% of all profits) and into financial products (which brings in around 5-10% of all profits, depending on whether you use gross or net figures). A number of successful rent reviews have also helped increase income from agricultural holdings. One of the most influential recent managers has been Sir Robert (Bertie) Ross, its Secretary and Keeper of the Records (effectively its chief executive) from 1997-2013 who brought with him a wealth of commercial experience from his twenty-five years as director and head of the agricultural division of the estate agents Savills. In 2014 he was rewarded for his successful financial stewardship of the duchy “an emolument” - as the annual report genteelly puts it – of £257,974 bringing his total remuneration (including bonuses) over the previous five years to over £1m.

  But some responsibility for the transformation of the duchy's finances must go to the Prince of Wales himself. Unlike his mother who takes no part in the running of her duchy estate, Charles is an active player. Recent annual reports pay tribute to how he "is actively involved in running the duchy and his philosophy [is] to improve the estate and pass it onto future dukes in a stronger and better condition.”12 In the past he has appointed members to the non-executive board of the Prince's Council and chaired its twice yearly meetings.