So – apart from his expenditure on official duties - how does Prince Philip actually spend his money? As a bachelor he famously owned a stylish black MG sports car but once he joined the royal family he preferred to drive a Land or Range Rover in the country and a converted London taxi in town – far less conspicuous than the flashy green Aston-Martin of his son, Charles. When it came to food and wine, he also had relatively modest tastes. Breakfast amounted to little more than a cup of coffee and toast, other meals were hardly lavish or overflowing with alcohol. Even in the navy he had never been much of a drinker. He did not smoke either, having on Princess Elizabeth’s insistence given up the habit on marriage (one of the recurring threads of this history of inheritance is the number of royals who would die of smoking-related illnesses and the duke’s longevity must owe a lot to his healthy lifestyle). Like his young wife, he developed a passion for horse-related sports. Encouraged by Louis Mountbatten, he took up polo and then later competitive carriage-racing for which he won a number of international trophies.18 The cost of maintaining a stable of horses reportedly set him back £15,000 a year.19
Prince Philip would have been acutely aware of such high maintenance charges as he was responsible for managing the estates of Balmoral and Sandringham, both a big drain on resources. His only comment on the cost of this lifestyle came in November 1969 at the height of a crisis in royal funding when he was interviewed on the NBC programme “Meet the Press”:
“We go into the red next year…now inevitably if nothing happens, we shall either have to – I don’t know, we may have to move into smaller premises, who knows? We’ve closed down, well for instance, we had a small yacht which we’ve had to sell and I shall probably have to give up polo fairly soon, things like that.”
Although the remarks were delivered slightly tongue in cheek, they did highlight his other great sporting passion – yachting. He loved to sail – whether a small dinghy or a full-size ship. Up until its decommissioning in December 1997 he had always been a fervent defender of the royal yacht Britannia which he had helped design. In October 1956 he had taken it on a well-publicised sixteen-week tour of Commonwealth countries. At the time no one seemed concerned about the cost of such a marathon voyage which took him everywhere from the Seychelles to the Falkland Islands. When the yacht reached Australia for the opening of the Melbourne Olympics, he invited the painter Edward Seago to accompany him on the return voyage via Antarctica and the South Atlantic. It proved a fruitful partnership. Seago who had previously painted portraits of George VI and Queen Elizabeth now gave their son-in-law a lesson in brushwork, inspiring him to go on to become a skilled amateur landscapist. For his part, Seago produced sixty oil paintings on the expedition and, according to his biographer, gave them all to his host20 (he had also regularly gifted the Queen Mother a couple of paintings a year).
The Norfolk artist’s generosity illustrates how casual, unsolicited gift-giving can be turned into royal assets. Today, Seago’s work regularly sell for £40,000-60,000 a canvas and a complete collection of Antarctic paintings with the added value of its royal cachet might easily bring in one hundred thousand pounds. Since it is so much at variance with his bluff public image, Philip’s passion for art – including his private (and highly valuable) collection of paintings - has never received much attention. It is estimated that he owns over two thousand pieces of art among which were thought to be one hundred and fifty contemporary Scottish paintings.21 His interest in Scottish art began soon after the coronation when to brighten up some of the dowdy walls of Holyroodhouse he began attending the Royal Scottish Academy’s summer exhibition and buying eight or nine pieces a year.22 The Edinburgh palace was soon transformed and its upstairs rooms are today home to over a hundred of his paintings.
Australian art also features prominently in his collection. On his Commonwealth tours he was able to pick up for a song a number of aboriginal works by Albert Namatjira as well as now valuable paintings by William Dobell and Sidney Nolan. Elsewhere, he also bought a Paul Nash – Cloud Flora Number One – worth in the region of £40-50,000. In pride of place in his first floor study on the north side of Buckingham Palace hang two other valuable paintings. A pair of handsome portraits of his parents - Princess Alice and Prince Andrea - painted in 1907 and 1913 when they were not yet out of their twenties by the Hungarian artist Philip de Laszlo. It is hard to value them precisely but a good Laszlo today fetches £90,000.
The study also contains an extensive library of thirteen thousand books which spill over into a second room. His tastes are eclectic – ranging from cookery to carriage driving, Shakespeare studies to Bob Dylan although there are relatively few works of fiction. The two biggest collections relate to wildlife – nine hundred books on birds and one thousand and two hundred titles on fish and animals.23 Specialist book collections can fetch large fees at auction and as we noted earlier more than £200,000 was realised from the sale of the field sports books of Philip’s uncle-in-law, Prince Henry, the Duke of Gloucester.
The combined book and art collection of the Duke of Edinburgh (along with his fine collection of original political and royal cartoons) must be worth several million pounds and when you add on his own personal possessions and gifts as well as some income from savings that might push the figure for his total wealth to something approaching £10 million, but to go as high as £28 million (as the Mail on Sunday’s Royal Rich Report did in the original estimate without giving a precise breakdown of the assets) seems more than a little excessive.
The one category of wealth that might bump up the size of his estate would be the inclusion of wedding gifts. Their total worth could be as high as £50 million. But as we saw with Princess Margaret’s probate sale it is not always clear where you draw the line between a public and a private gift – or indeed whether they are the property of the bride rather than the bride groom. At the time of writing, the grandly-titled Inventory Controller in the Gifts and Inventory Department at Clarence House had been unable to clarify the matter.
As someone well into his nineties and in declining health, the duke would undoubtedly have undertaken some detailed estate planning and been advised how to pass on his wealth to his family in the most tax efficient manner. If he pre-deceased the Queen, he could give her everything tax-free under the general spouse-spouse tax exemption. But if he survived the Queen, he could give everything tax-free to Charles, the new king, under the consort-sovereign tax exemption used so deftly by the Queen Mother.
20.A NATION MOURNS – 2022
“Its mystery is its life. We must not let in daylight upon magic”
Walter Bagehot on the undying appeal of the monarchy
This time, the BBC newsreader wore a black tie. After the media storm that erupted in March 2002 when Peter Sissons announced the Queen Mother’s death wearing the wrong colour neckwear, Hugh Edwards was appropriately attired in April 2022 when he interrupted BBC 1’s early evening programmes with a news flash.
“Within the last half hour we have received this statement from Buckingham Palace,” intoned the veteran news anchor in a voice heavy with history.
“The Prince of Wales with the greatest sadness has asked for the following announcement to be made immediately: ‘His beloved mother, Her Majesty Queen Elizabeth, died peacefully in her sleep this afternoon at Sandringham Palace. The Prince of Wales, the Duke of York, the Duke of Wessex and the Princess Royal were at her side.’”
After a long pause from the newsreader, the first bars of the national anthem rang out and the picture cut to a close up of the royal standard, the Queen’s flag. All the BBC channels came together with the rolling news channel BBC News 24 and any comedy or light-entertainment programmes were suspended for the time being. Then, Hugh Edwards handed over to the BBC’s royal correspondent, Nicholas Witchell for more detailed reports. The pre-recorded obituary material was played which had been kept in a locked box for more than a decade.
The drill had been laid out well before the death of the Queen Mo
ther in 2002. It was similar to the formula that applied to announcing the death of all senior members of the royal family – or what in BBC jargon are called “Category A” royals. Even if the BBC newsroom received prior knowledge of a high profile royal death, that information would be embargoed until Buckingham Palace made a formal announcement. It was set in stone like the flint in the blocks of Windsor Castle.
If the BBC is ready for the Queen’s sad demise then you can be sure that the palace is doubly prepared. There is reportedly a set of documents under lock and key in a special desk at Clarence House spelling out different scenarios for the death of the sovereign and the succession of the Prince of Wales.1 What is common to them all is that the funeral (organized by the Duke of Norfolk, the hereditary Earl Marshal, and employing the undertakers Leverton and Sons) would take place twelve days after the death. The best case scenario involving a smooth succession is one similar to that outlined above. In a mirror image to her father’s death in 1952, the Queen dies suddenly at Sandringham. The nation’s heart goes out to a family in grief and amidst a mood of widespread grief Prince Charles becomes a sympathetic figure and succeeds to the throne without a word of protest. All doubts about him not being up to the task – as whispered by many after the divorce from Diana - are quietly forgotten. He would already have received on-the-job training for the role after “the gradual glide” of the handover process whereby he had shared official duties with his mother. Their joint appearance on Sword Beach for the D-Day commemorations was the most visible illustration of this royal apprenticeship. At last, they were changing the guard at Buckingham Palace
The worst case scenario envisages a slow, lingering death and the alarming prospect of having to appoint a prince regent. “The Queen becomes ill and frail,” explained one palace advisor in 2010. “The longer she lives, the more frustrated Charles becomes, the grumpier he gets, doing his ‘Nobody’s ever going to love me the way they did my Mama act.’ The grumpier he gets, the more the public and the newspapers campaign for him to pass the mantle to William.”2
The option of skipping a generation – once popular with some media commentators and critics of Charles – now appears redundant, overtaken by the fact that the handover process is up and running. There would be little logic in going to all the trouble of giving Charles on the job training and getting the public accustomed to seeing him as their head of state only for him to hand over the baton of sovereign to his son the moment the Queen passes away.
A more likely scenario to skipping a generation would be for Charles to be crowned king and then share some of his duties with his eldest son, just as his mother now shares her workload with him. Given that Charles is not as popular with some Commonwealth leaders as the Queen on account of their unease about his divorce and marriage to his mistress, there has occasionally been speculation that Prince William who made such a good impression on his tours of Canada in July 2011 and Australia and New Zealand in April 2014 might play the role of deputy head of the Commonwealth. In crude terms, the handsome young son could do some of the PR work that his elderly father is less good at, becoming the poster boy for New Windsor.
Under this scenario of Charles subletting some royal responsibilities, it was envisaged by one commentator in 2010 that he might also hand over Highgrove House to his son and use Sandringham (or possibly Balmoral) as his main country retreat.3 The fate of the private residences is one of the thorniest issues raised by the succession process - as George VI found to his cost in 1936 when he had to buy out Edward VIII’s title to the properties. It is widely believed that on her death the Queen will leave Balmoral and Sandringham to Prince Charles. If she left them to anyone other than her eldest son - for instance, Prince Andrew, Prince Edward or Princess Anne - they would be subject to inheritance tax at 40% like any other private bequest. Since their combined market value might be close to £100 million, any royal beneficiary would be left a crippling tax liability - and one so massive that they might have to consider selling parts of the property to pay the bill - as happened to some extent to the beneficiaries of the estates of the Duke of Gloucester and Princess Margaret (although in their cases they sold chattels, rather than land).
But if Prince Charles inherited Balmoral and Sandringham he would not have to pay a penny in tax. Under the controversial tax exemption deal agreed by John Major in 1992, any private transfers from sovereign to sovereign are tax free. The one possible road block to this smooth transfer was the general understanding that the exemption should not be used as a blanket tax waiver. But the palace could probably argue that Balmoral and Sandringham are part of the national heritage. Balmoral is more than a private residence as the Queen spends August and September there carrying out official constitutional duties and for several months of the year when Her Majesty is not in residence the castle ballroom, the gardens and the grounds are open to visitors. A similar policy of public access now operates in the grounds of Sandringham House.
No doubt Her Majesty would have received top-notch estate planning advice from the phalanx of financial consultants at her lawyers Farrers, or indeed from other experts in the field. It is easy to imagine the arguments they would rehearse to persuade her to leave the two private residences to Charles rather than her other two sons and daughter. “With respect, Ma’am, it’s not a question of mitigating tax but of preserving part of one’s national heritage. Would Her Majesty really want a situation where Prince Andrew is forced to sell his share of Balmoral to some overseas property developer – say, Donald Trump - who might turn the golf course and grounds into a luxury leisure centre for American multi-millionaires? How the new owners might promote the resort hardly bears contemplating – ‘Live like a king and play like a prince at beautiful Balmoral.’ God forbid.”
It is no coincidence that the transfer of Balmoral and Sandringham from one sovereign to the next features so prominently in this story. The two royal residences dominate the royal finances because they are at one at the same time a valuable asset and a chronic liability. On the credit side of the ledger, they have since the mid nineteenth century when Queen Victoria and the future Edward VII first acquired them represented for the sovereign not only a place of private refuge but also a key private source of capital - and one that must be protected at all costs. To avoid the fate of their aristocratic cousins whose landed estates have been decimated by death duties, the Windsors have fought to prevent their lands from being salami-sliced by the taxman. This is why the 1992 agreement on the tax exemption on sovereign to sovereign transfers was of such historic importance to them. It protected the royal estates from that most unwelcome of outcomes - a probate sale.
But on the debit side the two royal estates have eaten up vast amounts of money. Expenditure on Balmoral is running at over £3m a year and Sandringham haemorrhages money too with the constant pressure to update its old facilities. No wonder that the money-pinching Edward VIII wanted to sell off the Norfolk estate as soon as he became king. Without the bounty from the Duchy of Lancaster profits, it is difficult to see how the Queen could afford to run two exceedingly expensive country seats. So if one of the key questions that this book has sought to answer is how do the senior royals spend their money, then part of the response must lie in paying the overheads of their country houses. They are a luxury that only the mega rich - or those in receipt of generous tax and hereditary privileges - could afford. The more junior royals without any special tax benefits - notably, the Duke of Gloucester, the Duke of Kent and Prince Michael of Kent - have all had to transfer or dispose of their country houses and live within their means like their beleaguered aristocratic cousins.
It is likely that with the blanket benefit of the inheritance tax waiver the Queen would leave Charles more than just Balmoral and Sandringham. It is worth remembering that when the Queen Mother enjoyed the same exemption, she left her daughter practically her entire estate – including her valuable collection of twentieth century art and her jewellery box. So, one would expect Charles to receiv
e at least some of her mother’s fabulous jewels – including perhaps the emeralds that passed from Prince Francis to Lady Kilmorey to Queen Mary to the Queen to Diana and most probably back to the Queen. But if for any reason she doubted whether such private property qualified as items of national heritage, then provided she did it seven years before her death she could under the lifetime transfer rules gift the jewellery to her son (or any other family member) tax free. This is what Queen Mary may well have done after the war and over the years it has no doubt become as useful a vehicle of transferring royal wealth as the trust fund.
But even if death duties are successfully mitigated, family wealth may be decimated by another ancient enemy - marrying out. This was the unvoiced fear of the royal family when the Duke of Windsor married a double divorcée: if the marriage failed or the duke died, the duchess could run off with some of the family heirlooms. A similar concern applied to Princess Diana at the time of her divorce and why the settlement required her to hand back some of the family jewels. With the Windsors’ long track record of keeping it all in the family, it is hardly surprising that one royal commentator suggested that the Queen’s motto might read “To Have and To Hold.”4
For similar reasons, the royal family must have been delighted when the Cameron government excluded the hereditary estates of the Duchies of Lancaster and Cornwall from the new funding settlement. But some critics saw this as a missed opportunity for a true root and branch reform of the royal finances. Since the stated aim of the changes was to simplify the fragmented sources of funding under a single arrangement, then it might have made sense to include the revenues from the two duchies in the same pot. This is what many backbench MPs have fought for since the Select Committee Report on the Civil List in 1971 and the issue was again raised in 2005 with the Public Accounts Committee inquiry into the two duchies. But, as we saw in previous chapters, the duchies are regarded by the palace (and some suspect a few sections of the Treasury too) as a no-go area. They are as tightly ring-fenced as the hi-tech security now surrounding Buckingham Palace.
Royal Legacy: How the royal family have made, spent and passed on their wealth Page 34
