Royal finances hit by Covid-19 helped by Harry and Meghan

Credit: PA

The Queen has had to approve savings of more than £10 million to cover the impact of the Covid pandemic – but the financial hole would have been even worse without Harry and Meghan’s repayment for the redevelopment of Frogmore Cottage.

The Duke and Duchess of Sussex agreed to return the £2.4 million that had been spent on refurbishing their official UK residence on the Windsor estate following their departure from the Royal Family last year.

The Queen’s treasurer, Sir Michael Stevens, the Keeper of the Privy Purse, said that the substantial sum had “partially offset” some of financial pain caused by the fall in revenues following the closure of royal residences to visitors.

Frogmore Cottage Credit: Steve Parsons/PA

This year’s Sovereign Grant report revealed that the Sussexes paid 5 months’ rent for Frogmore Cottage before they came to an agreement to repay the redevelopment costs which had come from the public purse.

That rent, plus the returned £2.4 million, has settled their account with the Queen’s treasurers until March 2022.

The Palace would not go into the exact arrangements with the Sussexes but insisted the settlement had satisfied them, the National Audit Office and property consultants that it was the right sum based on the commercial value of the property.

Building work takes place on the East Wing and Quadrangle of Buckingham Palace, part of the 10-year refurbishment programme. Credit: PA

A senior palace aide said: “The agreement represents a good deal for the Sovereign Grant and the taxpayer alike.”

It might initially suggest the Sussexes have been charged no rent for the property for a long period – but it is based on the fact that Harry and Meghan have paid for the refurbishment of a property they do not own.

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The rental value of Frogmore Cottage would therefore be significantly higher as a result of the redevelopment funded by the Sussexes themselves.

Frogmore Cottage is still owned by the Crown Estate and it remains Harry and Meghan’s official UK residence even though they have relocated to California.

Currently, Harry’s cousin Princess Eugenie lives there with her husband Jack Brooksbank and their new son August.

No details were shared of the financial arrangements between the cousins or the Royal Household.

Accountants at the Palace have had to make cuts of £10.2 million over the last year as a result of the pandemic which they did through efficiencies and lower operating costs due to less Royal activity.

The “Core” Sovereign Grant, in 2020-21 was worth £51.5 million.

An additional sum is currently being levied to pay for the major programme of works to Buckingham Palace – officially called the Reservicing Grant.

Last year, that grant was worth £34.4 million and the Reservicing is now in Year 4 of the 10 year programme.

The Queen during a ceremony at Windsor Castle to mark her official birthday Credit: Steve Parsons/PA

The Sovereign Grant is calculated on a proportion of the surplus income from the Crown Estate from two years earlier.

So Palace finances are likely to be hit further in the coming years as the Crown Estate income, on which the Sovereign Grant is based, will be affected by the pandemic.

Additionally, the Royal Collection Trust - which generates revenue from tickets sales to Buckingham Palace, Windsor Castle and the Palace of Holyrood House in Edinburgh - is projected to suffer an £18 million fall in income over three years because of the dramatic drop in visitor numbers.