Keeping the royal hangers-on afloat

Michael Portillo's decision to spend pounds 60m of government money on replacing the royal yacht Britannia really touched a nerve - the public do not want to pay out for a new luxury yacht. This is why Labour opposition to the plan, a rare event these days, had stiffened by the weekend. Telephone polls are not trustworthy, but the fact that all five did show overwhelming rejection seems to have convinced Blair and co.

Nor is the issue of public money one which attaches to the royal yacht alone. Much of the flak which the royal family has received has always concerned the cost of hangers-on. For many this definitely included Princess Margaret, the subject of a documentary tonight on Channel 4, in its Secret Lives series. She has never been the most productive of royals - she always came near the bottom of the league table of royal activity. Even when the monarchy was much more popular than today, Margaret attracted Fergie- style attention for her holidays in the Caribbean, leading the former republican MP, Willie Hamilton, to ask: what is Princess Margaret for?

One gets a feeling of deja vu. As with the 1992 Windsor fire, the Government has shown great enthusiasm to meet the costs from the public purse, whereas the majority of people think otherwise.

Then, attention was focused on the Queen's tax-exemption and the number of royals paid for by the Government from the Civil List. Within days of the Windsor fire, the Queen finally and reluctantly - after 40 years - agreed to pay taxes, except for inheritance tax, and to take Margaret, Andrew, Edward, Anne and the Dowager Duchess of Gloucester off the Civil List. Everyone nowadays seems to accept that the Queen pays pounds 890,000 a year for these minor royals out of her own pocket.

Of this, pounds 219,000 is for Princess Margaret. So the Queen may be thought to have skirted around Willie Hamilton's question: what is Princess Margaret for? She is the Queen's sister and she, not the public purse, helps support her.

However, the pounds 890,000 for these royals comes not from the Queens private pocket but from somewhere very different - the Duchy of Lancaster.

There is much confusion over the status of the Duchy, whose annual income of pounds 5.35m goes to the Queen. That she draws this revenue suggests that it is her private property, yet when the Palace calculate her private wealth they never include the 51,150 acres of land and pounds 32m of investments from the Duchy. Also, the Duchy, if not on a day-to-day basis, is in the charge of a government minister.

At the moment it is Roger Freeman who carries the title of Chancellor of the Duchy of Lancaster (his main job is Minister for Public Service in charge of Civil Service Reform and the Citizens Charter). So it seems strange that the money does not go to the Government, as is the case with the profits of the Crown Estate.

Over the last 200 years, all manner of leading politicians have maintained that the Duchy and its revenues really belong to the public. These include Edmund Burke, Lord Palmerston, Lord Brougham, Sir Charles Dilke, Clement Attlee and many more.

The Duchy of Lancaster's origins go back to 1265, even further in time than the Duchy of Cornwall, a higher-profile organisation, whose income goes to Prince Charles. Monarchs had for hundreds of years treated the Duchy of Lancaster's rents, along with tax revenue, as money for the business of government, not as a fund for personal expenses. So it is an anomaly, now that government finance is totally detached from the monarchy, that its profits did not pass to the Treasury.

The Duchy revenues would have been transferred to the public purse in the last century, if William IV in 1830 had not dug in his heels and simply refused to hand over the income. The government of the day gave in, vainly hoping to get William not to use the royal prerogative to block the Reform Bill to extend the vote from its then extremely narrow base. They were unconvinced of his case, but acted out of expediency. He did not return the favour, and in the end did his best to block the Bill.

A government attempt at taking back the Duchy in 1860 came to nothing. It probably backed down in face of opposition from the recently widowed Queen Victoria.

Yet the ties to government remain. The Duchy, whose headquarters are close to Waterloo Bridge in London, requires Treasury approval for many of its financial decisions. In this respect it has the same relationship with the Treasury as other government departments. It also has to submit accounts to Parliament, again showing that it is hardly a private possession of the Queen.

Even Kenneth Clarke, when he was Chancellor of the Duchy in the late Eighties, confessed that a "private estate" which was regulated like a government department, "puzzles me". The solution to the puzzle is that this is not money that should legally and constitutionally go to the monarch.

Princess Margaret also lives rent free at Kensington Palace, which is maintained at public expense. Other perks, such as her clothing allowance for official royal tours abroad, are paid for by the Foreign Office. In June 1995, a one-week visit to San Francisco seemed to require a clothing account for that visit alone of pounds 7,200 - more than those at the bottom end of the income scale might spend on clothes in a lifetime.

However, it is the Duchy revenue which is the biggest loss to the taxpayer. If Margaret and co plus the Queen's cousins - who from an earlier date were put on the Duchy payroll - cannot make do on their own, the Queen might pay for them from her own pocket. This is, in any case, what people think already happens

Estimates of the Queen's wealth in stocks and shares vary, from the Palace's own pounds 70m to mine of more than pounds 400m. Even on the lower figure she can afford to keep them above the poverty line, especially as some of these royals are hardly urgently in need, when they or their spouses already earn an income as company directors, and also have inherited wealth,

If our prospective iron chancellor, Gordon Brown, can show some resolve towards the royal yacht, he should do likewise and make plans to take back the Duchy of Lancaster.

Phillip Hall is author of `Royal Fortune: Tax, Money and the Monarchy' (Bloomsbury).