There’s an Economic Argument for Keeping the Royals--Tourist Money

While American pundits have been working overtime in recent weeks laying odds on whether the British monarchy will survive the death of Princess Diana, British Prime Minister Tony Blair has ignored all the media blather.

Instead, Blair promptly issued a statement of support for the royals immediately after Diana’s death in Paris, and he hasn’t wavered since in his defense of the Windsors and their institutional role in the life of Britain.

Is there something Blair knows that the commentators have missed? Is there a good reason why a Labor man like Blair would throw his political muscle behind a dysfunctional upper-class family and its hidebound ways?

Why, yes. Among other things (emotion, nostalgia, tradition, patriotism, etc.), Blair knows the cold, hard numbers. The simple truth is that British economics strongly favor the retention of Queen Elizabeth and her troubled brood.

Spending millions of dollars a year to perpetuate the wealth and status of a single family that owes its position to a nondemocratic past would, of course, gall American taxpayers. But a reasonable cost-benefit analysis of the monarchy shows that paying for the care and feeding of the queen, Prince Charles, Prince Andrew and the rest is actually quite a good investment for the British government.

That’s primarily because the royal family helps keep those Yankee tourists coming. Millions of Americans and other foreigners travel to Britain each year to soak up tradition and heritage--and they contribute huge amounts of money to the British economy along the way.

*

Nearly 3.7 million visitors from the United States and Canada traveled to Britain in 1996, and they pumped $3.7 billion into the local economy, according to the British Tourist Authority. Pomp and circumstance have helped make Britain the fifth-largest tourist destination in the world, in terms of earnings from visitors.

To be sure, many of those foreigners would still visit London even if the British government kicked the royals out of their palaces.

And putting Elizabeth and family out on the street would certainly save some money. Each year, the British government allocates about $13 million for the Civil List, which is the amount provided by Parliament to meet the official expenses of the queen’s household.

The monarchy says that 70% of the Civil List goes to pay the salaries of the queen’s staff, while the queen herself draws an annual allowance of about $1.04 million, with an additional $582,000 for her husband, Prince Phillip. Eight other family members were eligible to receive large allowances under the Civil List, but in 1993 the controversy over the royal family’s problems prompted Queen Elizabeth to begin to repay their allowances. Since 1993, the queen also has been paying income and capital gains taxes on a voluntary basis.

A separate fund--called the Privy Purse--covers official royal expenses not covered by the Civil List. The Privy Purse is financed from the income of the Duchy of Lancaster, which includes many of the royal family’s best real estate holdings. Meanwhile, Prince Charles is paid the annual net revenue from the large real estate holdings of the Duchy of Cornwall, which earned him nearly $8 million in 1995.

*

On top of everything else, the government also provides millions of dollars in direct grants in aid to the royal household to cover the costs of official travel and for the upkeep of palaces. (One of the few royal expenses over which Blair’s government has balked is the renovation of the royal yacht. An expensive renovation has been canceled, but the government still hasn’t decided whether it will eventually buy a new yacht.)

But despite the savings that would come from deposing the queen, British officials argue that such a move would be penny wise and pound foolish. Without a living monarchy, tourism would suffer. After all, they ask, would Americans rather see an old castle in Bavaria that hasn’t been lived in for 300 years, or the magnificent home of a reigning monarch?

So think of the living costs for Elizabeth and her princelings--along with the upkeep costs for Buckingham Palace, Windsor Castle and the rest--as the salary and maintenance costs for a British Disneyland, and you get the right idea.

“The benefits, in terms of tourism, massively outweigh the costs,” observes Robert Chatterton Dickson, a spokesman for the British Embassy in Washington.

“The fact that we have a working royal family, rather than a museum, and that our history is part of our present, is one reason why London is such a popular tourist attraction,” he adds. “There would, of course, still be lots of other attractions in Britain, but [the monarchy] makes the history relevant, the fact that our palaces are still lived in, as opposed to palaces in other countries that are simply museums.”

“It is most certainly the case that many visitors come [to Britain] because of the royal palaces, which go to the roots of our history,” adds David Beeton, chief executive of Historic Royal Palaces, a British government agency that manages five royal palaces. “And because they are still in use, that is uniquely British. The royal family is the living manifestation of a unique sense of continuity in Britain.”

The royals are especially valuable to British tourism because they retain a special mystique outside Britain. The royal palaces draw 50% more American tourists each year than British tourists, Beeton notes.

In fact, the royal palaces are the largest “heritage” tourist attraction in Britain. The two palaces that are owned directly by the queen--Buckingham Palace and Windsor Castle--draw just less than 2 million visitors each year, and the five that the government manages--the Tower of London, Hampton Court, Kensington Palace, Whitehall Palace and Kew Palace--attract an additional 3.5 million paying customers. The government estimates that there are 3 million more visitors each year who don’t pay admission to the palaces but who, instead, simply wander through the gardens--and perhaps buy souvenirs.

*

Yes, don’t forget the souvenir business! At the Tower of London’s gift shop, for example, there is now a line of jewelry for sale modeled after the crown jewels that are on display inside. At Hampton Court, Americans can buy silk scarves depicting palace design features.

To be sure, the maintenance costs of the five palaces managed by the government still outweigh the revenue generated from visitors by about $8 million a year. But Beeton says the government hopes to break even for the first time next year, when the agency managing the palaces may be turned into a nonprofit private foundation.

What’s more, those figures don’t take into account the larger economic benefits of spending by tourists drawn to Britain by the royal aura.

“The royal family is not a moneymaking operation [for the government], but it is one of the great attractions of the U.K.,” Beeton says. “After all, 17 million foreign visitors a year don’t come to London for nothing.”