Hello readers, a warm welcome back to my blog on interesting economics news stories of the week. Last week I discussed some of the reasons for India introducing its new denomination of the Rupee and removing, the 500 and 1000 notes from circulation, as well as the implications of doing so. This week I will be focusing on the UK and will be looking at the recent announcement of the Buckingham Palace renovations set to take place over the next 10 years. The aim of this post is not to create a contention between royalists and non-royalists, but to simply analyse and discuss this recent announcement from a purely economic point of view.
In today’s post I will explain why there was a need for the renovations, who is actually paying for them and the impacts of them financially as well as whether or not they will actually benefit the everyday person. If you have a few minutes to spare, give my take on this story a quick read and hopefully you may pick up a thing or two that you didn’t know about this topic. As always please post any comments or questions below and I will try my best to respond. Alternatively you can send them directly to me at email@example.com
Who is paying?
When we think of the royal family, images of gold, crowns and castles flood our minds. With a net worth of over 500 million, the queen has around 1000 times more than the average person on minimum wage could ever earn in a lifetime of working. Or think of it this way; around 6 times the euro millions jackpot! Whichever way, its clear the queen is not exactly tight.
When the recent announcement was made that £370 million will be spent on renovating Buckingham Palace; at the outset it may have seemed like a brilliant idea. Improved structural support, new wiring and piping and a bit more ‘sparkle’; what’s not to like? Not only would this have improved the aesthetics and safety, but it may have even attracted more tourists to the UK, who would spend their money in the UK and hence boost the economy. Does this sound too good to be true. Well, yes. Sorry to ruin it for you, but the Queen is not actually paying for these renovations and this large sum of money is all being funded through taxpayers’ money. Now when you think that the government has all these other issues like healthcare and areas of deprivation to focus on, surely these issues would be prioritised. Unfortunately this doesn’t seem to be the case. What makes matters even worse is that, according to the Guardian, Buckingham Palace is the queen’s least favourite royal residence and she only spends a third of her time there. Some reports are even claiming that LEGOLAND or the shops on Oxford Street are more popular attractions to tourists from abroad than this so called magnificent historical masterpiece.
The pictures below really help to exemplify this idea:
Many people have also reacted in a similar way. Here are just a few comments from people on the Guardian’s website:
“£370m over 10 years? Let’s fund the NHS instead”.
“Could they not just buy her one of those London houses that the builders have just reduced in price and open the palace as a museum? That would save £369M.”
“A week’s savings from being outside of the EU according to the Brexiteers”
“None of the royal palaces features in the top 50 Tourists attractions in Britain. Just thought I would put that out there”.
“I see, so there is no money to build social housing for thousands of families but the Queen can have £370m to refurbish one of her palaces? It’s her gaff so she should pay for it”.
“Disgraceful – absolutely disgraceful”.
According to the telegraph, “The cash has been approved by the Prime Minister, Theresa May, and the Chancellor, Philip Hammond, and is expected to be rubber-stamped by Parliament in the next six months”. The work will include replacing 100 miles of electrical cabling – much of it 60 years old – 30 miles of water pipes, 6,500 electrical sockets, 5,000 light fittings, 2,500 radiators and 500 pieces of sanitary ware. It will also involve lifting 30,000 sq. m of floorboards, the equivalent of three-and-a-half football pitches. It is estimated that the work will extend the life of Buckingham Palace and make it ‘fit’ for residence for a further 50 years.
So why on earth has this been approved by the chancellor and prime minister?
Perhaps the renovations are in fact needed and are actually well overdue. Although the question now is why is the Queen not paying for this. The queen earns around 38 million a year, and the cost of renovations over 10 years, would be around £37 million a year. Perfect, she would even have £1 million spending money left over. Even if it is her least favourite place of residence can it really be justified to use taxpayers’ money when there are so many people living in poverty in the UK. The government talks about ‘reducing social inequality’ and ‘improving the lives of its poorest, most vulnerable citizens’, although they certainly don’t seem to be doing that in this instance. Now you may well disagree and say that the queen brings in income to the country and that she contributes significantly to the UK’s economy. This is without a doubt correct. The royal family are extremely iconic and influential and bring in around £500 million a year. Yes this is great but this is not just from Buckingham Palace. It includes income form all the historic sites/royal influences in the UK put together as well as all the tourism from abroad. Despite all this if you still aren’t convinced and believe that taxpayers should pay because that £500 million the queen brings in, directly benefits the UK’s economy, it is still arguable that with so much wealth, why doesn’t the queen pay for this and do something that her people will remember her for. The only way to tackle this idea of social inequality and reduce poverty across the globe is for money to be transferred from the rich to help out the poor. Already billionaire tech gurus such as Bill gates and others like Mark Zuckerberg have pledged to give away most of their fortune to help face some of the most challenging issues that we face in today’s society.
An example to explain what is happening here if you’re a bit lost?
Suppose you wanted to install a new kitchen for £10,000 but you didn’t have the funds. You would probably decide to pay for it over 10 years or re-evaluate to see whether or not you actually need it. You wouldn’t go and ask everyone living on your street for £100 to contribute to this. The new kitchen might mean that you are more likely to invite them over and cook them a meal every now and then or bake them cookies every Christmas, although to be honest it wont really benefit them for most of the year. In this case, the palace upgrades may improve the palace and make visiting a more pleasant experience although in reality we are only going to visit a maximum of once a year, as there is nothing new to be gained by visiting again and again. Therefore just like the neighbours don’t really see any of the benefits, here the everyday person is not really better off. The ultimate policy objective for governments is to ensure that we maximise human welfare and happiness. In this instance, it appears that the government has just brushed this aside and is too engaged in renovating this iconic building.
So what now…?
To say that this is controversial is simply a euphemism. It is, as some put it ‘outrageous’. The palace may well need upgrades but with, but with 13 million people living in poverty, 913,000 people using food banks last year and anti-austerity marches so big, how can spending £370 million into the Queen’s estate be a smart move. A petition, which was recently launched, has now reached over 100,000 signatures and perhaps when this is debated in parliament, a different, better, more appropriate outcome may be achieved.
The image below shows the plan for the whole renovation process: