Commentary on Sections and Schedules The Sovereign Grant Section 3: The Reserve Fund
41.This section sets up a Reserve Fund. It will contain Sovereign Grant not used for the year for which it is made. Similarly, in years when use of resources exceeds the amount of the grant, drawings from the reserve will supplement the Sovereign Grant.
42.Subsection (1) sets up the Reserve Fund. It will contain surplus Sovereign Grant and funds derived from it.
43.Subsection (2) gives the Royal Trustees discretionary powers to invest the Reserve Fund.
44.Subsections (3) and (4) direct how the reserve should be filled and drawn down – respectively to store excess unused grant and to supplement Sovereign Grant when necessary. The Royal Trustees are to be responsible for seeing that this process is performed properly. The reserve cannot be overdrawn.
45.After the audit for the year, the amounts transferred into or out of the reserve should align with the Royal Household’s resource use for the year. Unused grant must be paid into the Reserve Fund after the audit. If the Royal Household has used more resources than the Sovereign Grant has provided for the year, the Trustees must transfer to the Keeper an amount equal to the excess (or less if there is less in the Fund).
46.Subsection (5) allows interim payments to or from the reserve in anticipation of the amounts that will be required to balance the books at the year end. Subsection (6) ensures that these interim payments are to be taken into account in calculating whether any final payment is due later and, if so, the amount of any payment.
47.Subsection (7) permits the Royal Trustees to authorise loans from the reserve to finance capital expenditure. The Royal Household’s resource accounts will show use of these resources through depreciation so that the process is transparent.
48.Subsection (8) provides that payments to the Keeper from the Reserve Fund are not treated as additional income for the purposes of calculating the amount of net relevant resources used for a financial year.