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Queen guaranteed £35m 'recession-proof' income

The Royal Family is to receive a recession-proof financial deal that guarantees it an annual income of around £35m in future years.

Under a shake-up of the royal finances announced by Chancellor George Osborne, the amount paid to the Queen is expected to fall in real terms by 9 per cent by 2015.

The moves were condemned by a Tory MP as risking leaving the monarchy looking like "something to be bought in Tesco".

The money that is received by the royals from the civil list and other government grants to cover the cost of transport and maintaining palaces is to be replaced by a single Sovereign Grant.

Its size will be linked to the profits of the Crown Estate, a vast property portfolio which includes parts of London's West End, Ascot Racecourse and more modest sites across the country.

A "floor" will be set in the levels of payments, guaranteeing the cash given to the royals will not be cut even if the value of the estate crashes. However, there will be no "ceiling" on the size of the payments. Because parts of the seabed are also owned by the estate, the growth in offshore wind generation could provide a major boost to its future profits.

The Queen is expected to receive a grant worth around £34m in 2013-14 – equivalent to 15 per cent of the profits of the estate, which is valued at more than £6bn.

Outlining the new system, Mr Osborne said: "We will see how the Crown Estate performs, but the current estimate is that the formula means that, by 2014-15, the last full year of this Parliament, the monarch will receive around £35m."

He also said the royal books will be opened to full examination by the National Audit Office, putting Buckingham Palace in line with the scrutiny of public bodies. And he announced changes to the rules over who receives the income from the Duchy of Cornwall, which is currently paid to the heir to the throne.

The alterations will make it clear that the money will go in future to the monarch's eldest child, regardless of their gender, which could prove a significant move if the Duke and Duchess of Cambridge have a daughter first.

Jacob Rees-Mogg, the Tory MP for North East Somerset, raised fears the financial overhaul would undermine the prestige of the monarchy.

He said: "When we say we want 'a good-value monarchy', it makes Her Majesty sound like she's something to be bought off the shop shelf at Tesco. This really cannot be the way to approach our constitution."

He added: "When I see the coronation coach being pulled through the streets of London I want to see it pulled by the finest horses money can buy. I want to see it gilded with the finest gold that can be bought."

But Labour MP Paul Flynn said: "We must apply the same financial discipline as we apply to the poorest in society to those who are in the Royal Family."