Queen Elizabeth II and Prince Andrew, Duke of York attend Royal Ascot 2017 at Ascot Racecourse on June 22, 2017 in Ascot, England.
Chris Jackson—Getty Images
February 17, 2022 3:18 PM EST

Queen Elizabeth II will reportedly contribute £2 million ($2.7 million) to Prince Andrew’s settlement with Virginia Giuffre in a civil sexual assault case. Although the size of the settlement agreed Feb. 15 was not disclosed, it is reportedly estimated at around £12 million ($16.3 million).

It’s been a week of catastrophic scandal for the royal family—just hours after the news of Andrew’s settlement, police in London announced an investigation into allegations that Prince Charles’ charity the Prince’s Foundation was involved in a “cash for honors” deal in which a Saudi citizen was offered a knighthood in exchange for donations. Clarence House, Charles’ London residence, reiterated a previous statement that the Prince had “no knowledge of the alleged offer of honors or British citizenship on the basis of donation to his charities.”

The scandals have prompted fresh scrutiny of the royal family and its finances as the Queen marksher historic 70-year anniversary on the throne this year. They also come as Britons experience the biggest cost of living crisis in decades. Here’s a breakdown of the scandal so far, and why the royals’ finances are so important:

The $16 million settlement with Virginia Giuffre

In 2009, Giuffre alleged she had been groomed by the late sex offender Jeffrey Epstein and his then-girlfriend, British socialite Ghislaine Maxwell when she was a teenager. She claims the pair abused her and forced her into sex with powerful men, including the Queen’s second son, Andrew. Maxwell, who is awaiting sentencing on separate sex trafficking charges, denies the allegations. Epstein died by suicide in 2019 while facing prosection.

Last year, Giuffre began civil proceedings against Andrew under New York’s Child Victims Act, a 2019 law allowing victims of childhood sexual to pursue compensation for abuse which happened too long ago for criminal charges to be brought.

Giuffre’s lawyers alleged that the Prince sexually assaulted her three times, once in London, again in New York, and a third time on Epstein’s private island in the U.S. Virgin Islands. Andrew denied all allegations against him. In 2019, he laid out his defense in an interview with the BBC, claiming he did not even remember meeting Giuffre. His lawyers tried and failed to get the civil case thrown out several times, and Andrew was due to be deposed March 10.

On Feb. 15, lawyers for both parties revealed a settlement in principle had been reached—that would avoid the possibility of the case going to trial. The exact compensation was undisclosed, but it is estimated to be worth around £12 million ($16.3 million), with some of the money going to Giuffre directly and the rest to her victim support charity.

In a statement, Andrew said he “regrets his association with Epstein and commends the bravery of Ms. Giuffre and other survivors in standing up for themselves and others.” That was in contrast to his comments in a 2019 BBC interview, in which he said he didn’t regret his relationship with Epstein.

According to The Daily Telegraph, the Prince also agreed not to repeat his claim that he did not sexually assault Giuffre.

Where Prince Andrew’s money comes from

Following the disastrous BBC interview, Andrew agreed to step back from royal duties. As a “working royal,” he would have received around £250,000 ($340,000) a year. The Prince has not had a full-time paid job since he left the Royal Navy in 2002—he now receives a £20,000 ($27,000) annual pension. It is unclear whether he still receives an annual stipend from the Queen.

But, Andrew’s penchant for luxury living—which earned him the nickname “Air Miles Andy”—has led him to far exceed his income, according to the Times of London. In November, Bloomberg claimed to have found evidence that Andrew took out a £1.5 million ($2 million) personal loan that was subsequently paid off by companies connected to a multimillionaire Conservative donor. A spokesperson for the Duke of York declined to comment to Bloomberg about the transactions at the time.

A spokesperson for the Prince told the BBC that Andrew is currently in the process of selling a chalet that he bought in 2015 for over £8 million ($10.9 million) with his ex-wife, Sarah Ferguson, the Duchess of York. He cannot sell his residence, the Royal Lodge in Windsor, since it’s leased from the Crown Estate.

The Queen poured millions of pounds into her son’s civil suit against Giuffre, The Daily Telegraph reported. And, as Andrew’s income is not enough to cover the £12 million ($16.3 million) settlement, she will reportedly be helping to cover those costs too. According to the Daily Mirror, the Queen agreed to contribute £2 million ($2.7 million) as long as she was not connected to any personal payment to Giuffre. Instead, the money will go towards Giuffre’s victim support charity.

The royal family’s complicated finances

The royal family’s finances are complicated. With an estimated personal net worth of $497 million, the Queen is among the world’s richest women, according to the Sunday Times of London’s 2021 Rich List. Her wealth consists of a mixture of public and private money.

Each year the government gives the monarch a single payment called the Sovereign Grant. Last year it was £86.3 million ($117.6 million), according to the BBC, and it is used to pay for official royal running costs, such as staff and travel. The value of the grant is based on the profits of the Crown Estate, a business that independently manages property and land owned by the Queen.

The Queen also receives income from the Queen’s Privy Purse, the profits of a private estate known as the Duchy of Lancaster, which covers over 18,000 hectares of land and dates back to 1399. This £20 million ($27.3 million) income is used for the upkeep of property and to fund the Queen’s private and official expenditure. Some critics of the royals argue that the land should be returned to public ownership.

She has another, separate income from inherited private estates, such as Sandringham and Balmoral Castle, and her personal investment portfolio. The Queen pays income tax on the revenue but her private wealth is not made public. In an investigation last year, the Guardian revealed why the royals’ finances are so opaque: in the 1970s, the Queen successfully lobbied the government to change a draft law in order to conceal her “embarrassing” private portfolio.

The impact on taxpayers’ money

Following the revelation that the Queen will foot a portion of Andrew’s bill, one lawmaker has said he will seek assurances in parliament that the public purse won’t be used to cover the cost.

The royals’ use of taxpayers’ money has come under scrutiny in recent years. Prince Harry and Meghan Markle faced criticism when it emerged they had spent £2.4 million ($3.3 million) in 2018 and 2019 to refurbish their U.K. home, Frogmore Cottage. In 2020, the couple repaid the expense after stepping back from royal duties.

What this means for the Queen

The Queen has addressed neither sons’ situations publicly. While surveys show that public support for the royal family has fallen from around 70% to 60% over the past three decades, Queen Elizabeth remains extremely popular with the British public

Yet, the scandals will no doubt muddy the reputation of the longest serving British monarch. At a time of soaring inflation, and rising taxes and energy bills, the royals’ costly embarrassments may prove a difficult pill for many Brits to swallow.

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