Queen of England's pay frozen until 2015
A tough financial deal is a result of replacing the civil list with the sovereign grant, under which her funding is linked to profits at the Crown Estate. The new formula, passed into law six weeks ago, also replaces taxpayer funding for royal travel and royal palaces.
The squeeze on the monarch's income is likely to delay a backlog of repairs to royal palaces. There will be no extra money from the taxpayer to pay for the court of the Duke and Duchess of Cambridge, who are rapidly emerging as global stars. The cost of providing staff for the couple will continue to be met by the Prince of Wales, the Sunday Times reported.
Under the new arrangement, the Queen receives 15 percent of the profits made over two years from the Crown Estate, whose portfolio includes Regent Street, Windsor Great Park and more than half the country's shoreline.
George Osborne, the Chancellor, and Ed Balls have disagreed over whether the new arrangements would amount to an increase or a cut in income.
But a Treasury briefing document for the second reading of the Sovereign Grant Bill said: "The grant levels envisaged in the early years of the new system [starting April 2013] are, in real terms, below what the Royal Household spent in every one of the last 20 years.
Since the lowest point was 2010-11, with an income of £32.1m, even if "early years" means no more than two years, it indicates the Queen will have an effective pay cut until at least April 2015.
Since the credit crunch, the Queen has received an effective pay cut every year, dropping from £38.3m in 2008-09. In 1991-02 she received £77.3m.
Buckingham Palace is likely to boost its efforts to raise money from commercial sources, or to cut back on public appearances by the royal family.
Sir Alan Reid, keeper of the privy purse, warned last summer that it would be "very difficult for overall expenditure to fall much further without impacting on the Royal Household's activities in support of the Queen and teh long-term health of the estate."
Buckingham Palace said the Treasury calculations were based on forecasts. The sums the Queen will receive will depend on the Crown Estate's trading performance.