Dalton’s audience took place on October 27th. It appeared to go well. Lascelles wrote afterwards that the Chancellor was ‘greatly pleased by his talk with HM,’24 and Dalton told the Prime Minister that he found the King ‘in a very happy mood’. The meeting seemed to resolve one of the royal difficulties – how to preserve the principle of provision by Parliament, without a Select Committee – by agreeing a formula that established a Select Committee in name, but not in reality. A royal message would announce that no burden should be placed on public funds while economic difficulties lasted. Then the Chancellor would propose the setting up of a Select Committee that would merely note that it was normal for provision to be made for an Heir on marriage, but that this would be delayed for the time being.
The affair, ‘so delicate from so many different points of view,’ Dalton wrote to Attlee, ‘has moved forward with an unexpected smoothness.’25 But had it? One thing it had not disposed of was the problem of how much the Princess and Prince would get, and how they would be paid. ‘The essential point,’ Dalton reminded the King, ‘was to prevent the development of an embarrassing debate.’ That, however, was more the Government’s problem than George VI’s. The royal concern, the King told the Chancellor, was ‘that he could not go on indefinitely making the additional provision from his own resources . . .’26 The gap between these two positions remained a wide one, and in the fortnight before the Budget it became the cause of a heated argument, which turned on the status of the royal wartime loan. The Government saw this as a fund of public money to be tapped; the Palace, on the other hand, regarded it as the product of royal frugality, and an essential part of the King’s accounts. It did not help Government-Palace relations that at the end of October it was decided, for technical constitutional reasons, that a proper Select Committee would be necessary after all.27
On November 7th, Dalton returned to the attack, sending the Palace a detailed proposal: the King should surrender the £200,000 saved during the War, and out of this sum a £10,000 annuity should be paid to Elizabeth (over and above the £15,000 Civil List income she was already getting), and £5,000 to Philip, making a joint total of £30,000, part of which should be taxable. If he imagined that this would do the trick, he was mistaken. The Palace was incensed at an amount which it considered derisory, and a poor return on its £200,000 wartime saving. Lascelles recorded the next day that the King considered the offer to be unacceptable.28 The prospect of a negotiated peace having thus faded, both sides now dug trenches. As Dalton approached the day on which he would have to give the most difficult Budget speech of his career, his attitude became even less tractable, and more infuriating to the Court. On November 10th, he returned to the Palace for another discussion with Lascelles and Alexander, and explained that his earlier offer had just been a bargaining position. The admission confirmed everything the Palace believed about him already. ‘He began by saying that he was not at all surprised that the King had rejected the offer,’ noted an exasperated Lascelles, who added that this was particularly remarkable in view of the fact that he had been told that Dalton had Cabinet backing.29
There, for the next few days, the matter rested. In his Budget speech on November 12th, Dalton – as expected – announced a series of tax increases and other deflationary measures. Next day, in Cabinet, his sole recorded contribution to the morning’s discussion concerned the forthcoming marriage of HRH Princess Elizabeth for which, he said, Parliament should be asked to make further financial provisions.30 A Draft Message from the King, in which His Majesty expressed willingness to ‘place at the disposal of the faithful Commons a sum derived from savings on the Civil List made during the war years’ was passed without a dissentient voice. Even the left seemed happy. The Minister of Health, Aneurin Bevin – who might have been expected to make a critical or at least quizzical comment – merely remarked that so long as Britain had one, ‘we ought never to lower the standards of the Monarchy’, and that he hoped the Select Committee would do its work quickly, and settle the whole matter while the Wedding was fresh in people’s minds. No figures were mentioned. ‘That is quite satisfactory’, Lascelles wrote to the King cautiously, ‘as far as it goes.’31
The same night, however, an unexpected development altered the picture in a fundamental way. Released from Budget concerns, Dalton might now have turned his attention fully to the Civil List problem. Instead, the discovery that he was the inadvertent source of a Budget leak, which appeared in an evening paper while he was still giving his speech, forced him to offer his resignation as Chancellor of the Exchequer. It was accepted. His friends were shocked, while the Opposition congratulated itself on an unexpected scalp.
Buckingham Palace could be forgiven if it secretly rejoiced as well. At any rate, it is unlikely that the King remonstrated with Attlee about the departure. Indeed, he now had a double reason for gratitude towards his Prime Minister on the subject of Mr Dalton. In 1945, Attlee had obliged by not appointing the renegade Etonian as Foreign Secretary; two and a half years later, he obliged once again by accepting Dalton’s resignation as Chancellor, at a moment of maximum convenience to the Palace.
In the negotiations, Dalton had appeared both resistant and devious, even – most maddeningly of all – gleeful. His successor, Sir Stafford Cripps, was none of these things. Despite his reputation for austerity (perhaps partly because of it), he was not only straightforward in his dealing with the Palace on the Civil List issue, he was also accommodating. As a result, a much more generous provision than Dalton had ever envisaged went through without a hitch.32 In December, the new Chancellor recommended to his colleagues a total provision of £50,000 – including a £25,000 increase for Elizabeth, with £10,000 for Philip – £20,000 more than Dalton’s offer. He also suggested that the King should make available only £100,000 of accumulated savings, for a period of four years.33 He was, however, taking a risk. The provision required Parliamentary approval which, in view of the need for a Select Committee, could not be taken for granted. Moreover, if they did not accept it, serious damage would be done to the prestige of the Monarchy, as well as to relations between Palace and Parliament.
The Committee began hearing evidence on December 3rd. A key witness was the King’s private secretary, who impressed MPs with a dire warning that the Civil List ‘may have to face a crisis of insolvency,’ if it did not receive adequate provision. Should this happen, three major economies would become necessary: the abolition of horse-drawn carriages, the disbandment of the Gentleman at Arms and Yeoman of the Guard, and the closing of Windsor Castle as a royal residence. ‘I don’t think any member of this Committee,’ he declared – repeating Bevan’s remark in Cabinet – ‘will disagree with me when I say that, so long as we have a Monarchy, the Monarchy’s work has got to be done well’.34
It was a close-run thing. Under only slightly different circumstances – with a less persuasive Chancellor, or one who commanded less authority among MPs – the decision might have gone the other way. As it was, five out of the twelve Labour MPs on the Committee, including the Chairman of the Parliamentary Party, were in favour of substantially lower annuities for the royal couple, backing figures of £35,000 for Elizabeth and £5,000 for Philip. In the final vote, Labour MPs, split evenly, and the higher figures proposed by the Chancellor required Tory and Liberal support to carry them.35