Revealed: The Queen is facing a cash crisis

On the eve of her golden jubilee weekend celebrations, the Queen is facing the prospect of an embarrassing cash crisis that could result in her having to ask Parliament for more money.

On the eve of her golden jubilee weekend celebrations, the Queen is facing the prospect of an embarrassing cash crisis that could result in her having to ask Parliament for more money.

An analysis of the monarch's finances, carried out by The Independent, reveals the increasing strain on her income.

Although it is impossible to be precise about the scale of the problem because of Buckingham Palace's secrecy, it is estimated the Queen is paying £15m a year more from her private income than when she agreed to reduce the Civil List in 1993.

The main reasons are the deal struck with John Major's government to pay income tax and the increasing burdens of her family. There has been a dramatic falling away of profits from the royal palaces and a £48m cut in state funding, including smaller amounts in grant-in-aid from the Government, parliamentary annuities and from the Civil List over the past 10 years.

In accountancy parlance, the Queen, based on information that is publicly available, is approaching a "net worth of nil". Buckingham Palace, which estimates her personal wealth in cash, stocks and shares at less than £100m, describes the Queen's personal finances as being "fully committed".

For the first time, her 20,500-acre estate at Sandringham is in the red, hit by the effects of foot-and-mouth, while her share portfolio has been reduced by an estimated £12m because of the economic downturn.

In the past six months, for example, the Queen has had to draw on her private wealth to cover an additional £6m – including the estimated £4m overdraft inherited from the Queen Mother and £500,000-a-year for Prince Edward's withdrawal from business life.

No one doubts that the Queen is very wealthy. This year's Sunday Times rich list estimates her fortune at £275m – although that represents a huge recalculation from 1990 when it said she was worth £6.7bn. In 1993, the Queen's former Lord Chamberlain, Lord Airlie, said estimates of £100m were "grossly exaggerated''.

The revelation of the Royal Family's cash difficulties will spark debate over the obfuscation within the current system and the unwillingness of the Palace to discuss its finances. It raises questions over the role and costs of the monarch and her family.

What our analysis, carried out with the aid of independent accountants and constitutional experts, shows is that, although the Queen may have numerous assets, she may not have enough cash to pay her bills.

Furthermore, it is unclear what assets the Queen owns and what is held by the state or simply because of her position. It would make disposal of assets, such as artworks or property, difficult. Such a sale, although it would immediately alleviate the cash problem, would also have implications for public perception.

The deal struck by the Palace and the Government two years ago – to freeze the Civil List at £7.9m until 2011 – now looks unworkable. The Palace admits that if inflation were to rise significantly the Queen would have to go to Parliament and ask for a top-up – something constitutional experts say would have serious implications and garner little sympathy from the public.

Professor Vernon Bogdanor, professor of government at Oxford University, said: "There is an inherent principle of a constitutional monarchy that the sovereign remains financially independent of the Government of the day. It's embarrassing for the Queen to go to parliament to ask for more money."

There are parallels. In the 1960s, the Royal Family had to press the government of Harold Wilson for more money. The issue was raised in the House and it was revealed that the royal finances were in the red.

More money was granted. The question of whether a slimmed-down Scandinavian-style monarchy would be more appropriate was also debated.

There are already signs that the Queen's personal advisers are facing the costs issue. The Queen has begun letting lodges at Balmoral, which has never been a profitable estate. At Sandringham, there are plans to start renting holiday homes.

Perhaps the most significant development is the announcement that Prince Andrew is to give up his Sunninghill Park estate, which cost the Queen £3m as a wedding gift when he married Sarah Ferguson. He is to move into the more modest Royal Lodge. Prince Charles will also move home – from St James's Palace to Clarence House – which, contrary to public perception, is all a part of the cost-driven reshuffle of royal palaces.