Why Alice had to leave wonderland

Aristocrats are having to pack up and wave goodbye to their country seats. Vicky Ward on the decline of a landed class

They say Princess Alice, 93, was in tears. She had just been told by her son and daughter-in-law, the Duke and Duchess of Gloucester, that she had to leave the house her late husband, Prince Henry, had bought for her in 1938. Her pride and joy was not the house itself but the garden which Prince Henry had planned so lovingly to celebrate their silver wedding anniversary.

The Grade II listed Barnwell Manor is not a palace. But with its 30 rooms and 12 acres of grounds, it afforded the Gloucesters a country seat grand enough for minor royals - even when they are, at least nominally, farmers.

The trouble is that the Gloucesters' income from farming, combined with their £175,000 a year from the Civil List, is nowhere near enough to maintain the 427-year-old Barnwell. Mounting financial pressures have forced the family to move.

The entire clan - the 20-year-old Alexander Earl of Ulster, Lady Davina Windsor (17) and Lady Rose Windsor (14) along with their parents and distressed grandmother - has been forced to abandon the life of the landed gentry and move lock, stock and barrel into Kensington Palace in London, the so-called sink estate for minor royals. The Barnwell butler and six staff have been made redundant, no doubt muttering that "You simply can't find the employers these days".

Agents are busily looking for someone to rent Barnwell for £30,000 a year fully furnished. The duke and duchess have let it be known they want "suitable" tenants. But they are in the hands of the market now, and the likelihood must be that the house will go to someone unsuitable, keen to show off the furnishings of a royal home.

The duke's retreat from Barnwell is par for the aristocratic course these days. The past year has not been a good one for the British aristocracy, hit as it has been by a rash of major estate losses. The roll-call includes the Earl of Shelburne, who had to sell his archives to keep his house; the Marquess of Milford Haven, who ran out of money and Lord Brocket, charged with insurance fraud. And the house of Lovat in Scotland has been hit by a tragic series of deaths.

The aristocracy has been under pressure for more than a century. The decline began in earnest in the 1880s when land prices started to fall. Since then a combination of mismanagement, death duties and low incomes from farming has further reduced the ranks. Since 1973, about 710 country estates have been sold by aristocrats, according to the Historic Houses Association. Today only 1,400 remain.

There are three reasons behind the latest exodus. One is that the property market is suddenly on the move again; buyers are re-emerging after the recession of the early 1990s. A second is the steady rise in maintenance costs, not just repairs and building work but also heating. Fuel bills for drafty country houses have risen by 17.5 per cent with the introduction of VAT on fuel. The third, according to the upper classes, is that the Government will not provide them with support to help them move into commercial projects.

There are several ways that modern aristocrats fall on hard times, as they struggle to pay their bills.

The Duke of Gloucester best fits the traditional image of the landed aristocrat, slowly drained of resources over the decades. He is a farmer whose farm, like most very old British farms, is worth half what it once was. He is not a businessman, nor was he trained to be. He relies on his inheritance and the Civil List. Payments from the list to minor royals such as the Gloucesters are likely to come under growing political scrutiny. "In some ways," says the revisionist historian Andrew Roberts, "it is astonishing that agriculturally dependent aristocrats [aka Gloucester] have been able to pay for their houses as long as they have.''

Lord Brocket, 42, a polo-playing army officer, had tried to transform his residence, Brocket Hall, the former home of Lord Palmerston, into a grand conference centre. He and his wife Isa Lorenzo, the former Vogue cover girl, even moved into the laundry when they discovered that by living in the house they were losing around £60,000 a day by not taking paying guests. Even so, not enough visitors arrived to prevent Brocket ultimately accumulating a £5m overdraft and unpaid bank loan for £1m. He is now awaiting trial for alleged insurance fraud, accused of stealing four classic cars worth £4.5m from his own estate and then claiming the insurance.

Roberts says: "The thing about turning your estate into a corporate entertainment venture is that you have to do more than just open your doors. You have to work at it. The last few years it's been really tough for those industries. People are still not ready to spend money on sumptuous banquets."

The Lovats did not go into the service sector. They had also planned ahead to minimise death duties. The old Lord Lovat passed the estate to his eldest son, Simon, while he was still alive. At the cost of a huge rift within the family, Simon Fraser tried to save the estate by taking it into light industry.

An ill-fated foray into mineral water bottling lost the estate £3m. Fraser died of a heart attack last March during a hunt, only days after his younger brother was killed in a hunting accident in Africa. Now the new 18-year-old Lord Lovat faces not only the losses on the bottling plant but death duties of £7.4m. Already peripheral parts of the estate and fishing rights have been sold. Many expect the Scottish estate (or at least a large part of it) to go on the market. There are rumours that it may end up in the hands of someone from show business.

Even when commercialisation does work, there's still no accounting for the bad luck that has plagued the upper classes through the decade. Perhaps the most unexpected of all was that of Moyns Park, the Essex seat formerly belonging to Lord Milford Haven.

Milford Haven, 33, had done what British aristocrats have been doing, or trying to do, for centuries - he married money in the form of glamorous divorce Sarah Walker. But any sense of financial security soon evaporated. His wife's wealth was based on her father George Walker's business empire, Brent Walker. The protracted collapse of the Walker businesses was soon felt at Moyns Park.

The Marquess's assessmentwas as follows: "It was like putting three or four grand a week into a bucket and dropping it down a well, and all because of the aristocracy's obsession with keeping their estates going for the next generation. I kept it up for seven years. It virtually ruined me."

Sarah and the marquess are now separated. In the end, Milford Haven's brother, Lord Ivar Mountbatten, bought out his elder brother. With the aid of his wife, Penny, the daughter of a Sotheby's representative, he is attempting to open it Brocket-style. "I've given myself four years to get it off the ground," he says. "If it doesn't work out we'll have to try to sell the estate again."

Earl Spencer, the Princess of Wales's brother, is making a television series on the subject of keeping up historic homes for Sky's NBC Superchannel. Last week, he talked publicly about his struggles to maintain Althorp and to make amends for his step-mother's commercial misjudgements. "All the costings were wrong. The house was losing £450,000 a year. She's always seen as a business genius but that the house was losing so much money speaks for itself."

Lord Spencer is fortunate, however, in that his estate is large enough to just about break even, if he is careful. It is the smaller estates of under 10,000 acres that really suffer (unless the owner has an independent income) since the bottom line for maintaining the most modest of historic houses is roughly around £100,000 a year.

William Proby, president of the Historic Houses Association, owns Elton Hall, Peterborough, a medieval and Gothic tower that has been in his family since 1660. He says that without his job in the City, it would be impossible for his wife and their four children to live there. "It is not the big houses such as Blenheim and Chatsworth that are the problem because the nation will keep them intact. It is the next lot of not-so-famous Grade I houses such as ours. Opening them to the public just does not pay since we have to pay more for public facilities and staff than the grant we would get in return is worth. It is a myth to think that opening to the public pays."

Owners from different social backgrounds do not fare any better. The HHA says that a third of historic properties bought up by incoming owners in the past 20 years were back on the market within three years. Asil Nadir tried it. Alan Bond tried it. The country estate defeated them both.

Some aristocrats are advocating extreme measures. They are looking to Tony Blair as their political saviour. Lord Shelburne, a former president of the HHA, who recently had to sell his archives to maintain the upkeep of Bowood House, is publicly advocating the advantages of a future Labour government, since the Tories, contrary to their promises of 1968, have not given allowances for the maintenance of listed buildings, and VAT on repairs - four times the cost of normal house repairs - has remained at the full rate.

"If only the Government would give us quid pro quo," says William Proby. "If we opened our houses to the public, they would give us decent help in return. As it is, grants have virtually dried up and people like the Gloucesters have lost confidence. They can't see any way out."

So may we presume that at the next election we will see 1,400 former Tory voters turning to Labour? "Put it this way," says Mr Proby, "they haven't set their agenda yet, but I've spoken to the Labour regime and they were, shall we say, very sympathetic."