When the Duke of Sussex told Oprah Winfrey that his family had “literally” cut him off financially, sources close to the Prince of Wales could not hide their surprise.

The bank statements, they said, told a different story.

It has now emerged that the Prince of Wales gave the Duke and Duchess a “substantial sum” when they stepped back from their official roles, apparently contradicting Prince Harry’s claim that they had only been able to afford their new life in California because of his inheritance from his mother.

The Clarence House annual review revealed that Prince Charles gave a total of £4.5 million to the Duke and Duchess of Cambridge and the Duke and Duchess of Sussex during the last financial year, down from £5.6 million the previous year. 

A Clarence House spokesperson confirmed that it included a "substantial sum" to help the Sussexes following their departure from royal life, payments that ended last summer.

“As we’ll all remember in January 2020 when the Duke and Duchess announced that they were going to move away from the working Royal family, the Duke said that they would work towards becoming financially independent,” the spokesperson said.

“The Prince of Wales … allocated a substantial sum to support them with this transition.”

He described the couple’s departure from the working Royal family as "a matter of enormous sadness to the family,” but added: “The Prince wanted to help make this work.

“I betray no confidence when I say they’ve been very successful in becoming financially independent.”

It also emerged that the investigation into alleged bullying by the Duchess of Sussex, which is being conducted by an external law firm, is being paid for privately.

Buckingham Palace declined to confirm which member of the Royal family was footing the bill but said no taxpayers’ money was being spent on the probe.

Details of the review were expected to be included in the annual report, but it has not yet been completed and aides declined to reveal when its conclusions might be published.

A spokesperson for the Sussexes insisted that there was no contradiction on timings and that it was “inaccurate” to suggest otherwise.

“The Duke’s comments during the Oprah interview were in reference to the first quarter of the fiscal reporting period in the UK, which starts annually in April,” she said.

“This is the same date that the ‘transitional year’ of the Sandringham agreement began and is aligned with the timeline that Clarence House referenced.”

In the interview, the Duke told Oprah: “my family literally cut me off financially… in the first half, the first quarter of 2020. But I’ve got what my mum left me, and, without that, we would not have been able to do this.”

Buckingham Palace admits failing to improve diversity

Buckingham Palace has also admitted it was failing in its efforts to improve diversity as it published staffing figures for the first time, in the wake of the Sussexes’ racism allegations.

The Sovereign Grant report, published on Thursday, revealed that 8.5 per cent of employees at the palace are from an ethnic minority background. Aides said they hoped to increase that figure to 10 per cent by the end of 2022.

A senior palace source acknowledged they “must do more” to improve diversity, adding: “We are not where we would like to be despite our efforts.”

The aide said the figures had been published so there could be “no place to hide” and they could be held accountable if no progress was made.

Clarence House revealed that eight per cent of its staff were from ethnic minority backgrounds, which it also admitted was "not where we need to be".

It comes just months after the Sussexes accused the Royal family of racism, claiming that concerns had been raised about the colour of their unborn son’s skin tone.

In the UK, around 13 per cent of the UK population is from a minority ethnic background.

The report revealed that the palace diversity strategy, agreed in 2017-18, was adapted in early 2020, shortly after the Sussexes moved abroad, to “actively emphasise the importance of inclusion” although plans to appoint a diversity tsar have been put on ice.

It also disclosed a significant black hole in palace finances, with annual income supplementing the Sovereign Grant plummeting from £20.2 million to £9.4 million.

The royal household had previously estimated that £15 million over three years would be lost in income from the Royal Collection Trust but that figure is down £18 million this year alone.

The reduction was partially offset by the £2.4 million received from the Sussexes to reimburse the public purse for the refurbishment of Frogmore Cottage.

The lump sum was considered sufficient to also cover the couple’s rental costs for the property for 18 months until March 2022, when the annual licence on the property is due to be renewed.

The accounts show the monarchy cost the taxpayer £87.5 million during the last financial year, an increase of £18.1 million on the previous year.

Property maintenance costs soared by £11.2 million to £49.5 million as the 10-year project to renovate Buckingham Palace continued.

Sir Michael Stevens, the Keeper of the Privy Purse, said: “In the year covered by this report, we actually spent more than our grant and the supplementary income we earned, with total net expenditure of £87.5 million, a 26 per cent increase on the previous year.

“This was largely driven by a significant increase in the reservicing spend from £21.2 million to £38.8 million, an 83 per cent increase on the year.”

The overspend of £2.3 million was met from funds drawn from the Sovereign Grant reserve.