Margaret Hodge, chairman the Public Accounts Committee, described the decision to increase the salary of one senior figure by £7,000 as a "heck of an increase" while staff earning above £21,000 had their pay frozen during the last financial year.
Sir Alan Reid, Keeper of the Privy Purse, was grilled by the committee's MPs during a hearing which examined the Sovereign Grant, the new funding formula for the monarchy.
During the hearing MPs also questioned figures that showed gas use had soared by 14% in 2012-13, while electricity was up 3%.
The huge cost of refurbishing palaces and other buildings was highlighted by Sir Alan, who told the MPs that around 39% of the royal estate was below "target condition", and bringing it back up to standard was likely to cost more than £50 million.
Ms Hodge questioned Sir Alan about the rise in salaries asking whether it was "really sensible" for the senior staff to give themselves "extra money" when "they were expecting staff on £21,000 not to have extra money".
Sir Alan stressed that his pay of £180,000 was frozen during the last financial year, as was the salary of the Queen's private secretary Sir Christopher Geidt, who earns £146,000 a year.
Mike Stevens, the Queen's deputy treasurer, told the MPs that Lieutenant Colonel Sir Andrew Ford, known as the Comptroller and head of the Lord Chamberlain's office which organises ceremonial events like investitures and garden parties, saw his salary increase last year by £7,000 to £116,000 because he took on the extra responsibility of royal travel.
The other senior figure to see an increase in their salary was Air Marshal Sir David Walker, who has stepped down from his post as Master of the Household, but last year saw his salary increase by £2,000 to £122,000.
Mr Stevens added: "Underpinning these increases, over the five years since 2007-08, the household's pay bill has reduced by 6% in real terms."
Ms Hodge added: "They just went up, they're not massive amounts on what they earn, but if you're on £21,000 another £2,000 is a 10% increase...going up from 109 (thousand) to 116 (thousand) - £7,000 is a heck of an increase."
Answering questions relating to the rise in utility bills Mr Stevens suggested the increase could largely be blamed on cold weather.
But he added: "This is an area that we will wish to look at ways in which we can reduce.
"One of the areas in which the Sovereign Grant (money) will be applied will be the replacement of boilers in the main palaces which are nearing the end of their useful life.
"One of the key projects of the next 15 years will be refurbishment of Buckingham Palace.
"Heating systems there are antiquated. They are over 60 years old and they don't lend themselves to efficient use of energy."
Sir Alan also defended the way the Royals sourced energy, explaining that while the Household did not "fix" its bill, it set up multi-year deals to obtain power from the wholesale markets.
Ms Hodge also questioned the schedule of a recent trip by the Duke of York to south-east Asia and America, and who picked up his expenses bill.
She said: "It looked as if in a three-week trip there was a little bit of work, which was very important public work, but there was quite a lot of holiday - nobody denies him the right to have his holiday - and quite a lot of family time, again really important."
Sir Alan said all official overseas trips made by the royals were approved by the royal visits committee and Mr Stevens added that the Duke's visit to Indonesia was approved by the committee and its costs would be paid for by the Sovereign Grant, while the other elements of his trip were either funded by other organisations or privately by Andrew.
Ms Hodge asked Sir Alan whether it was sensible having a royal train, and he replied: "I think for the time being. The rolling stock is very old indeed and it probably doesn't have too many more years of life."
He added: "I think it's from 1970, if not older, the decor is very G Plan, which is either 60s or 70s, and it is not luxurious by any stretch of the imagination, but it does offer a very safe and secure and effective way, particularly as the Queen's got older, of having her go up the country in order to do engagements first thing the next morning."
Sir Alan said he thought the royal train had "five to 10 years life left" and they would continue with it as long as the current rolling stock was working, but it would then be a "major" decision to have a new royal train, adding: "I think the numbers would be quite staggering."
Mr Stevens, the Queen's deputy treasurer, was questioned about claims the Palace employed people on "zero hours" contracts, where someone is not guaranteed work but is expected to remain available.
He said: "The staff who were employed for this year's summer opening of Buckingham Palace were employed on a contract described as, and it may be semantics, as and when required. The reason they were put on those contracts was to give us flexibility from the point of view of rostering, in what is a very busy period."
He added: "All of those staff worked in excess of 35 hours a week."
He said people working during next year's summer opening would work a guaranteed 35-hour week.