Royal household finances criticised


Royals attend Sandringham church

The Queen's royal household could be doing more to reduce its costs and increase income, and needs to get a firmer grip on a backlog of property repairs, a Commons committee has said.

The household also needs to plan and manage its budget better for the long term, a report by the Public Accounts Committee (PAC) recommended.

Margaret Hodge, the PAC's chairman, also criticised the Treasury for failing to be more actively involved in reviewing the household's financial planning and management.

Ms Hodge said "there is scope for the household to generate more income and reduce its costs further".

She went on to praise it for increasing its income during the last financial year, but added: "However, we think it could do more. Since 2007-08, the household has cut its net costs by 16% in real terms, but 11% of that was achieved by increasing income, and just 5% by reducing expenditure.

"With better commercial expertise in place, we think there is room to do more with less, reducing costs further and supporting the Queen's programme more effectively."

The report produced by the PAC looked at the Sovereign Grant, the financial system funding the monarchy, and last October its MPs questioned Sir Alan Reid, Keeper of the Privy Purse, about the financial affairs of the household.

The document stated that the household's staffing levels had remained largely static at just over 430 people, during the past seven years, to allow it to maintain the Queen's programme.

But this contrasted with the public sector which had seen employee numbers cut during the same period, and yet the sector was still expected to increase efficiency with fewer workers.

Ms Hodge also highlighted the large amount of work needed to maintain "nationally important heritage properties".

The report gave the example of the Victoria and Albert Mausoleum, a monument of national importance, which has been waiting 18 years for repair work. The document said when assessed in 2012, 39% of the royal estate's buildings were below what the household thought was an acceptable condition - and the current position is likely to be worse.

The PAC chairman said: "The household must get a much firmer grip on how it plans to address its maintenance backlog.

"It has not even costed the repair works needed to bring the estate back to an acceptable condition, and the Treasury did not require an estimate. Again, the Treasury has an oversight role here."

The PAC report stated that the household intends to allocate between 50% and 60% of the increase in Sovereign Grant funding in 2013-14, and in future years, to addressing the maintenance backlog, and was "belatedly" developing a 10-year maintenance plan.

Ms Hodge added: "...we feel that the Queen has not been served well by the household and by the Treasury, which is responsible for effective scrutiny of the household's financial planning and management.

"We believe that the Treasury has a duty to be actively involved in reviewing the household's financial planning and management - and it has failed to do so."

Commenting on the ability of the Queen's staff to plan for the future, she said: "The household needs to get better at planning and managing its budgets for the longer term - and the Treasury should be more actively involved in reviewing what the household is doing."

A Buckingham Palace spokeswoman said: "The move to the Sovereign Grant has created a more transparent and scrutinised system, which enables the royal household to allocate funding according to priorities. This has resulted in a more efficient use of public funds.

"The royal household was charged by the PAC in 2009 to generate more income to supplement the funding it receives from Government. This has been done successfully. In 2012-13 the Household generated £11.6 million in comparison with £6.7 million in 2007-8. Work on income generation continues.

"A significant financial priority for the royal household is to reduce the backlog in essential maintenance across the occupied royal palaces. Recent examples of work include the renewal of a lead roof over the royal library at Windsor and the removal of asbestos from the basement of Buckingham Palace. The need for property maintenance is continually assessed."

A Treasury spokesman said: "The new arrangements established by the Sovereign Grant Act have made the royal finances more transparent than ever while providing the long term stability necessary for good planning.

"The PAC's report has failed to properly account for these changes."

Asked if the Royal Family had too many palaces, Mrs Hodge told the BBC Radio 4 Today programme: "I don't think we even looked at that - we wouldn't have dared to look at that."

Responding to the suggestion that the problem had been allowed to develop because the Treasury and others tread too carefully around issues involving the Royal Family, she went on: "It may be a thing for another year.

"This is the very first year that there has been much stronger accountability, visibility and transparency around the sovereign grant, so this is our first dip of our toe into the water."

Tax tricks to improve your wealth

Tax tricks to improve your wealth