Does the royal family deliver good value for money?

Financial accountability? Transparency? Why look, there’s a plane… Dominic Lipinski/PA Wire

Royal finances have come under close scrutiny in recent days after the Public Accounts Committee told the royal household it must earn more and spend less – a bit like the rest of the country in an era of austerity.

Worryingly for the future of Britain’s royal heritage, buildings and treasures – such as artworks – were found to be in poor repair, prompting this bizarre exchange between committee members last October:

Richard Bacon (Cons): I remember vividly crawling on top of Buckingham palace and looking at all the cracked lead.
Chair: What were you doing there, Richard?
Bacon: We were invited … I don’t know whether your lead is still cracked. There was an issue, I remember, with the picture gallery. The rain was coming in on the expensive paintings.
Ian Swales (Lib Dems): He was arrested shortly afterwards.
Bacon: I was not wearing a Batman costume at the time, I hasten to add.

The current system of the state providing a subvention to the Palace for household expenses is generally traced back to 1760, when George III surrendered the revenues on the Crown Estates to the Treasury in return for an annual payment, commonly known as the “Civil List”. The Sovereign Grant Act of 2011 introduced a significant innovation: the Civil List was to be merged with three separate grants-in-aid from the government which had previously been used for the specific purposes of the maintenance of the royal palaces, royal communications, and royal travel.

This new, amalgamated “Sovereign Grant” is set at 15% of the net surplus generated by the Crown Estates two years previously. From the point of view of the royal household, this has a number of advantages – given rising profits from the Crown Estates, it promises significant year-on-year increases in the size of the Sovereign Grant, enabling the Palace to plan ahead with some confidence. It also means that savings made in particular areas of royal expenditure can be diverted to other areas where increased spending is required.

Anything to declare?

Yet as the PAC’s report makes clear, the new system also carries with it potential dangers for the royals. The Palace has been notoriously shy in the past about embracing the principle of transparency. Indeed, in the dying days of the previous government it managed to obtain sweeping exemptions for the Queen and Prince Charles from the provisions of the Freedom of Information Act. Yet the Sovereign Grant Act has significantly enhanced the scope of both Treasury and parliamentary scrutiny over the royal finances, introducing a greater element of public accountability.

Hence, for example, we now know that in 2012-13, Buckingham Palace and the Royal Mews spent £462,000 on their gas supply (a figure that attracted some critical questioning from members of the PAC, but which is unlikely to surprise anyone who has opened a utilities bill recently). Giving evidence before the committee, the Queen’s treasurer, Sir Alan Reid, found himself being quizzed on many other details of royal income and expenditure. Why, in only the first year of the new regime, had the Palace not managed to live within its means and been forced to dip into its diminishing reserves? Why had three of the highest-paid members of the royal household been awarded substantial salary increases when the Palace was supposedly enforcing a pay freeze? And why could more money not be generated by increasing the number of days Buckingham Palace was open to tourists?

Darling, I think the roof’s leaking… Chris Ison/PA Archive

But the issue that drew the most sustained fire from the PAC’s formidable chair, Margaret Hodge (and here we return to Mr Bacon’s rooftop adventures) was the maintenance of royal properties. This was a long-standing matter of concern for the committee, which back in 2009 had highlighted the poor state of repair of the Victoria and Albert Mausoleum at Frogmore. In its 2012-13 annual report, the Household revealed that repairs to the building were not a priority, despite it being on English Heritage’s “at risk” register. Indeed, in March 2012 the Household had calculated that 39% of the royal estate was in a condition below what it considered to be acceptable and the PAC guessed that in the intervening period the situation had probably deteriorated further.

Bread-and-butter issues

Here, perhaps, is the real significance of the PAC report. When in December 1971 parliament debated the recommendation of a Select Committee that the value of the Civil List be substantially increased, Labour MP and self-appointed standard-bearer of British republicanism Willie Hamilton compared the Queen Mother’s bloated staff of 33 with the struggle of pensioners in his constituency to ward off cold and hunger. He described the proposed state subsidy of £95,000 a year to cover the former as “one of the obscenities of what we are discussing”. In today’s very different political climate, such impassioned appeals to the principle of egalitarianism may have lost some of their power. But arguments about efficiency and the preservation of the nation’s heritage almost certainly have not.

The notion that a little extra butter on the Royal slice of bread might necessitate delays to essential maintenance on a royal palace is likely to be a compelling force for retrenchment. But this is about more than just the Windsors denying themselves a few luxuries. Are the benefits of a royal visit to Wolverhampton to open a new maternity unit really enough to justify a rain-drenched Canaletto being denied urgent restoration?

The new funding regime invites us to make precisely this sort of cost/benefit analysis. And even many people who are relaxed about the idea of Britain continuing to have a monarchy might feel that a fairly drastic reduction of expenditure on the activities and lifestyles of the current cohort of royals would be justified if that would allow money to be diverted to the preservation of buildings and artefacts which will be of value to future generations. The terms of the debate about whether the royal family represent “value for money” have effectively been changed, and its members may well come to regret the passing of the 2011 Act.

Professor Philip Murphy is director of the Institute of Commonwealth Studies. His latest book: “Monarchy and the End of Empire: The House of Windsor, the British Government, and the Postwar Commonwealth” was published by Oxford University Press in December.