Queen's household told to do more to cut costs after cash reserves fall to £1m
Public accounts committee says monarch's staff should do more with less just like the rest of public sector facing austerity
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Queen Elizabeth II. The royal household has been told to pay closer attention to its finances. Photograph: Chris Radburn/PA
The Queen's royal household has been told by a Commons committee to reduce its costs and increase income after its cash reserves were found to be at a historic low of £1m.
A report by the public accounts committee (pdf) recommended better planning and budget management to rebuild a sufficient level of contingency in its reserve fund to cover unforeseen demands on the Queen's programme.
Years of over-expenditure by the household have reduced the contingency fund from £35m in 2001 to £1m today.
Margaret Hodge, the committee chair, also criticised the Treasury for failing to do more to review the household's financial planning and management.
Hodge said there was "scope for the household to generate more income and reduce its costs further".
Hodge said there was "scope for the household to generate more income and reduce its costs further".
She praised the increase in income during the last financial year, but said more could be done.
"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."
Asbestos was recently removed from the basement of Buckingham palace, the Queen's London residence. Photograph: Ian Mckinnell/Getty
The report looked at the sovereign grant – the financial system funding the monarchy – and last October the committee questioned Sir Alan Reid, keeper of the privy purse.
Household staffing had remained at about 430 people over the past seven years. But this contrasted with the public sector, where employee numbers were cut during the same period and yet was still expected to increase efficiency.
Hodge also highlighted the large amount of work needed to maintain "nationally important heritage properties". The report said that 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 was likely to be worse.
Hodge 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 report said the household intended to allocate 50%-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.
"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."
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 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 report has failed to properly account for these changes."
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 [public accounts committee] 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 £11.6m in comparison with £6.7m in 2007-8. Work on income generation continues."
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