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Property maintenance stretches Royal accounts

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26th Jun 2014
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The financial accounts for the Royal Household reveal net expenditure was £35.7m, an increase of 2.4m (7.2%) on the previous year, due to additional spending on property maintenance.

The Sovereign Grant Annual Report for 2013-14 states that spending on property maintenance increased by £4.2m to £13.3m, more than a third of the Sovereign Grant, over the last year.

Under a formula set in 2012 the grant, which covers the costs of the Queen's official duties, will go up a further 5.7% to £40m in the next financial year.

The Sovereign Grant is tied to the income from the Crown Estate, which published record profits of £267m.

The Royal accounts reveal more than £4m was spent on converting offices in Kensington Palace into an apartment for the Duke and Duchess of Cambridge and Prince George.

The residence was in a “state of disrepair” and work included the removal of asbestos, new heating, hot and cold water, electrical services and redecoration.

A palace official confirmed that furnishings and a new kitchen were paid for privately by the family.

Back in January the Public Accounts Committee (PAC) warned of a maintenance backlog with properties in a “dangerous or deteriorating condition”.

The committee also identified several areas where the Royal Household and Treasury failed in their financial management and planning.

“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,” said committee chair Margaret Hodge. “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.”

The PAC report found the Sovereign Grant had strengthened accountability, but the increased scrutiny had made life somewhat more challenging for former KPMG partner and keeper of the Privy Purse, Sir Alan Reid.

For the 2012-13 accounts Sir Alan had to draw down £2.3m from its £3.3m reserve fund, leaving a historically low £1m balance.

“Longer term, we would like to build up a modest reserve, but as long as we have a property backlog, we do not anticipate building up a reserve of more than about 5% of the annual level of the grant,” he said.

On the new set of accounts Sir Alan said that with maintenance costs stripped out, public funding of the monarchy had actually fallen by 8% in real terms in the last two years.

Buckingham Palace added that the cost of the monarchy, not including security, was equivalent to just over a penny a week for every person in the UK.

Travel expenditure was also revealed in the most recent set of accounts, including the £255,000 cost for the Prince of Wales to attend Nelson Mandela's funeral in South Africa.

Replies (10)

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By carnmores
26th Jun 2014 17:57

i saw reps from royal household
Appear before select committee PAC where they were being questioned on the budgetary process for property maintenance on the Royal Estates very poor performance

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By the_Poacher
26th Jun 2014 18:23

Meanwhile...
Meanwhile other public sector workers are having zero per cent pay rises or, in the case of HMRC a 0.5 % pay cut over last year

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By User deleted
27th Jun 2014 08:52

Public Sector pensions ...

@the_Poacher

It is thought that by 2018, unfunded public sector pensions will equate to £1 in every £7 Government borrows and will be the equivalent to £1,500 per family in the UK

These are an unsustainable future liability that will place a burden on today’s youngsters for ever more and yet they continue!

Why have they not been closed to new entrants who should be placed on the same footing as the private sector? Furthermore, closing then would allow a run-off of existing members and a finite liability for the country that will wash out of the system in 25-50 years

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By andrew.hyde
27th Jun 2014 11:16

To be cynical for a moment

The last two posts, taken together, surely give the answer.

HMRC must compete with other employers for labour.  Easy enough in, say, Sunderland.  Less so in London and the South East.

Offering recruits better salaries will clearly impact on current spending (= tax rises, loses votes).  Offering recruits generous pensions impacts on spending way down the line.

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By Ian McTernan CTA
27th Jun 2014 11:52

PAC headline grabbing

As usual, the PAC trying to grab a headline by attacking someone.

Looking at the figures in context, it appears that the amount the royal household gets from the Crown Estate is 15% of the net profit, with the Government receiving 85%, which doesn't seem particularly fair.  £40m is a tiny sum compared to the amount brought in by tourists and also the incredibly hard work done by the royals day in day out.

They should set aside an amount from these profits each year to pay for maintenance instead of (like unfunded pensions) storing up problems in later years for someone else to deal with (Labour party spending springs to mind).

So next year the royal budget should be stripped of the repair portion, and instead a separate fund made from the Crown Estate profits to cover all required repairs going forward.  Maintenance can then be properly funded and done when required which in the longer term will reduce the maintenance bill (it's easier to fix a leaky roof before the water causes huge damage inside than it is to wait for funding then have to find millions to repair the whole building).  This might involve setting aside £50-100m from the profits.

This would also lead to better looking buildings etc which we can all take pride in.

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By SJH-ADVDIPMA
27th Jun 2014 12:21

palaces
The thing is, if we abolished the monarchy, these buildings would be retained by the UK as tourist attractions / buildings of historical interest, and still need to have money spent maintaining them, so a red herring really.

The government wastes 100's millions on failed software projects, we have to get this into perspective.

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Replying to JonnyB1984365:
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By andrew.hyde
27th Jun 2014 12:30

Houses are in short supply

SJH-ADVDIPMA wrote:
these buildings would be retained by the UK as tourist attractions

Not necessarily.  Buck House and its gardens is 40 acres of prime building land.  Even at a modest 20 properties per acre, that's 800 units that would easily fetch a million each.  And there has to be a market for real royal bricks from the palace, not to mention the fittings...

I'll take it off your hands for £100m.  Can't say fairer than that.

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7om
By Tom 7000
27th Jun 2014 12:19

And theres.....

...not even anything in the budget for a relacement for the royal yact Brittania.

 

Should just double the grant

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By User deleted
27th Jun 2014 13:30

House short supply - factors ...

@andrew.hyde - http://www.thetimes.co.uk/tto/news/uk/article4131556.ece

... and only becoming more acute !

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By johnporter
27th Jun 2014 16:04

Royal Household exp

I'm sure there Royal Highness's & entourage/hangers on will be able to join the queue at the Local Food Bank although according to IDS they are a figment of someones Imagination (where do my donations go them must be to feed fat tory politicians).

Don't want them going Hungry

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