Exclusive: Royal books face MPs' scrutiny for first time

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The Queen’s closest aides face the prospect of a historic public grilling by MPs about whether the Royal Family is providing value for taxpayers’ money.

Parliament’s most powerful watchdog, the Public Accounts Committee, is expected to launch an inquiry later this year into the finances of the Queen and the Royal Family. This follows a change in the law which, for the first time, gives MPs oversight of royal finances.

Such an inquiry will cause trepidation in Buckingham Palace because of the committee’s formidable reputation for lambasting civil servants and government departments if it deems they have misused public funds.

As well as shaming Amazon, Starbucks and Goldman Sachs over their tax affairs, the committee has grilled a succession of Whitehall bosses over their tax affairs, the committee has grilled a succession of Whitehall bosses over wasteful spending in their departments. Often these have led to damning public reports. This week alone the MPs accused the Department of Work and Pensions of causing “misery and hardship”, the Department of Health of “abject failure” and the Department of Energy of “failing to get to grip” with Britain’s mountain of nuclear waste.

The PAC, chaired by the former Labour minister Margaret Hodge, will decide on the scope of any inquiry after the National Audit Office is granted access to the Queen’s finances next month. Auditors will produce a report on their findings which will then be scrutinised by the committee who will decide whether to call palace officials to give evidence. Committee sources indicated that this was likely to happen.

“Margaret wants to do it – but obviously it’s got to be a decision of the whole committee,” said a source.

“I’m all in favour of it,” said Austin Mitchell, a Labour MP who sits on the committee. “It’s not intrusive. It is about ensuring that the public are getting good value for money.

“At the moment there is no accountability for spending what is a considerable fortune.”

Among the areas the committee is expected to examine are transport costs including the Royal Train and the Royal Flight, as well as money spent on official entertaining and the upkeep of palaces.

Money given to junior royals to support their work backing up the Queen will also be scrutinised while the committee may also want to examine whether Buckingham Palace is doing enough to raise money itself by selling the royal brand. For example while the Palace now opens to paying visitors during the summer some have argued it should be open all year round.

The change has come about after George Osborne scrapped the Civil List – an annual handout to the Royal Family that has had to be approved by Parliament since 1760 – in favour of paying the Monarch 15 per cent of the income from the Crown Estates as a new “Sovereign Grant”.

Crown Estate assets include Regent Street in London, Ascot racecourse and Windsor Great Park, 265,000 acres of farmland, as well as ownership of our national seabed stretching out 12 nautical miles around Britain. The Estate’s profits have been paid to the Treasury and taxpayers since 1760, after George III handed the Crown’s property to the state in return for an annual fee to support his duties. The income from the estates, now more than £240m is expected to increase to £450m by 2020 – which would more than double the Queen’s income from taxpayers’ to £67.5m at a time when voters have been told to expect a decade of austerity.

In April Buckingham Palace will receive £36.1m to fund the Queen’s official duties, a 16 per cent increase on the £31m paid by taxpayers last year.

MPs will examine the business strategy of the Crown Estates, which has been criticised for investing heavily in offshore wind farms, which Prince Charles has criticised as a “horrendous blot on the landscape”.

But under a controversial deal with the Palace the main income of the Prince of Wales, which he gets through the Duchy of Cornwall, will be outside the PAC’s scrutiny. The Duchy of Lancaster, a trust that provides the Queen’s private income, is also exempt.

The unprecedented parliamentary inquiry will mean that Sir Alan Reid, the Keeper of the Privy Purse – effectively the Queen’s treasurer – will face the full glare of publicity by being questioned in front of the television cameras. Sir Christopher Geidt, the Queen’s private secretary, could also be called to give evidence. “We will be looking into the royals later this year,” a committee source said. “We need to be sure when other public services are being cut that there is value for money. We would certainly want to speak to the most senior people who control the purse strings.”

The Conservative MP Jacob Rees Mogg said that while he backed the move to give Parliament scrutiny of the Queen’s expenses it had to be “proportionate”. “It is perfectly reasonable for Parliament to examine expenditure on areas like royal palaces, state banquets and the postal service. But it would be unreasonable to examine the Queen’s private sources of income and expenditure and whether she prefers chocolate or plain Hobnobs.

“The Public Accounts Committee’s main job is to scrutinise large areas of national expenditure running to billions of pounds. I’m sure … it will not want to spend too large amount of time on the Royal Household which provides very good value for money.”

Buckingham Palace declined to comment.

Making a royal mint: Questions for the Queen

Subsidised royals

The Queen’s public subsidy not only pays for her work – but that of other members of “the firm” as well. The committee will want to look at how many public visits are carried out by members of the Royal Family, and how much each of the Queen’s relatives gets in subsidy from the Monarch (and hence the taxpayer).

Hospitality

Accounts in 2011 show that the Queen entertained over 76,000 guests, including 41,000 people who attended the seven royal garden parties. The committee may want to examine the costs per-head of these events and whether they could be done more cheaply.

Travel

Buckingham Palace’s travel accounts show that most of the £6.1m travel costs went on air travel – with £2.4m on helicopters and £2.2m on planes. Top of the Public Accounts Committee’s priorities may be to look at the travel costs associated with lesser members of the Royal Family such as Prince Andrew – nicknamed “Airmiles Andy” because of his allegedly expensive travel tastes.

Revenue raising

More than 600,000 people paid to visit Buckingham Palace last year when it opened during the summer, raising £10m in ticket sales. But the committee may question why the palace is not open for longer.