| MATTERS ARISING FROM THE TREASURY MINUTE
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| Access to information
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| Qs 35-36
| 10. In relation to the grant-in-aid funding for the Occupied Royal Palaces, the Department stated that they received from the Royal Household a five-year programme of work, an annual programme of more detailed work, an annual programme of more detailed work, an annual report on the Royal Household's stewardship in carrying out that programme, quarterly estimates and reports of progress and all internal audit material. The Royal Household said that they had willingly entered into a Memorandum of Understanding with the Department which provided this sort of information and that in their view they were very closely supervised by the Department.
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PAC 40th Report (93-94) HC 316, para 14
Cm 2732, para 2
| 11. In their previous report our predecessors recognised that the Department had requested and received internal papers from the Royal Household and that the latter's external autitors had access on the Department's behalf. However, our predecessors noted that information provided by the Royal Household was not necessarily a substitute for direct sight of the underlying papers. They welcomed the Royal Household's statement that they had no objection to the Department having full access to their accounts and records, and the Department's intention soon to amend the Financial Memorandum, which specifies the conditions under which the grant-in-aid is paid, to provide for this. The Treasury Minute stated that the Financial Memorandum was being amended to make explicit the fact that the Department could see any papers which they requested.
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| Q 62
| 12. The Department told our predecessors that the principal change that they had needed to make to the Financial Memorandum had been to make sure that the provision that the Royal Household would respond to the Department's requests for the information they required should be properly incorporated. There had been other minor changes. In practice, these arrangements were now in place but the Department thought that it would be sensible not to promulgate the revised Memorandum formally until after our predecessors had taken evidence in case there were other points which they should take into account in the revision.
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PAC 40th Report (93-94) HC 316, para 14
Cm 2732, paras 2-3
| 13. In their previous report our predecessors considered that the National Audit Office should also be provided with full access to the Royal Household's accounts and records to enable the Royal Household and the Department to demonstrate effectively their stewardship of public expenditure on the upkeep of the Occupied Royal Palaces. The Treasury Minute summarised the papers made available by the Royal Household to the Department and the Department's rights of access. It stated that the National Audit Office had an automatic right to see all the documents that the Department saw and that the external auditors of the Royal Household had direct access to the Royal Household's papers. The Government believed that these arrangements appropriately reflected the relationship between the Royal Household, the Department and Parliament, and did not consider that a right of direct access to the Royal Household's internal papers was also necessary to demonstrate effective stewardship.
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Q 56
Qs 52, 54-55
Q 37
Q 57
| 14. The Department stated that the Royal Household did not have the same constitutional status as the non-departmental public bodies receiving grants-in-aid from the Department, to which the National Audit Office not only had access but were the auditors. The Royal Household operated within the confines of Government policy as to what the Government believed was the appropriate relationship between the National Audit Office, the Department and the Royal Household. This was that access to the Royal Household should remain conventionally through Ministers. The Royal Household confirmed that the financial arrangements for them and the separation between the Royal Household and the Government were intended to reinforce the independence of the monarchy. The Department said that the information available now for the grant-in-aid was substantially greater and more useful than that which was available before 1991, when the expenditure was carried on Votes from the Department of the Environment to which the National Audit Office had access.
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| Qs 58-61
| 15. The Comptroller and Auditor General told our predecessors that he welcomed the proposed change to the Financial Memorandum, to make it explicit that he could see any Royal Household documents that the Department saw, as a move forward in the right direction. He also told us that the current arrangements provided for all reasonable business to be conducted and confirmed that more information was now available to the National Audit Office. However he also said, as an auditor, that the general principle of auditing was that the preferred arrangement was one of direct access, to be able to go directly to the source of the evidence and material rather than to see it at one remove. There was always a risk that information which would be of importance or value might be overlooked, which was why indirect access was less satisfactory than direct access, even though the auditor might not be able to point on any particular occasion to where he had been put in a detrimental position. He added that where he had sought information this had been readily supplied by the Department and, by extension, the Royal Household, with the exception of the matter referred to at paragraph 16 below.
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Q 83
Evidence, Appendix 2, pp. 36-37
Q 84
Evidence, Appendix 1, pp. 30-36, Qs 5-6
| 16. The Department told our predecessors that there had been two reasons why they had not been able to provide information requested by the Comptroller and Auditor General, on behalf of a Member of the Committee, concerning private secretaries and officials in the Queen's Household accommodated in the Royal Palaces. The first had been that the vast majority of staff involved were staff not funded by the grant-in-aid and did not fall within the Department's responsibility. Secondly, the responsibility for the allocation of accommodation operationally was not one for the Government but for the Royal Household. They also stated that the provision of accommodation was treated as a matter of overall remuneration which was not a matter for the Department. They subsequently provided information requested for two of the staff in question who are funded from the grant-in-aid.
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Hansard, 16 October 1996 Col 905
Supply Estimates 1997-98, HC 335
| 17. On 16 October 1996, the then Prime Minister announced that the Government propose, with Her Majesty, the Queen's agreement, and following consultation with the then Leader of the Opposition, to invite Parliament to approve for 1997-98 a single grant-in-aid on the Department of Transport's vote for official Royal travel by rail and air. The Royal Household will use this to purchase the services of the Royal Train, the Queen's Flight or commercial providers. At present, these costs are met by the Department of Transport, the Ministry of Defence or the Foreign and Commonwealth Office as part of their general expenditure. The then Prime Minister added that the grant-in-aid for property services on the Occupied Royal Palaces provides a suitable model and that an annual report on the new grant-in-aid for Royal Travel will be presented to Parliament by the Secretary of State for Transport. The 1997-98 Supply Estimates include an amount of £19,492,000 for Royal travel.
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| Fire protection |
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PAC 40th Report (93-94) HC 316, paras 57, 69
Cm 2732, para 15
| 18. In their previous report our predecessors considered the question of fire protection in the Occupied Royal Palaces in the light of the fire at Windsor Castle in November 1992. They recommended that the Department should ensure that the necessary protection measures were given a high priority to prevent further fires. In the Treasury Minute, the Department accepted these conclusions and indicated that the Royal Household had provided their first annual progress report on implementing the recommendations of the Bailey Report on "Fire Protection Measures for the Royal Palaces" in June 1994. It had shown substantial progress.
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Q 1
Q 64
| 19. Our predecessors asked when the recommendations on fire protection would be implemented. The Department stated that all but two of the recommendations of the Bailey Report had now been carried through. The first of those was the completion of automatic fire detection arrangements; St James's and Kensington Palaces and Windsor Castle were in the process of being dealt with and Buckingham Palace would be dealt with by the end of 1996; and that work was ongoing. In relation to fire compartmentation, a lot of the work had been done and all the other work was fully in hand. They expected that the main areas that needed to be compartmented would be completed during 1997.
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Q 64
Q 66
Q 68
Q 70
| 20. The Royal Household said that, if at all possible, something like fire compartmentation should be undertaken in conjunction with other work because it was not particularly sensible to dismantle a building without rewiring or replacing the pipes at the same time. They were therefore cautious about saying that everything would be done by April 1997. They assessed the risk of fire and the work to be done. If the risk was not assessed as being at all great, was in a relatively minor area and there was a programme of work coming up in the medium term, they might decide to delay compartmentation and combine it with other work. In the fire restoration area in Windsor Castle, compartmentation would be completed in early 1998 when that restoration work was done. In any other significant area, where there was any risk in main buildings, it would all be done by April 1997.
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Q 71
Q 72
| 21. Our predecessors asked the Department whether they could assure them that in some way the disciplines of the commercial market, in particular risk management techniques, were being adopted and adhered to. The Department said that the recommendations of the Bailey inquiry and the work that they and the Royal Household had described were a very firm and clear discipline in terms of what they had to do, what was being done and their targets. The Department were quite clear that the Royal Household were thoroughly aware of the problems of managing risk in such a large number of historic buildings of considerable complexity. The Department recognised that these were substitutes for the discipline which would be provided by an insurance arrangement, but for reasons of wider Government policy they adopted self-insurance. The Royal Household added that, while the buildings themselves were not insured, the contents of the Royal Collection within them were, and the buildings had been inspected by commercial insurers who, they undertstood, had been very satisfied and impressed with the fire precautions.
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| Conclusions |
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| 22. We note that the Royal Household willingly entered into a Memorandum of Understanding and Financial Memorandum which provide for very close Departmental monitoring of the grant-in-aid. We note that, following our predecessors' Report on this subject, a revised Financial Memorandum has been prepared which gives the Department full access to the Royal Household's accounts and records, and that the arrangements in the revised Memorandum are already in place. We welcome this development and the recognition that the National Audit Office have an automatic right to see all documents that the Department see.
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| 23. We note the Department's view that the arrangements for access must fall within the confines of Government policy on what is the constitutional relationship between the National Audit Office, the Department and the Royal Household. We recognise that, with the exception of some information requested on behalf of a Member of the Committee, information requested by the Comptroller and Auditor General has been readily supplied by the Department and Royal Household.
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| 24. We consider that it is always preferable for auditors to have direct access to the source of information to ensure that matters of importance have not been overlooked and so that they can test how systems of control operate on the ground and see the context in which they operate. We are disappointed to note that the Government have decided not to grant such access to the Comptroller and Auditor General in this case, since they consider that such access would be incompatible with the Royal Household's unique constitutional position. We do not agree with this view since we believe that it would be in the interests of Her Majesty the Queen, as well as Parliament, that the usual principles of direct access by the Comptroller and Auditor General to papers relating to the expenditure of money voted by Parliament should apply. We propose to return to this issue in the future.
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| 25. We note that the Government propose to invite Parliament to approve a single grant-in-aid from the Department of Transport to the Royal Household for Royal Travel, using the grant-in-aid for property services as a model; and that the expenditure concerned currently falls within general expenditure subject to audit by the Comptroller and Auditor General. We recommend that he should be given access to the papers relating to the new grant-in-aid at least as extensive as that which he has to the grant-in-aid for property services.
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| 26. We note that, of the 17 recommendations in the Bailey Report on `Fire Protection Measures for the Royal Palaces', 15 had been implemented, and that automatic fire detection would be completed in 1996. Whilst most compartmentation will be completed during 1997, we were concerned that some areas of fire compartmentation will not be completed by then. However, we recognise that it may be more cost-effective to delay the work to combine it with other projects and that decisions of this nature are based on risk assessment. We urge the Royal Household not to delay compartmentation work where there is a material risk.
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| 27. We note the Department's assurance that the Royal Household are fully aware of how to manage risk in historic buildings, that current arrangements in their view provide adequate substitutes for commercial insurance disciplines, and that insurance companies have commented favourably on fire protection arrangements. We stress again the importance of such matters in protecting valuable national assests.
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