PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES:
RESPONSIBILITIES FOR ROYAL HOUSEHOLD REMUNERATION AND THE PROVISION
OF ACCOMMODATION (continued)
| THE SIZE AND SALARIES OF THE ROYAL HOUSEHOLD
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Evidence, p. 2, para 8
Evidence, Appendix 1, pp. 30-36, Qs 5-6
| 28. At 31 March 1995 the Royal Household expected to have 172 full-time equivalent staff funded from the grant-in-aid, at a budgeted wage and salary cost of approximately £3.0 million. The Treasury told the National Audit Office that, at 31 December 1994, the Royal Household had 296 full-time equivalent staff funded from the Civil List costing £4.4 million. In addition, 11 staff in the Central Chancery branch of the Royal Household, which deals with administration following the award of honours, are paid by the Treasury and two staff with diplomatic duties are paid by the Foreign and Commonwealth Office at an annual salary cost of £201,000 and £48,000 respectively.
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| Q 177
| 29. The Department told our predecessors that on the grant-in-aid side there had been a substantial fall in staff numbers, starting with a reduction of 28 staff in the short term after the Royal Household took over. The Royal Household said that on the Civil List side over the past few years, staff numbers have been reduced by around 10 per cent.
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PAC 40th Report (93-94) HC 316, Evidence, Appendix 3, Appendix A, p. 43, paras 6, 8
Q 2
Evidence, p. 3, para 10
| 30. Under the Memorandum of Understanding dated 14 March 1991 governing the provision of property services to the Occupied Royal Palaces, staff in the Royal Household provided for from the Grant-in-aid are members of the Queen's Household and not civil servants, and the terms and conditions of their employment are a matter for the Royal Household. However, the Department can request external inspections of numbers, grading and pay levels and their agreement has to be obtained for the appointment and remuneration of Heads of Department or Branch who control or manage the property services programme and funds. The Department informed our predecessors that the leading responsibility for remuneration and pay and grading was with the Treasury, in consultation with the Royal Household. In relation to the grant-in-aid, the Royal Household supply details to the Department each year of how many staff are employed at which salary level and discuss with the Department and obtain approvals for any changes in remuneration and grading. The Royal Household obtain the agreement of the Department on the employment, grading and remuneration of two staff at or above Grade 5.
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Evidence, p. 31, para 11
Q 9
| 31. Until April 1994 the Royal Household had a pay and grading structure with wages and salaries comparable with the civil service with the top salaries at the rate paid to second Permanent Secretaries except for one member of staff on a fixed-term contract. Following a review by the Royal Household of remuneration, including accommodation and grading, the Treasury approved a new pay and grading system for all Royal Household staff, below Grade 5 equivalent, funded from the Civil List and grant-in-aid. The Royal Household told our predecessors that, when they had assumed responsibility for property services for the Occupied Royal Palaces in 1991, they had also assumed delegated responsibility for remuneration and grading for publicly funded employees in the Royal Household. The arrangements which they had taken over were complicated and not consistent or uniform in all areas. They had been keen to sort this out and they hoped that they had done that, but there would be a transitional period in which those who had been employed under the old system continued to have terms and conditions of employment which reflected that system.
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| Q 4
| 32. Our predecessors asked the Royal Household what benefits they expected to achieve from the new remuneration arrangements. They said that the main benefit was that they now had a much simpler and clearly understood grading structure. They had reduced from around 250 to 40 grades. They had also introduced performance related pay, discontinued many non-cash benefits and sorted out the approach to accommodation.
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Evidence, p. 3, para 11
Qs 112-113
| 33. At 31 January 1995, publicly funded Royal Household employees were being paid in total around £77,000 per annum (on average 2 per cent) more than they would have been under the old contracts. The Royal Household stated that the increase reflected the introduction of performance related pay and that the cost of that was compensated by savings in other areas. They had set objectives, and had taken an enormous amount of care in introducing the system, which revolved around the annual appraisal and review of individuals' performance against their objectives.
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Q 116
Evidence, Appendix 5, pp. 40-41
| 34. The Royal Household informed our predecessors that the review of remuneration had been done in two tranches. They had addressed staff under Grade 5 first because they had delegated authority to deal with their remuneration and grading themselves. Their proposals for higher level staff, which were very similar to those for the staff below Grade 5, had been submitted to the Treasury for approval. The Department have since told our predecessors that a new performance pay regime with abatement for official accommodation had been introduced, with reserved rights for existing postholders. All the posts had been appraised and pay linked to the new paybands set by the Senior Salaries Review Board for the Senior Civil Service, agreed with the Treasury. The new pay system at this level had come into force on 1 April 1996.
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Qs 224-226
Evidence, Appendix 5, pp. 40-41
Q 183
| 35. The Department told our predecessors that the Royal Household's Director of Finance and Property Services was on a special four-year contract which included performance related pay which was not consolidated or pensionable. The Department have also stated that the Director's remuneration for 1995-96 comprised basic salary of £118,833 (over 30 per cent higher than the top of the salary range for a Second Permanent Secretary), plus a bonus of £13,200 and value attributed to free housing of £18,913 (totalling £150,946). The equivalent annual figure for 1993-94 was £140,500. The Lord Chamberlain took the lead in assessing his performance and consulted the Permanent Secretaries at the Department and the Treasury. They made the judgement in the light of the targets that had been set. The performance bonus was taken as a set of personal targets from the overall targets which were given to the Royal Household.
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| Conclusions |
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| 36. We note that, when the Royal Household assumed responsibility for property services in Occupied Royal Palaces in 1991, they also assumed delegated responsibility for remuneration for publicly funded employees in the Royal Household. We recognise that, in introducing a new system for the remuneration and grading of their staff below Civil Service Grade 5, the Royal Household have sought to streamline their arrangements and make them consistent. We note that the Royal Household have taken care in establishing a performance-related pay scheme and that the additional costs arising from this have been met by savings elsewhere in running costs. We note that a new pay system for senior staff came into force on 1 April 1996.
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| 37. We acknowledge that the Department are involved in setting the performance bonus of the Director of Property Services, and that this has been based on improvements in efficiency. We note that the Department receive details of employees' salary levels and we recommend that the Department should monitor the Royal Household's progress in applying the new contracts to all staff.
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