PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES:
RESPONSIBILITIES FOR ROYAL HOUSEHOLD REMUNERATION AND THE PROVISION
OF ACCOMMODATION (continued)
| THE COSTS OF MAINTAINING ACCOMMODATION
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HC 132; Evidence, p. 7
Evidence, p. 7, para 35
Q 195
| 67. The Department's responsibilities and procedures for overseeing expenditure out of the grant-in-aid were detailed in the Comptroller and Auditor General's Report on Property Services in the English Occupied Royal Palaces. The expenditure includes the costs of self-contained accommodation within the Royal Estate where these are payable by the Royal Household as landlord. The Royal Household estimate the total costs of maintaining such accommodation in the four years beginning 1 April 1991 as £4.9 million. The Royal Household expected future costs to be £485,000 in 1995-96, £701,000 in 1996-97, £808,000 in 1997-98, £853,000 in 1998-99, and £749,000 in 1999-2000.
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Evidence, p. 7, para 35
Evidence, Appendix 3, pp. 38-39
| 68. The 1993-94 expenditure included one project costing approximately £400,000 in that year, the structural repair and refurbishment of the apartment previously occupied by Princess Alice Countess of Athlone. It had been divided into three apartments of which two are occupied and the third remains a shell. The repairs to the fabric cost £655,000 and a further £283,000 was incurred fitting out the two apartments. The total cost at March 1995 was £938,000, including £883,000 for the two occupied apartments.
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| Q 12
| 69. The Department told our predecessors that the last time that the apartment had had anything really done to it was 1923. It had been uninhabited and, they were told, uninhabitable since 1981. An enormous amount of basic work to the fabric of the building had therefore been necessary. To make better use of it in terms of value for money the Royal Household were creating three apartments where there had been one. The Department said that although the cost might appear very large, the amount of work needed on a very important listed building, Kensington Palace, fully justified the cost. They had been concerned to make sure and had checked that this was being sensibly done.
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Q 12
Evidence, Appendix 1, pp. 30-36
Q 10
| 70. The Royal Household told our predecessors that the cost of refurbishment had been approximately £660 per square metre, which compared with an industry standard of around £900 per square metre. Furthermore, they stated that ultimately it should not be a cost to the tax-payer but a source of revenue in that the amount of money spent should be recouped in less than 20 years, while the work that had been done should last very much longer than that. Long-term it was not really a cost but an investment. The Department subsequently said that the amounts paid by the occupants of the two completed apartments were equivalent in total to £30,452, plus, in one case, 6 per cent of net salary for minor repairs.
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Q 104
Qs 108, 140
| 71. Our predecessors asked why the Royal Estate had allowed an apartment not to be renovated or refurbished for so long. The Royal Household said that between 1922 and 1981 the apartment would not have been refurbished because it was occupied but that they did not know why it was not refurbished between 1981 and 1991 when they took over. At that point there had been standing water in the basement and the apartment would have needed quite a lot of work doing on it, whether or not it was going to be occupied, just because it was in an important listed building. They assured our predecessors that the apartment had been the only apartment that had been in really poor condition, because it had been the only apartment on the Estate that had been uninhabited for 12 years.
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Q 19
Q 148
| 72. The Royal Household said that the average age of most of the apartments was very considerable. The work at Windsor Castle had started in 1070 and the other main buildings had been built between the 16th and 19th centuries. They were historic buildings, which were difficult to maintain. They thought and hoped that they maintained them as well as anyone and by all industry yardsticks they maintained them considerably more cost-effectively than industry standards. In doing so, they worked very closely with English Heritage and appreciated their advice and input.
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| Q 20
| 73. The Royal Household stated, that over the last four years, they had spent a lot on modernising apartments. They had in hand a programme to make sure kitchens and bathrooms were up to proper health and hygiene standards. They had had a major programme to install independent central heating rather than using large central heating systems which were much more expensive, and through this, and other measures, they had managed to achieve quite considerable energy savings.
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Qs 108-109
Q 184
| 74. The Royal Household told our predecessors that they thought they had managed the estate effectively, which was shown by the fact that the grant-in-aid had been about £24 million when they took over and their five-year plan showed it reducing to £15 million at the end of their planning horizon. In real terms that was a reduction of over half, and the properties were better maintained. They said that even though the amount of grant-in-aid had reduced, they had brought an additional £11.4 million into the programme in the first three years. The Department stated that the Royal Household's targets had been met in terms of the continuing reduction in the grant-in-aid, the progressive sharpening of the tendering process and getting pre-priced contracts which were more economical than term contracts.
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Evidence p 7, paras 33 and 34
Q 25
Q 89
| 75. In general the occupants of self-contained apartments pay for carpets, curtains and other furnishings and movable equipment. One exception is the provision from the grant-in-aid to fully furnished accommodation specifically allocated to six of the Heads of Department in the Royal Household. The Royal Household said that this arrangement had been set out in a letter from the Department of the Environment in May 1982 that listed the Heads of Department and gave the range of expenditure for furnishings and that there was a desk instruction which set out the standards including, for example, how much could be spent on a roll of wallpaper or a kitchen unit etc. The Department said that the furnishings and equipment were no longer paid for from public funds because the programme had been completed.
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Evidence p. 7, para 34
Q 92
Q 32
Q 31
| 76. These furnishing costs totalled £310,000 in the four years to 31 March 1995, for four apartments, in addition to the £283,000 spent on fitting out the accommodation for the Director of Finance at Property Services and his assistant. The Department told our predecessors that they could only extract the information on expenditure prior to 1991 at disproportionate cost. The Royal Household said that the apartments also benefit from furniture and paintings loaned by Her Majesty the Queen. They confirmed that conformance with fire regulations was a considerable factor in the costs of refurbishments of the apartments in a building like Kensington Palace. While they were not actually obliged at Kensington Palace to conform with statutory regulations, they did, in accordance with the terms of the Bailey inquiry and their own wishes, have very extensive fire precautions there, the cost of which was substantial. Several hundred thousand pounds had already been spent there on fire precautions and the programme is still on course.
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Qs 26-28
Evidence Appendix 1, pp. 30-36
Q 14
| 77. The Royal Household stated that the main reason for this provision had been that Heads of Department, who had often joined the Royal Household later in their career, had been required to occupy these apartments, possibly for only a relatively limited period of time, and it would have penalised them if they had had to make a substantial investment themselves to furnish the apartment for a relatively short period of occupation. The furnishings should last a good 15 to 20 years whilst the average tenure of office was at the moment nine years. The Department said that the change had been introduced in 1982 to ensure that as wide a range of candidates as possible could be considered for the posts.
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Evidence, p. 7 para 34
Qs 42, 190
| 78. We are concerned that, after our predecessors' first hearing, as a justification for the furnishing of the accommodation for the Directors of the Royal Household, the Department and the Royal Household told our predecessors and the previous Committee of Public Accounts that there was a requirement for the occupants of these apartments to use them to undertake official entertaining. However, at our predecesors' second hearing the Royal Household said that there was not a huge amount of official entertaining and the accommodation was not really provided for that purpose. The Marshal of the Diplomatic Corps, whose primary job was to entertain and look after the diplomatic corps in London, undertook a substantial amount of entertaining in his apartment and had spent £5,000 on it last year. But other than that, the amounts involved were not large.
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| Conclusions |
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| 79. We observe that, by March 1995, it had already cost the grant-in-aid £0.94 million to repair and refurbish the apartment previously occupied by Princess Alice Countess of Athlone. We note that this high cost was attributed to the fact that the apartment had not been refurbished since 1923 and had been uninhabited and uninhabitable since 1981. We are concerned that part of the Estate was neglected in this way. We note the Royal Household's assurance that there are no other apartments which have been similarly neglected.
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| 80. We are not convinced by the argument put forward that the costs of repairing and refurbishing this part of the estate will be recovered in 20 years. Some £900,000 was spent from 1993-94 or earlier up to 1994-95, whereas the rents, totalling £30,452 in 1994-95, plus in one case six per cent of net salary, will be recovered gradually over 20 years. It is usual when undertaking calculations of this type to use a discount factor to take acount of the cost of the interest on capital. Even without allowing for this, recovery of £900,000 over 20 years would equate to £45,000 each year.
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| 81. We recognise that the apartments in the Occupied Royal Palaces are in historic buildings and, as such, are difficult to maintain. We accept the Royal Household's assurance that they have maintained them to a reasonably modern standard, that they now have better-maintained properties and have achieved savings on the annual maintenance programme since 1991 which will allow the grant-in-aid to be reduced to £15 million by 1999-2000.
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| 82. We note that the apartments of six Heads of Department in the Royal Household have been fully furnished at public expense since 1982, and that, between April 1991 and March 1995, a cost of £310,000 was incurred, for four apartments. We are surprised that the costs prior to 1991 could only be made available at disproportionate cost. We also note that furnishings were provided through an agreement with the Department of the Environment dating back to 1982, and that no further costs will be charged to the grant-in-aid. We recognise that the main justification was that furnishings were expected to last for 15-20 years, whereas the average tenure of any postholder is about nine years. We note there is a desk instruction which sets out the standards including, for example, how much may be spent on a roll of wallpaper or a kitchen unit. We also note that the Royal Household do, in accordance with the terms of the Bailey inquiry and their own wishes, have very extensive fire precautions at Kensington Palace, the cost of which is substantial.
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