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The Prime Minister: I am in the happy position of being able to agree with virtually everything that the right hon. Gentleman has said. He is right. If inflation were to outpace the Chancellor's forecast, we would lay further matters before the House, but I am happy to say that we do not anticipate that eventuality.

I point out, in addition to the points that the right hon. Gentleman has made, that the Queen receives about 80,000 guests a year, that there are 2 million visitors to the royal homes and palaces, and that the royal family undertakes about 3,000 engagements. That is a pretty impressive work record by any stretch of the imagination.

Mr. Charles Kennedy (Ross, Skye and Inverness, West): On behalf of my right hon. and hon. Friends, I also welcome the fact that an amicable agreement has been reached between the royal household and the Treasury, which will put things on a stable footing for a further decade and enable the royal family to fulfil their duties over that period. I congratulate the Prime Minister on the fact that, despite rather mixed headlines at the moment, he clearly has not lost his sense of humour by choosing 4 July to make the announcement.

Given that one Sunday paper has been speculating on which members of the Cabinet fall into the category of roundheads and which fall into the category of cavaliers, may I unusually declare myself, asking some specific questions on behalf of the third way, as a Jacobite?

Given that the royal household has accepted the need for on-going transparency in these matters, can the Prime Minister confirm that the civil list over the next 10 years will be fully accountable? Can he indicate what efficiency expectations, in common with every other public Department and office, the Government have factored into the equation for the settlement that has been reached? Equally, what level of inflation have the Government relied on as a projection for reaching the conclusions that they have with the royal household? Finally, what level of income does the royal purse derive from the opening of Buckingham palace to the public for a fee? It would be helpful if the Prime Minister clarified those matters and added to the bonhomie of this royal occasion.

The Prime Minister: I cannot clarify the very last point now for the right hon. Gentleman, but I shall certainly ensure that he receives that information. As for his other points, the inflation assumption is the Government's inflation target. As for the savings that will be made, the £7.9 million is itself a saving, as it represents a static cash sum and is, therefore, over the years, reducing in real value. Additionally, we expect about £25 million to be taken from other categories of public spending and transferred to the civil list as a result of the savings and surplus that have been made.

Tony Wright (Cannock Chase): Does my right hon. Friend agree that we do no service to the monarchy by not asking sensible questions about how it operates? Is it not really quite extraordinary that, under the 1972 Act,

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even when the civil list generates a huge surplus, as it clearly has now, we are not able to amend the amount downwards, but can only push it upwards? Is it not true that that applies to no other category of public expenditure? Is it really a very sensible way of proceeding?

The Prime Minister: It is correct that there is no power in the legislation to reduce the payment. On the other hand, the same thing can effectively be done both by keeping the sum static for 20 years--as it will have been by 2011--and by being able to transfer to civil list expenditure items of other public expenditure. There is a significant saving there. I think that a 55 per cent. real-terms reduction over 10 years is quite significant. I also offer my hon. Friend the suggestion that, in terms of legislation, I can think of bigger priorities.

Mr. David Davis (Haltemprice and Howden): May I commend the Prime Minister on the partial increase in financial transparency that will be achieved because of the report that he is publishing today, and congratulate the royal household on the savings that it has achieved in the past decade? However, the Prime Minister's figures for the next 10-year projection do not assume any efficiencies. One of the side effects of not changing the sum is that no relevant statutory instrument will be put before the House, and that the House will therefore not have a chance to debate or review the figures once they are in the public domain. That raises a rather important constitutional consideration.

The monarchy's ultimate constitutional function is to be the final check on the Executive. It seems a little odd, at least, that these figures are arrived at by agreement between No. 10 Downing street--or the Treasury--and the palace. Does the Prime Minister think that he could improve that process if the civil list itself, like grants in aid, were open to parliamentary scrutiny and to audit by the Comptroller and Auditor General?

The Prime Minister: I understand why the right hon. Gentleman, as Chairman of the Public Accounts Committee, raises a pretty hardy perennial in this debate. I should like, however, to explain my understanding of the history of the matter. A decision was made, I think in 1972, that the civil list, which is the expenditure most closely associated with Her Majesty, should be treated differently. I think that that was decided after a contemporary Select Committee report had indicated that that was the best way of dealing with the matter.

The right hon. Gentleman is right to say that other grant in aid expenditure and other expenditure, amounting to about £30 million, is subject to the normal rules. However, it was thought to be right and in keeping with everyone's interests that the expenditure most closely associated with the Queen should be treated differently. I think that he will agree--he perhaps acknowledged it, at least by implication, in his initial comments--that this year there is more detail about how the money is spent.

As for debating the sum in the House, it is £7.9 million. I do not know what fraction that is of overall public spending, but I think that it is 0.002 per cent. or thereabouts. Again, I think that there are probably bigger items of public spending to get our teeth into.

Mr. Dennis Skinner (Bolsover): This is a pretty big winter heating allowance. What is so special about this

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family that they qualify for £7.9 million instead of 75p? If the Prime Minister really wants to save money, the answer is to kill two birds with one stone by shipping them off to the millennium dome, where they can have a zone apiece.

The Prime Minister: Well, let me answer that in two ways. First, I know that my hon. Friend would not want to let the opportunity to talk about the 75p go without also mentioning the winter allowance, the free TV licences and the £6.5 billion of extra expenditure that the Government have made available. However, in respect of the civil list, it is also worth pointing out that the figures that I gave earlier are quite impressive--3,000 engagements undertaken on behalf of the royal family, 80,000 guests and 2 million people coming to visit. The Queen is our head of state. Whatever their views about the monarchy, most people believe that she does a very good job. She is held in great affection by the people.

Mr. William Ross (East Londonderry): I suppose that I am one of the few people in the House who are always suspicious when the leaders of the two main parties agree, even when the issue is one such as this. Will the Prime Minister tell us whether the present arrangements will last for only as long as the current monarch is on the throne? Will new arrangements be made every time a new sovereign ascends the throne? Will he also confirm that the Crown estate and the hereditary revenues of the Crown contribute upwards of £130 million to the revenues of the nation every year? Are the sums involved in that to be frozen in the future? Will any surplus that arises over the next 10 years go directly to the royal household?

The Prime Minister: In respect of the hon. Gentleman's first point, the settlement is for 10 years. I am pleased to say that the answers to potential queries that I have are based on the happy assumption of Her Majesty's continuing good health.

The hon. Gentleman asked about the surplus. Any surplus at the end of the next 10 years will be the subject of the next statement, which will be made in the year 2010. However, any such surplus can be used in a variety of ways. In particular, it can be used for special situations with regard to the royal household. It can also be used in the way that it is being used this time--to cover some other expenses from other areas of public spending. At present, I do not think that it is wise to speculate about how large that surplus might be, or what it could be used for.

Mr. Alan Williams (Swansea, West): My right hon. Friend has indicated that this money, like the money that we provide for the palaces and for royal travel, is used to support the monarchy. There can be no objection to that, but the way in which the money is monitored does raise an objection. Uniquely, the money is not audited by the Comptroller and Auditor General. It is not monitored by the Public Accounts Committee, nor by Parliament.

It is all well and good to hark back to 1972, but that was some years ago--I had been in the House only a few years at that time. We now live in days of greater transparency, and transparency about the palace money and travel money has done no harm. Would not it

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therefore be appropriate to bring this money into line and make it accountable to the National Audit Office and to the Public Accounts Committee?

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