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Select Committee on Public Accounts Minutes of Evidence



MAINTAINING THE ROYAL PALACES: UPDATED FINANCIAL INFORMATION (PAC 2000-2001/10)

Memorandum by the Comptroller and Auditor General updating his Report HC 563 Session 1999-2000

DECEMBER 2000

  1.  The National Audit Officer report on Maintaining the Royal Palaces focused on expenditure on property maintenance projects in the financial year 1998-99, and drew on the work of the Royal Household's auditors for that year. As the audited accounts of the grant-in-aid for the financial year 1999-2000 are now available, this memorandum updates the financial information given in the National Audit Office report where relevant. Amended Figures, tables and other financial details are shown, cross-referenced to the National Audit Office report.

COSTS MET FROM THE GRANT-IN-AID (FIGURE 2, PAGE 6 OR C&AG'S REPORT)


BREAKDOWN OF THE APPROXIMATE SPEND ON THE MAIN TYPES OF MAJOR MAINTENANCE (PARAGRAPH 1.5, PAGE 7)

  2.  The main types of major maintenance and the approximate spend in 1999-2000 on each were:

1999-2000
£000
1998-99
£000
Energy conservationincludes the installation of energy efficient lighting and secondary glazing 5887
Fire precautionsincludes the installation of automatic fire detection equipment, re-wiring, fire compartmentation and improved means of escape 9991,671
Health and Safetyincludes lift modernisation, removal of asbestos, and the repair and replacement of roof walkways 314450
Housingincludes the repair and refurbishment of self-contained residential accommodation[1] 723620
Offices and workshopsincludes the provision of new and refurbished office and workshop space 1,3551,304
General maintenanceincludes all other expenditure, such as re-roofing, resurfacing roads and paths, redecoration and repairs to the external fabric of buildings 3,3393,112
6,788 7,244

COMPETITIVE TENDERING (PARAGRAPH 2.11, PAGE 13)

  3.  In total, 203 contracts were let during 1999-2000, with 196 competitively tendered. The other seven were all under £10,000 in value.

SOURCES OF FUNDING SHOWN IN THE GRANT-IN-AID ACCOUNT (FIGURE 5, PAGE 15)

Figure 5

SOURCES OF FUNDING SHOWN IN THE GRANT-IN-AID ACCOUNT FOR 1999-2000

1999-2000 1998-99
£000£000 £000
The grant-in-aid from the Department 15,00015,809
The Royal Collection Trust:
net surplus from paying visitors to the precincts at Windsor Castle 2,369 3,416
Less
Retained by the Trust to repay payments made in advance in earlier years to meet fire restoration costs 850 2,331
Cost of new visitor centre at Windsor Castle 1,091 839
Contributions to 1999-2000 fire restoration costs and general maintenance 428246
Rents from residential and office accommodation 3931 2881
Interest137 189

Note:

1 In addition, employees paid from the grant-in-aid or the Civil List provided with residential accommodation in the Palaces have their salaries abated. In 1999-2000 these abatements and charges amounted to £519,000 (521,000 in 1998-99), representing savings to the graint-in-aid and the Civil List.

  Source: The Royal Household.

GRANT-IN-AID EXPENDITURE SINCE 1991-92 (FIGURE 7, PAGE 17)

Figure 7

GRANT-IN-AID EXPENDITURE SINCE 1991-92

  From 1991-92 to 1999-2000 the grant-in-aid has fallen from £29 million to £14.6 million in real terms (1998-99 prices). Exceptional expenditure from the grant-in-aid on the restoration of Windsor Castle is shown separately. In addition, almost £28 million of expenditure on the Windsor Castle restoration was funded from income collected from visitors to Buckingham Palace and Windsor Castle.


  Expenditure has been adjusted to 1998-99 prices using the GDP deflator. This retains consistency with the data shown in Comptroller and Auditor General's Report. As a result the 1999-2000 figure shown is £14.6 million, slightly below the cash figure of £15 million (Figure 2). The Royal Household does not use the GDP deflator but publishes real terms data using indices specific to those types of expenditure on which the grant-in-aid is incurred.

EXPENDITURE ON MAINTENANCE PROJECTS SINCE 1991-92 (FIGURE 8, PAGE 18)

Figure 8

EXPENDITURE ON MAINTENANCE PROJECTS SINCE 1991-92

  In real terms (1998-99 prices) expenditure on property maintenance has fallen to 35 per cent of the amount spent in 1991-92, when the Royal Household took over management of property services. The figures for maintenance projects shown above exclude the cost of the Windsor Castle restoration to allow year-on-year comparisons of maintenance costs.


  Expenditure has been adjusted to 1998-99 prices using the GDP deflator. This retains consistency with the data shown in the Comptroller and Auditor General's Report. As a result the 1999-2000 figure of £6.6 million is slightly below the cash figure of £6.8 million (Figure 2). The Royal Household does not use the GDP deflator but publishes real terms data using indices specific to those of expenditure on which the grant-in-aid is incurred.

MAINTENANCE PROJECT EXPENDITURE AGAINST BUDGET (FIGURE 9, PAGE 19)

Figure 9

MAINTENANCE PROJECT EXPENDITURE AGAINST BUDGET, 1996-97 to 1999-2000

  In each of the years 1996-97 to 1998-99 the costs of major property maintenance were between 2.0 and 4.8 per cent in excess of budgets, as a result of achieving savings in other areas. In 1999-2000 expenditure was six per cent under budget.


THE ROYAL HOUSEHOLD'S PERFORMANCE AGAINST THEIR PROJECT COST TARGETS (FIGURE 10, PAGE 20)

Figure 10
THE ROYAL HOUSEHOLD'S PERFORMANCE AGAINST THEIR PROJECT COST TARGETS

THE TARGET WAS MET OR EXCEEDED IN MOST CASES.

1994-951995-96 1996-971997-98 1998-991999-2000
Projects with a construction cost of £25,000 or more with a cost overrun of no more than:
—  70 per cent of projects to be completed within 5 per cent of the let tender amount No
(69 per cent)
Yes
(75 per cent)
Yes
(77 per cent)
Yes
(95 per cent)
Yes
(74 per cent)
Yes
(82 per cent)
—100 per cent of projects to be completed within the greater of £20,000 and 10 per cent of the let tender amount YesYesNo
(97 per cent)
No
(95 per cent)
Yes Yes

  Source: The Royal Household.

PROGRESS OF INDIVIDUAL PROJECTS (PARAGRAPH 3.17 AND APPENDIX 3, PAGE 34)

  4.  Of the two projects examined by the National Audit Office which were still ongoing at 31 March 1999, one has since been completed.

Project 6

Repairs to the external fabric of St James's Palace The project was completed on time for a total cost of £591,000.
This was 6 per cent below the tender cost.
Comptroller and Auditor General

13 December 2000



1   The net income from salary abatements and charges for employees, and rental payments from other occupants of self-contained residential accommodation, was £213,000 (£630,000 in 1998-99) offsetting some of these costs. Net income was lower in 1999-2000 principally because several apartments which have become available for commercial letting were refurbished, and the refurbishment costs were charged against rental income. Commercial rents will increase substantially in 2000-01 as a result. (Source: The Royal Household, Grant-in-aid annual report 1999-2000). Back


 
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