Select Committee on Public Accounts Minutes of Evidence

Examination of witnesses (Questions 1 - 19)




  1. This afternoon we are taking evidence on the Comptroller and Auditor General's Report on Maintaining the Royal Palaces. The Report dates from 22 June 2000, so you have had plenty of time to prepare your answers, gentlemen. The witnesses are Robin Young, Permanent Secretary at the Department of Culture, Media and Sport, and Sir Michael Peat, the Keeper of the Privy Purse at the Royal Household. Welcome, gentlemen. Can I start, Sir Michael, with you. I want to start with paragraph 3.9 which tells us that some of the £11.4 million maintenance backlog which you inherited in 1991 has not been cleared. Why is this work still outstanding after that many years and how long is it going to take to clear?
  (Sir Michael Peat) It has all now been cleared. The work in question was the repairs to the external fabric of St James's Palace and there was a lot of work to do which was phased over a number of years.

  2. At this point how much was still outstanding?
  (Sir Michael Peat) There was about £600,000 worth outstanding which was cleared last year.

  3. That is all done, good. Let us move on. Paragraph 4.9 is my next question. It tells us that you do not generally carry out post-project reviews. Why do you not feel that it is necessary and have you introduced them yet? If so, what lessons have you learned?
  (Sir Michael Peat) We did carry out post-project reviews previously because they are an important part of undertaking any project, but we did not document them in a way that was useful for external reviewers and, indeed, was useful for ourselves to ensure that the lessons were learnt. I introduced the documentation process about two years ago. We have now undertaken ten which are formally documented and two more are due, one this month and one more next month. So we have now got a good rolling programme of formally documented reviews. With respect to what we have learned, we have learned that things generally are going pretty well. No major problems have been identified as a result of these reviews. Obviously perfection is never achieved, there is never any room for complacency and we do learn things and there are things that we should do better. Areas where we have learned lessons in the recent past are in terms of the design which could have been improved in one or two instances and, in particular, communication between users and those who undertake the work. It is always essential that this is clear and timely. When we run into problems, on occasions, it is often because the users of the space concerned feel that their requirements have not been adequately translated when the work is undertaken.

  4. In managing the Royal Palaces you must be one of the largest managers of historic buildings in the country. Do you have any lessons for other people about historic buildings from what you have learned in the last year or two?
  (Sir Michael Peat) Yes, I hope so. We have set up a group where we work together with other people involved in looking after historic buildings and we do try and disseminate the lessons we have learned to others. We give seminars to people at our Palaces, and they come in and we have lectures. I think you are absolutely right, Chairman, it is important that lessons are passed on. We do not know everything and we want to learn lessons from others as well and we are working on that.

  5. Can you give the Committee some practical examples of the sorts of lessons you have learned and been able to pass on?
  (Sir Michael Peat) Specifically when looking after historic buildings, I think the main thing you learn to be a bit tentative about is that you never know what you are going to find when you take up the floorboards. When people have been messing around with buildings, sometimes for a thousand years, you can get a bit of a shock and so you have to be flexible. You have to take great care that you use the right materials that match the existing materials. You have to make sure that you get the right advice. Generally the main lesson, which does not just apply to historic buildings, is that managing building projects is difficult. It is not something that is usually done well and you really do need to keep on your toes and keep your wits about you. Not a good reply I am afraid, Chairman.

  6. Regrettably, getting a shock when you lift the floorboards is not just confined to historic buildings! Let us move on to Robin Young and Figure 8. Given the significant reduction in maintenance expenditure since 1991 that you have had, can you tell us why you did not seek specific assurances from your consultants on whether reducing maintenance expenditure has had any implications for the backlog?
  (Mr Young) Because there was no evidence from the quinquennial surveys that that was the case. As you know Chairman, we have now agreed to do so. We have regular discussions with our consultant and with the Household about the rate of progress that they are making in addressing the problems thrown up by the quinquennial reviews. We believe that had there been a building up of a backlog of uncompleted maintenance work, we would know. Nevertheless, I think it is fair to point out, as the Report does, that we had not specifically asked our consultants to look at this question and we have now done so. They are going to start by looking at the last Quinquennial Review for Buckingham Palace completed in 1998 and check whether everything identified in there as necessary maintenance work has since become part of the rolling programme of work.

  7. Is it now a position of zero backlog?
  (Sir Michael Peat) Yes.

  8. So that is a good position to manage from?
  (Mr Young) Indeed, and worth checking too.

  9. My next question relates to paragraphs 3.5 and 3.6 which tell us that the Department allowed the agreements to verify the amount of money which was available from Windsor Castle precincts' receipts for property services to lapse. That is quite a big number. Why did this happen and have these arrangements now been reinstated?
  (Mr Young) They have. We allowed them to lapse because we did not think that a belt and braces were necessary. We have now agreed with the NAO's suggestion and put in belt and braces. There already were audited amounts checked and certified, by the external auditors of the Royal Collection Trust. What we have done is to ask the external auditors of the Trust to give us a separate Certified statement of the amounts. We were basing our judgment on the externally audited amounts, but we now have a separate Certified statement.

  10. I guess it is more a question of transparency than belt and braces in the sense that all of your improvements over the last few years have been great improvements in transparency and these numbers could be quite large, over £2 million.
  (Mr Young) They could. We have now had the checks for the years 1998-99 and 1999-00 and we have had those figures checked and audited.

  11. My next question relates to paragraphs 3.14 and 3.16 which tell us that the Royal Household performance targets do not take into account changes in the scope of projects or report the performance in delivering the project on time. Without this information how do you know that the annually agreed programme has been delivered?
  (Mr Young) I missed the reference.

  12. 3.14 through to 3.16.
  (Mr Young) We set the Household 15 performance indicators/figures to produce for us which together are designed to give us the necessary reassurance that we need to sign off their programmes, and they are doing very well against those targets. We think that portfolio of targets is the right one to set and correctly gives the reassurance that we need.

  13. So would you know if there was a shortfall in a given project that you have allocated money for?
  (Mr Young) Yes, we would. That would be reported to us in our quarterly returns and discussed with us by the Household.

  Chairman: Others may want to come back on that one but that strikes me as fine. Let us widen things out and go straight to Mr Alan Williams.

Mr Williams

  14. Welcome again, Sir Michael. I understand from the Report that, of course, the National Audit Office does not have access to the Royal Collection Trust finances and accounts and does not audit them. That is correct, is it not?
  (Sir Michael Peat) Yes, but it is not public money.

  15. We will see in a moment; I think you will find you are wrong. Because, of course, as the Chairman has just indicated, for some mysterious reason, by a decision of a Secretary of State, I suspect at the behest of a certain (?), the funds from the receipts from the visitors to the Palaces have been given to the Trust, which puts them outside public monitoring. That is true, is it not?
  (Sir Michael Peat) The receipts from admission to the Palaces have been received by the Sovereign since the 18th Century and the Sovereign has passed them over to a charitable trust which is subject to monitoring, like all charitable trusts, by the Charity Commissioners.

  16. By everyone but Parliament. We have had the Charity Commission before us and they did not impress us one little bit so we do not find that slightly reassuring. I want to press this a little bit further because we see from Figure 7 that in the heading to it it says, in addition, almost £28 million of expenditure on the castle has been provided by income collected from visitors to Buckingham Palace and Windsor Castle. This is the updated version of the Report[2].
  (Sir Michael Peat) Alright.

  17. That is £28 million. As I understand it, there is a formula, is there not, which decides how much of the money from the receipts goes to the Palace and how much goes to the Trust and how much goes to the Department. That is correct, is it not?
  (Sir Michael Peat) A formula for Windsor Castle receipts, not for all of them.

  18. We will come to Buckingham Palace receipts afterwards; that is another issue. Taking the Windsor receipts, if we take the year 1997-98, of the £6.8 million income from visitors to Windsor Castle, only £23 million, one-third, went to the fire restoration. If that proportion is true of the whole, if from the receipts from the visitors to the two Palaces—and remember Buckingham Palace was specifically for the fire, that is why it was opened up—if over the years £28 million has gone for fire restoration, that suggests that £56 million has been kept by the Palace via the Trust. Is that correct?
  (Sir Michael Peat) No, that is not correct.

  19. How much is it then?
  (Sir Michael Peat) The figure I recognise is £26 million and of that £26 million round about £14.5—

2   Note: See Evidence, p.2-7. Back

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