Select Committee on Public Accounts Minutes of Evidence

Examination of witnesses (Questions 180 - 199)



  180. In that case could we have a note to that effect as to who sanctioned or approved the decision of the Royal Collection Trust to that effect[4]. Thank you. Mr Young, can I ask you to address Recommendation 1 in the report where it says "The Department should ensure that each year they have sufficient information to satisfy themselves about the amount available from Windsor Castle precincts receipts for property services." The implication is you have not had. Why did you stop verifying the money paid to the Royal Collection Trust? When did you stop doing so? Who was the Accounting Officer responsible at that stage?
  (Mr Young) The answer to that can be referred to on page 16, paragraph 3.6. The receipts were no longer subject to departmental audit when they ceased to be shown on the face of the departmental accounts. They ceased to be shown on the face of the departmental accounts because we decided to fix our grant-in-aid sum whatever the receipts from the Windsor precincts. That happened in 1998-99.

  181. Can you repeat that, I do not think I quite caught what you said?
  (Mr Young) The receipts are no longer shown on the face of the department's accounts because we altered the previous habit of having a net grant-in-aid. We now set out a single figure for grant-in-aid, which is £15 million, and that figure is not altered by the actual quantum of receipts from Windsor. So it is a fixed amount that we pay and, whatever they get from Windsor, the Household then add to that.

  182. I understand that.
  (Mr Young) That was the reason that we did not show them on the face of the accounts.

  183. It is not a reason, it simply tells me that is what happened. The question I asked in the first place was was there a conscious decision on the part of the department no longer to require that information? If so, why did you no longer require that information? Did you not think that it was relevant any longer?
  (Mr Young) Let us be plain. The figures are shown in the department's annual report, so they are not kept secret in any way. They just do not come into the department's accounts because our grant-in-aid is now paid out as a cash quantum not affected by the quantum of receipts. They are not secret, they are in the annual report. They were not shown on the face of the department's accounts because that was what the Treasury advised was the consequence of that different treatment. That happened in 1998-99. My predecessor was the Accounting Officer.

  184. We have got two parts of the question answered, let me keep on about the first part. We have a recommendation in an agreed report that the department should ensure that each year they have sufficient information to satisfy themselves about the amount available from Windsor Castle precincts receipts for property services. As an agreed report you agree with that recommendation?
  (Mr Young) I do and I have implemented it.

  185. Why do you agree with it, first of all?
  (Mr Young) Because it was thought better to have two audited amounts rather than one. Although I think it was acceptable and respectable to rely on one, after the NAO suggested it I was happy to agree with that recommendation and I have had the audited reports back.

  186. Therefore, when the change was made back in 1989, what was the reason, the obverse of the reason that you have now given for accepting the recommendations?
  (Mr Young) That it was reasonable to rely on the audited accounts from the Trust. That was the reason that my predecessor went for it and, I repeat, I think that was a perfectly respectable point of view. As I said in answer to the first question from the Chairman, I nevertheless accept the recommendation and we have now a separate Certified statement of account from the external auditors..

  187. Sir Michael, how do you set the rents for the 12 apartments outside the security cordon?
  (Sir Michael Peat) We use chartered surveyors who let them for us, who market them and advise us what the rent should be.

  188. How do the surveyors do that?
  (Sir Michael Peat) They are general surveyors who operate in the London letting market or the Windsor letting market.

  189. What do they do?
  (Sir Michael Peat) Like any professional they get as much rent as they can. The surveyors look at what other similar properties are being rented for and we look at that.

  190. On the basis of what?
  (Sir Michael Peat) On the basis of the size of the property, the location, the way it is fitted out. It is like when you are selling anything, when you are selling your car.

  191. When you are selling something what do you automatically do?
  (Sir Michael Peat) You try to get as much money for it as you can.

  192. Before you do that, what do you do?
  (Sir Michael Peat) Before you do that?

  193. Do you not get a valuation of it? Do you not evaluate what it might be worth?
  (Sir Michael Peat) Of course we do.

  194. Is that what your surveyors do?
  (Sir Michael Peat) Yes, absolutely.

  195. Did you not say to Mr Williams earlier on this afternoon that valuation was difficult, if not impossible, because of course these are historic Palaces and there is nothing to compare them with?
  (Sir Michael Peat) But we are not renting out bits of the historic Palaces. As you have just said, we are renting out bits outside the historic Palaces, firstly. Secondly, we do not value them for capital purposes, we value them for rental purposes. We are not selling them, we are renting them.

  196. If you value them for rental purposes then there is a basis for those 12 apartments that Mr Williams was seeking to get you to talk about earlier upon which an assessment for a tax could be made, is that not correct?
  (Sir Michael Peat) I cannot comment on tax, it is for the Inland Revenue. I have already said, what tax people pay is their own concern and the Inland Revenue's concern.

  197. Absolutely. It seems to me an extremely evasive answer.
  (Sir Michael Peat) It is not evasive in the slightest.

  198. I am not asking you to be a tax expert, what I am asking you to do, in effect, is to make an evaluation of what the accommodation that is being given for grace and favour apartments is worth so that we can all know what that is.
  (Sir Michael Peat) Yes. Of course we can value the ones outside the Palaces because, as you say, you can get the capital value as a factor of the rental value. The ones outside the Palaces are not historic buildings that have been occupied by members of the Royal Family and have huge historical connotations. To value a Palace, no-one has ever done it. To try to put a value on Buckingham Palace or No.10 Downing Street or the building here would be a hypothetical exercise.

  199. Would your estimation be that those apartments within the Palace were worth more or less or approximately the same as the 12 outside?
  (Sir Michael Peat) As was said in the report of this Committee published in 1997, with which I agreed entirely, of course they are worth more.

4   Note of Witness: See Evidence, Appendix 3, p.42 and Appendix 5, p.44-46. Back

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