APPENDIX 4
SUPPLEMENTARY MEMORANDUM SUBMITTED BY
THE COMPTROLLER AND AUDITOR GENERAL (PAC 2000-2001/83)
You asked for a critique by the National Audit
Office of the formula used for distributing visitor income at
Buckingham Palace and Windsor Castle for funding the fire restoration
work at Windsor. I should explain as identified during the evidence
session that the visitor income at Buckingham Palace is retained
by the Royal Collection Trust. It is not subject to the formula
in question, which applies only to visitor income at Windsor Castle.
Our comments on the formula are noted below. Before the Windsor
Castle fire no charge was made for entry to the Castle precincts.
However, the Royal Collection Trust, the Privy Purse Charitable
Trust (a charitable trust within the Royal Household) and St George's
Chapel collected income from separate charges to visitors to the
State Apartments, Queen Mary's Dolls House and St George's Chapel
respectively. After the fire these arrangements were replaced
in January 1994 by a new combined charge for entry to the Castle
and its precincts initially to raise money for the restoration.
The Department (then the Department of National
Heritage), the Royal Household, the Royal Collection Trust and
St George's Chapel agreed a formula to share annually the income
from the combined entry charge, after deducting the costs of collection
and a management fee for Royal Collection Enterprises Limited
(the commercial arm of the Royal Collection Trust). The formula
compensates those bodies that previously charged separately by
allocating them a share of income from the combined charge based
on the income (net of the costs of collection) they used to receive
from their separate entrance charges. The formula is as follows:
— St George's Chapel receives a minimum
based on £720,000 agreed for 1994-95 adjusted annually by
movements in the Retail Price Index. If higher, St George's Chapel
receives 27.5 per cent of the net income remaining after deducting
the allocations to the Royal Collection Trust and the Privy Purse
Charitable Trust. This arrangement reflects the fact that St George's
Chapel is responsible for the maintenance of this proportion (some
27.5 per cent) of the precincts. While St George's Chapel may
benefit from higher visitor income under its percentage share
arrangement when this produces a more favourable result, St George's
Chapel is guaranteed the minimum figure, adjusted by inflation,
irrespective of movements in visitor income at the Castle.
— The Royal Collection Trust retains
a share based on an amount of £1.5 million agreed for 1994-95
and the Privy Purse Charitable Trust receives a share based on
an amount of £250,000 agreed for 1995-96. Both shares are
adjusted annually by movements in the Retail Price Index. In addition
these shares are adjusted (upwards or downwards) annually by the
percentage change in visitor numbers, supplied by the British
Tourist Authority, to a basket of comparable tourist attractions
in London and nearby historic properties (listed in the attached
Annex). The shares are not affected in direct proportion to movements
in visitor income at Windsor Castle, although visitor numbers
at the Castle are included in the basket of tourist attractions.
However, the combined effect of the adjustments made is to ensure
that the shares reflect both inflation and changes in tourist
numbers in general.
— The remaining balance was allocated
to fund the fire restoration and subsequently to meet costs which
would otherwise be met from the Property Services grant-in-aid.
Under the agreement reached on the formula, the grant-in-aid does
not bear any risk of paying the other shares should net income
be insufficient to do so. In such an event, the Royal Collection
Trust would be required to meet the costs involved.
The Figure below illustrates how visitor income
at Windsor Castle has been allocated under the formula for the
last three financial years.
THE OPERATION OF THE WINDSOR CASTLE VISITOR INCOME FORMULA
|
1997-98
£000
|
1998-99
£000
|
1999-2000
£000
|
| Total Visitor Income |
6,856
|
8,264
|
7,530
|
| Less cost of collection |
(1,477)
|
(1,650)
|
(1,979)
|
| Less management fee |
(127)
|
(131)
|
(137)
|
| Net Income |
5,252
|
6,483
|
5,414
|
| Allocations payable under the formula
to: |
|
|
|
| St. George's Chapel |
842
|
897
|
859
|
| The Privy Purse Charitable Trust |
263
|
281
|
281
|
| The Royal Collection Trust |
1,766
|
1,889
|
1,888
|
| Balance to fund the fire restoration,
and subsequently to meet costs which would otherwise be met
by the grant-in-aid |
2,381
|
3,416
|
2,386
|
| Total allocated |
5,252
|
6,483
|
5,414
|
The principal objective of introducing a combined charge
for entry to Windsor Castle, to raise additional revenue for the
restoration of the Castle, has been met. Each year since its introduction
a balance, after allocating the other shares, has been available
to fund the fire restoration, and subsequently to meet costs which
would otherwise be met by the grant-in-aid.
Annex
THE BASKET OF COMPARABLE TOURIST ATTRACTIONS USED IN THE
FORMULA
London
Hampton Court Palace
Kew Gardens
Madame Tussaud's
Museum of London
National Maritime Museum
St. Paul's Cathedral
Tower of London
Regional
Dover Castle
Leeds Castle
Rochester Castle
Royal Pavilion, Brighton
Stonehenge
Warwick Castle
Windsor Castle
Comptroller and Auditor General
24 February 2001
|
