1 Managing the Estate
1. Since 1760 it has been customary for The Sovereign
to surrender hereditary revenues to the Exchequer in return for
funding to meet the cost of The Sovereign's official duties.[2]
In 2007-08 £211 million was surrendered and the Exchequer
funding included the £15.7 million grant-in-aid to maintain
and run the Occupied Royal Palaces. It also comprised the Civil
List (£7.9 million), a Parliamentary annuity paid to the
Duke of Edinburgh (£0.4 million), the grants-in-aid for Royal
travel (£6.4 million), communications (£0.5 million)
and other costs met directly by other Government Departments (£4.9
million).[3] Since 1998-99,
£1.7 billion in hereditary revenues has been paid over to
the Exchequer in return for funding of £376 million (Figure
1), producing a net surplus for the Exchequer of over £1.3
billion.[4]
Figure 1: Hereditary revenues surrendered to the
Exchequer and funding received from 1998-99 to 2007-08
2. The annual grant-in-aid to maintain and run the
Occupied Royal Palaces Estate (the Estate) is paid by the Department
for Culture, Media and Sport (the Department). Since 1991 day
to day responsibility for planning and managing the maintenance
of the Estate has rested with the Property Section of the Royal
Household (the Household). The Department, however, is ultimately
accountable to Parliament for maintaining, and providing services
to, the Palaces.[5]The
Occupied Royal Palaces Estate
The Estate is Buckingham Palace, Buckingham Palace
Mews and Gardens, St James's Palace (including Clarence House),
Windsor Castle and Windsor Castle Royal Mews, buildings in Windsor
Home Park, Hampton Court Mews and Paddocks, and residential areas
of Kensington Palace.
Source: Comptroller and Auditor General's Report
HC (2008-09) 14, Box 1
3. In setting the level of grant-in-aid, which has
been around £15 million since 2000-01 (a 19% reduction in
real terms over the period), the Department considers other demands
on its resources as well as opportunities for the Household to
generate income from other sources—£2.8 million in
2007-08.[6] In 2007-08,
the Household spent £11.1 million on maintaining the Estate,
after meeting running costs (such as utilities, security, fire
prevention and health and safety) of £7.4 million. The effect
of the real terms reduction in grant-in-aid, coupled with rising
utility and security costs, has been a 27% real terms fall in
maintenance expenditure since 2000-01 (Figure 2).[7]
Figure 2: Maintenance expenditure (in real terms)
from 2000-01 to 2007-08
Source: Analysis of the grant-in-aid for the maintenance
of the Occupied Royal Palaces in England Annual Report and Accounts
4. The Department has set the Household the objective
of maintaining the Estate to a standard consistent with the Household's
operational requirements, and with the royal, architectural and
historic status of the buildings.[8]
While the Department considers it has a good understanding of
the condition of the Estate and commissions consultants to advise
it, none of the key performance indicators reported by the Household
to the Department measures performance against this objective.
In addition, although the Household inspects the condition of
around 70% of the Estate annually, its assessment criteria are
not clear and are open to interpretation, and the inspections
do not result in a comprehensive analysis of the condition of
the Estate. The Household is now reviewing how other organisations
responsible for maintaining heritage assets measure and report
on condition.[9]
5. In 2001, we highlighted the risk of a backlog
building up if maintenance expenditure was reduced. The Department
assured us at the time that it would ask its consultants to check
whether a backlog was developing, but only did so in July 2008
after the Household stated in its annual report and accounts that
it had a £32 million maintenance backlog.[10]
The Household attributes the backlog to its grant-in-aid and visitor
income not increasing as expected, and its running costs increasing
by more than anticipated. In addition, some maintenance projects,
such as the repairs to the Buckingham Palace façade, have
been brought forward for health and safety reasons, resulting
in other work being deferred.[11]
6. The Department and the Household have yet to agree
criteria for assessing what should be included in backlog, assess
the practical impact of deferring work and develop a plan for
managing it. Meanwhile, repairs to buildings of national importance
have been deferred. The need for work on the Victoria and Albert
Mausoleum, which is on English Heritage's Buildings at Risk Register,
was identified 14 years ago and the Household estimates the work
would cost around £3 million. When we visited the Estate
we saw how much the condition of the Mausoleum had deteriorated.
We also saw some of the other work which needed to be carried
out, for example, in the State Rooms. Despite this, we recognise
the dedicated job the Household's front-line staff do in maintaining
the Estate given the range of challenges they face and a decreasing
grant-in-aid.[12]
7. When looking to get the best value for money from
available resources, it is important that an organisation has
a strategy for managing its assets. A good estate strategy matches
an organisation's operational needs with the property it manages,
and without a clear strategy an organisation may miss opportunities
for improving value for money. The Household, however, does not
have a strategy setting out a management plan for the Estate.[13]
2 The Hereditary revenues consist of the annual revenue
from the Crown Estate, a property portfolio worth over £7bn
that was formerly the property of The Sovereign but is now managed
by an independent organisation headed by the Crown Estate Commissioners
and accountable to Parliament. Back
3
Qq 93-102; The Crown Estate Annual Report 2008; Royal Public Finances,
Annual Reports 2007-08 Back
4
Ev 24 Back
5
C&AG's Report, para 2 Back
6
Qq 14-15, 20; C&AG's Report, paras 6-7, Figures 1-2 Back
7
Qq 20-21, 60-63; C&AG's Report, paras 12-13, Figures 4-5 Back
8
Q 8; C&AG's Report, para 2 Back
9
Qq 8, 10, 17-18, 49-51, 53, 146; C&AG's Report, paras 27,
31, 33 Back
10
Committee of Public Accounts, Eighth Report of Session 2000-01,
Maintaining the Royal Palaces, HC 77, para 5; Treasury
Minute on the Eighth Report of Session 2000-01, Maintaining
the Royal Palaces, Cm 5201; C&AG's Report, para 39 Back
11
Qq 9, 12, 103; C&AG's Report, para 37 Back
12
Qq 9, 88, 102-105, 141, 146; C&AG's Report, paras 36, 40 Back
13
Qq 32-39, 41-44; C&AG's Report, paras 16-17 Back
|
