Royal palaces face new inquiry by audit office

INVESTIGATORS from the National Audit Office, the public finance watchdog, have been ordered to look again at taxpayers' funding of the royal palaces.

The move, requested by MPs at a private session of the Commons Public Accounts Committee last week, is a setback for the Queen and officials who thought they had laid the controversy to rest.

It follows a report earlier this year by the audit office on the value for money achieved at Buckingham Palace, Kensington Palace, St James's Palace and Clarence House. That study, which was largely favourable to the Household and the Department of National Heritage, which oversees the pounds 20m a year budget, was described as a 'whitewash' by MPs.

Since then, a session of the Commons Public Accounts Committee and a series of answers to parliamentary questions from Alan Williams, MP for Swansea West, have unearthed evidence of massive expenditure at the palaces - particularly on the living accommodation for officials.

The PAC is not due to report until September but MPs have already decided to refer the matter back to the audit office. 'The PAC has asked us to follow up a few points which will be mentioned in the (committee's) forthcoming report,' a spokeswoman for the office said.

One key area for further investigation is likely to be the granting of apartments to 272 members of the Royal Household on rents of between pounds 348 and pounds 4,524 a year. Those who qualify for accommodation include the Queen's assistant press secretary, the Sub Dean of the Chapels Royal, the deputy head bookbinder at the Royal Library, the Reprographic Operator and the Messenger to the Yeomen of the Guard.

On Thursday, Iain Sproat, a Heritage minister, disclosed in an answer to Mr Williams that pounds 240,000 plus value-added tax will be spent on fitting out accommodation at Kensington Palace for Michael Peat, director of finances and property services at the palaces, and his deputy, John Tiltman. In addition, pounds 98,000 plus VAT will go on furniture and furnishings for Mr Peat's apartment.

A Buckingham Palace spokeswoman said yesterday that Mr Peat is paying rent of pounds 25,000 a year for his apartment, which comprises five bedrooms, four bathrooms, a sitting room, dining room, study, kitchen and utility room, basement room and two separate lavatories.

At their recent question and answer session with officials, the PAC was told that rents were set at a maximum of one- sixth of salary. The MPs were also informed that the highest- paid officials had salaries at about the level of second permanent secretary.

But Mr Peat's rent would give him a salary of pounds 150,000 a year - far in excess of any Whitehall second permanent secretary.

The palace spokeswoman explained that the pay/rent formula did not apply to Mr Peat. It applied only to new employees and besides, his rent was agreed separately, 'as part of his total remuneration package'.