Inside Parliament: Madam Speaker rules these waves: Fate of the royal yacht prompts uproar during which sovereignty is asserted

A Labour MP's report of his conversation with the Queen over the future of the royal yacht Britannia caused uproar at Question Time yesterday and a drew a reminder from Betty Boothroyd that it was she, and not the Palace, that ruled in the Commons.

Britannia will be decommissioned in 1997 but her fate, and whether there will be a replacement, are the subject of a good deal of tactical manoeuvring in Whitehall.

Getting rid of Britannia will save the Ministry of Defence pounds 10m a year in running costs and the bill for a pounds 17m refit. If, as one Tory MP declared, Britannia is a 'floating trade ambassador', perhaps a replacement should be the responsibility of the Department of Trade and Industry - and funded, in part at least, by the private sector.

This seemed to be the sub- text of the case Jeremy Hanley, Minister of State for the Armed Forces, put before MPs. 'The crew of the Britannia is over 220, and even a Type 23 frigate now has a crew some 40 less. Therefore the costs involved have to be carefully considered.'

He agreed with Tory backbencher Nicholas Winterton who said Britannia brought 'immense status' and 'great wealth' to the UK. It was worth every penny needed for a refit or a replacement, the Macclesfield MP said. But Mr Hanley said promotional activities were a matter for the DTI. As for the Queen's travel, that was a matter for the Foreign Office.

When her decommissioning was announced last month, Britannia was in Helsinki acting as the venue for a trade seminar conducted by Michael Heseltine. The Queen is understood to believe a yacht is no longer needed for royal travel.

Perhaps it was the prospect of the President of Board of Trade strutting on the bridge or the Royal Navy using it as target for anti-ship missiles, but the Queen seems to have given a sympathetic hearing to the idea of Britannia finding a retirement berth in Hartlepool.

Peter Mandelson, the town's MP and Labour's former communications director, told MPs he had written to Malcolm Rifkind, Secretary of State for Defence, suggesting that the royal yacht receive a 'comfortable and dignified' retirement in the new maritime heritage centre and marina there.

'I have discussed this personally with Her Majesty the Queen and she has expressed her interest in this,' he said. Tory MPs howled with delight. The idea of the master spin doctor, one of the architects of Labour's red-rose image, in conversation with the monarch also amused his colleagues.

But not Miss Boothroyd, the Speaker: 'I am sure Mr Mandelson is very proud indeed, but he should not divulge conversations he has had with Her Majesty.' The MP said the Queen's private secretary had 'graciously given me permission to disclose this information. Will the Government therefore confirm that this is an option that will be considered most positively?'

To laughter, Mr Hanley replied: 'If such is Her Majesty's instruction, I can do no less.'

Miss Boothroyd exploded again, and to a loud cheer from the commoners she declared: 'It is actually the chair of this House that rules here and not Her Majesty's private secretary.'

On the eve of a Cabinet reshuffle and with their summer holidays coming up, most MPs seemed bent on end-of-term knockabout rather than policy consideration. John Major took a Question Time swipe at the three Labour leadership contenders' stance on the rail dispute, after hearing that 75,000 members of the RMT signal workers' union were eligible to vote in the contest.

Michael Bates, Tory MP for Langbaurgh, said 2 million passengers were bracing themselves for 'another day of disruption on our railways caused by the inflation-busting pay demand' of the RMT.

To Tory cries of 'Oh]' and 'Corruption]', he added that 'some 75,000 members of the RMT union pay their political levy to the Labour Party and have been eligible to vote in the leadership election'.

Mr Major, who has pressed the candidates repeatedly over the strike, said he was not aware of that. 'But certainly 75,000 is an awful lot of potential votes, and perhaps we will now get a clear condemnation of the strike now the ballot is closed.'

In her last outing as acting Labour leader - barring earthquakes - Margaret Beckett accused the Conservatives of having a 'fatal attraction' to VAT. But Mr Major could see 'no likelihood' of it being extended and could 'conceive no circumstances ever' when food would be subject to VAT.