Civil List (Hansard, 4 July 2000)

§ The Prime Minister (Mr. Tony Blair)
With permission, Madam Speaker, I should like to make a statement on the civil list, which supports Her Majesty the Queen in carrying out her official duties as head of state.
The Civil List Act 1972 requires the royal trustees—my right hon. Friend the Chancellor of the Exchequer, the Queen's Treasurer and me—to report at least once every 10 years on the royal finances, and to make recommendations to the Government on future civil list arrangements. The current 10-year period ends later this year. We have therefore reviewed the current arrangements, and are today laying a report before the House. It proposes that the amount of the civil list should remain exactly the same over the next decade as it has over the preceding one. It also proposes that the civil list should take on some costs of the monarchy currently met from other sources.
The report sets out not only expenditure on the civil list, but expenditure on the monarchy more widely. That includes the grants in aid for the royal palaces and travel, and spending undertaken by Departments. The report records the very substantial saving of 55 per cent. in real terms over the last 10 years on spending on the monarchy generally.
The annual figure for the civil list was set by the last Government at £7.9 million in 1990. With Her Majesty the Queen's agreement, and following consultation with the Leader of the Opposition, the Government propose that the annual payment should remain at £7.9 million for the next 10-year period. By the year 2010, therefore, the cost of the Queen's civil list will have remained at exactly the same level for 20 years. In addition, there will be costs transferred from public spending in Departments which will now be met by the Queen's civil list. All in all, this represents a substantial saving as a result of lower inflation, and the efficiency of the way in which the Queen's expenses have been managed.
The principal additions to civil list expenditure will be pension contributions to be paid to the Consolidated Fund, and some of the running costs of the royal palaces which are currently funded within the property services grant-in-aid. In total, around £25 million of extra spending over the next 10 years will be transferred to civil list expenditure from other sources. By expanding the costs for which the royal household is directly responsible, we will contribute to the continuing drive for efficiency to which I know it is committed.
We are able to make this proposal for two reasons. First, as I said, the royal household has achieved substantial efficiencies in the civil list over the last decade, amounting in total to some 10 per cent. in real terms. Indeed, the actual increase in expenditure over the decade has been held below inflation. In addition, when the figure of £7.9 million was set 10 years ago, it allowed for an inflation rate of 7.5 per cent. per annum, in line with the average annual inflation of the 1980s. Inflation has turned out much lower than was allowed for. As a result of those factors, a surplus of £35 million on the civil list has accumulated, including interest of around £12 million.
Under the Civil List Act 1972, civil list provision may be increased by order, but it may not be reduced. However, the Act also provides that any surplus at the 162 end of one civil list period be carried forward to meet official expenditure in later years. This is what will now happen. We expect, nevertheless, that there will be a prudent balance at the end of the period, amounting to around one year's spending at that time. That will enable unforeseen eventualities to be met, should any arise. If they do not, the surplus will be available to fund civil list spending during the current reign from 2011 onwards.
The Queen, supported by other members of the royal family, carries out a wide range of duties on behalf of the nation as head of state. The arrangements that I have announced will provide proper support for Her Majesty in that role. They also reflect the principles that Parliament has embodied in legislation, and which I am happy to reaffirm. They support continuing improvements in efficiency by ensuring that financial and management responsibility go hand in hand; and they are in keeping with the honour and dignity of the Crown, the importance of the role carried out for the nation, and the high regard and affection in which the Queen and the royal family are held.

§ Mr. William Hague (Richmond, Yorks)
May I thank the Prime Minister for his statement and for giving me advance notice of it, and express the Opposition's support for what he has announced? We shall, of course, study the trustees' report carefully, but we remain of the view that the Civil List Act 1972 set out the best framework for the determination of civil list expenditure. We therefore support the future arrangements that he has announced. They are in line with the principles set out in the previous statement on the matter by the then Prime Minister, Baroness Thatcher.
Does the Prime Minister agree—I am sure that he does, given his statement—that the record of the past 10 years provides clear evidence that the civil list is spent wisely and that the royal household has been managed well? Is it not the case that the royal household has made the most of its resources, has been willing to adapt and has supplemented the revenue from the civil list with the prudent use of other sources of income? Does he further agree that the opening of Buckingham palace to the public, the royal family's commitment to pay income tax and the publication of an annual report on royal expenditure have demonstrated a commitment to openness and a willingness to change?
The new arrangement reflects the climate of low inflation, which the Government inherited from their predecessors. However, we—and more particularly Her Majesty the Queen and the royal family—are being asked to take on trust that it will continue. As Members on both sides of the House know, economic forecasts should always be treated with some scepticism. Does the Prime Minister therefore agree that the trustees should lay a further report if it became clear during the coming decade that inflation was significantly outpacing the Chancellor's forecast?
We on the Conservative Benches believe that the value of the service given by the Queen and her family to our country far exceeds any sum granted in the civil list. We are in no doubt of the importance of the monarchy to our national life. As Members of Parliament, we swear 163 allegiance to the Queen with pride. We hope and pray that she and her family will continue to give service to our country for many years to come.

§ The Prime Minister
I am in the happy position of being able to agree with virtually everything that the right hon. Gentleman has said. He is right. If inflation were to outpace the Chancellor's forecast, we would lay further matters before the House, but I am happy to say that we do not anticipate that eventuality.
I point out, in addition to the points that the right hon. Gentleman has made, that the Queen receives about 80,000 guests a year, that there are 2 million visitors to the royal homes and palaces, and that the royal family undertakes about 3,000 engagements. That is a pretty impressive work record by any stretch of the imagination.

§ Mr. Charles Kennedy (Ross, Skye and Inverness, West)
On behalf of my right hon. and hon. Friends, I also welcome the fact that an amicable agreement has been reached between the royal household and the Treasury, which will put things on a stable footing for a further decade and enable the royal family to fulfil their duties over that period. I congratulate the Prime Minister on the fact that, despite rather mixed headlines at the moment, he clearly has not lost his sense of humour by choosing 4 July to make the announcement.
Given that one Sunday paper has been speculating on which members of the Cabinet fall into the category of roundheads and which fall into the category of cavaliers, may I unusually declare myself, asking some specific questions on behalf of the third way, as a Jacobite?
Given that the royal household has accepted the need for on-going transparency in these matters, can the Prime Minister confirm that the civil list over the next 10 years will be fully accountable? Can he indicate what efficiency expectations, in common with every other public Department and office, the Government have factored into the equation for the settlement that has been reached? Equally, what level of inflation have the Government relied on as a projection for reaching the conclusions that they have with the royal household? Finally, what level of income does the royal purse derive from the opening of Buckingham palace to the public for a fee? It would be helpful if the Prime Minister clarified those matters and added to the bonhomie of this royal occasion.

§ The Prime Minister
I cannot clarify the very last point now for the right hon. Gentleman, but I shall certainly ensure that he receives that information. As for his other points, the inflation assumption is the Government's inflation target. As for the savings that will be made, the £7.9 million is itself a saving, as it represents a static cash sum and is, therefore, over the years, reducing in real value. Additionally, we expect about £25 million to be taken from other categories of public spending and transferred to the civil list as a result of the savings and surplus that have been made.

§ Tony Wright (Cannock Chase)
Does my right hon. Friend agree that we do no service to the monarchy by not asking sensible questions about how it operates? Is it not really quite extraordinary that, under the 1972 Act, 164 even when the civil list generates a huge surplus, as it clearly has now, we are not able to amend the amount downwards, but can only push it upwards? Is it not true that that applies to no other category of public expenditure? Is it really a very sensible way of proceeding?

§ The Prime Minister
It is correct that there is no power in the legislation to reduce the payment. On the other hand, the same thing can effectively be done both by keeping the sum static for 20 years—as it will have been by 2011—and by being able to transfer to civil list expenditure items of other public expenditure. There is a significant saving there. I think that a 55 per cent. real-terms reduction over 10 years is quite significant. I also offer my hon. Friend the suggestion that, in terms of legislation, I can think of bigger priorities.

§ Mr. David Davis (Haltemprice and Howden)
May I commend the Prime Minister on the partial increase in financial transparency that will be achieved because of the report that he is publishing today, and congratulate the royal household on the savings that it has achieved in the past decade? However, the Prime Minister's figures for the next 10-year projection do not assume any efficiencies. One of the side effects of not changing the sum is that no relevant statutory instrument will be put before the House, and that the House will therefore not have a chance to debate or review the figures once they are in the public domain. That raises a rather important constitutional consideration.
The monarchy's ultimate constitutional function is to be the final check on the Executive. It seems a little odd, at least, that these figures are arrived at by agreement between No. 10 Downing street—or the Treasury—and the palace. Does the Prime Minister think that he could improve that process if the civil list itself, like grants in aid, were open to parliamentary scrutiny and to audit by the Comptroller and Auditor General?

§ The Prime Minister
I understand why the right hon. Gentleman, as Chairman of the Public Accounts Committee, raises a pretty hardy perennial in this debate. I should like, however, to explain my understanding of the history of the matter. A decision was made, I think in 1972, that the civil list, which is the expenditure most closely associated with Her Majesty, should be treated differently. I think that that was decided after a contemporary Select Committee report had indicated that that was the best way of dealing with the matter.
The right hon. Gentleman is right to say that other grant in aid expenditure and other expenditure, amounting to about £30 million, is subject to the normal rules. However, it was thought to be right and in keeping with everyone's interests that the expenditure most closely associated with the Queen should be treated differently. I think that he will agree—he perhaps acknowledged it, at least by implication, in his initial comments—that this year there is more detail about how the money is spent.
As for debating the sum in the House, it is £7.9 million. I do not know what fraction that is of overall public spending, but I think that it is 0.002 per cent. or thereabouts. Again, I think that there are probably bigger items of public spending to get our teeth into.

§ Mr. Dennis Skinner (Bolsover)
This is a pretty big winter heating allowance. What is so special about this 165 family that they qualify for £7.9 million instead of 75p? If the Prime Minister really wants to save money, the answer is to kill two birds with one stone by shipping them off to the millennium dome, where they can have a zone apiece.

§ The Prime Minister
Well, let me answer that in two ways. First, I know that my hon. Friend would not want to let the opportunity to talk about the 75p go without also mentioning the winter allowance, the free TV licences and the £6.5 billion of extra expenditure that the Government have made available. However, in respect of the civil list, it is also worth pointing out that the figures that I gave earlier are quite impressive—3,000 engagements undertaken on behalf of the royal family, 80,000 guests and 2 million people coming to visit. The Queen is our head of state. Whatever their views about the monarchy, most people believe that she does a very good job. She is held in great affection by the people.

§ Mr. William Ross (East Londonderry)
I suppose that I am one of the few people in the House who are always suspicious when the leaders of the two main parties agree, even when the issue is one such as this. Will the Prime Minister tell us whether the present arrangements will last for only as long as the current monarch is on the throne? Will new arrangements be made every time a new sovereign ascends the throne? Will he also confirm that the Crown estate and the hereditary revenues of the Crown contribute upwards of £130 million to the revenues of the nation every year? Are the sums involved in that to be frozen in the future? Will any surplus that arises over the next 10 years go directly to the royal household?

§ The Prime Minister
In respect of the hon. Gentleman's first point, the settlement is for 10 years. I am pleased to say that the answers to potential queries that I have are based on the happy assumption of Her Majesty's continuing good health.
The hon. Gentleman asked about the surplus. Any surplus at the end of the next 10 years will be the subject of the next statement, which will be made in the year 2010. However, any such surplus can be used in a variety of ways. In particular, it can be used for special situations with regard to the royal household. It can also be used in the way that it is being used this time—to cover some other expenses from other areas of public spending. At present, I do not think that it is wise to speculate about how large that surplus might be, or what it could be used for.

§ Mr. Alan Williams (Swansea, West)
My right hon. Friend has indicated that this money, like the money that we provide for the palaces and for royal travel, is used to support the monarchy. There can be no objection to that, but the way in which the money is monitored does raise an objection. Uniquely, the money is not audited by the Comptroller and Auditor General. It is not monitored by the Public Accounts Committee, nor by Parliament.
It is all well and good to hark back to 1972, but that was some years ago—I had been in the House only a few years at that time. We now live in days of greater transparency, and transparency about the palace money and travel money has done no harm. Would not it 166 therefore be appropriate to bring this money into line and make it accountable to the National Audit Office and to the Public Accounts Committee?

§ The Prime Minister
Of course, the money is carefully overseen by the royal trustees, whose report this year gives a lot of detail about how the £7.9 million is broken down and about the various items of expense that it covers. The report also includes the numbers of employees within particular salary bands—a matter that has been raised on previous occasions. The report this year, therefore, contains a great deal more information than it normally does. Given the sum of money involved and what has been a very substantial reduction in real terms, I think that we can have every confidence that the money is being managed well and properly.

§ Sir Peter Tapsell (Louth and Horncastle)
As new Labour tends to cheapen and vulgarise almost anything that it touches, will the Prime Minister do his very best to try to protect the institution of monarchy in this country from the influences of his spin doctors?

§ The Prime Minister
I think that that institution probably suffers more from prejudiced and rather unpleasant statements such as that. Given that I delivered the statement in perfectly good faith, and that I paid tribute to Her Majesty the Queen and the work that the monarchy does, I should have expected a slightly more gracious intervention from the hon. Gentleman.

§ Mr. Gerry Steinberg (City of Durham)
Following from the question of my right hon. Friend the Member for Swansea, West (Mr. Williams), as the civil list is public expenditure, has the Prime Minister thought about allowing the National Audit Office to audit the accounts and letting the Public Accounts Committee investigate the result? That would be in line with practice on other public expenditure and would make the whole matter more accountable and, indeed, acceptable to Parliament, because people could then see that there was nothing to hide.

§ The Prime Minister
There really is nothing to hide, as one can see from the detail that is published today. A decision was taken about this at a very early stage. There has always been this question, because other expenditure is subject to scrutiny by the National Audit Office and the PAC. However, it was considered that the expenditure most closely associated with Her Majesty should be treated differently. I do not think that that is unreasonable, particularly in light of the fact that more detail has been given here today than has been provided before, and it breaks down literally every item of expenditure.
Because the vast bulk of the expenditure is on salaries, there is not a great deal to investigate other than seeing the salary levels. We have put the salary bands in the report so that people can see exactly how many people are employed, and how many are employed in each band. I am second to none in my enthusiasm for the work of the PAC, but I think that it will find that there are bigger issues to look into.

§ Mr. David Rendel (Newbury)
If, as the Prime Minister says, the civil list expenditure is that most 167 closely associated with the monarch, why are car transport costs included in the civil list, whereas air and rail transport costs are not? Why is one set of costs more closely associated with the monarch than the other?

§ The Prime Minister
It was decided at the time, back in the 1970s, to treat some of those expenses differently. Air travel and train travel costs, in particular, are incurred when heads of state go abroad and visit different countries. We can argue about the allocation of these costs and the way in which the expenditure is separated, but the actual amount set out for car costs is of a completely different order from those in relation to air and train costs. Again, because those tend to be more closely associated not with personal expenses, but with those incurred as head of state on visits, it was decided to make the allocation in that way.

§ Mr. Jeremy Corbyn (Islington, North)
Does the Prime Minister agree that his statement is rather an understatement of the amount of money that is actually spent on supporting the royal family, and that he should include all the other expenditure within that amount? Since the royal family will end this 10-year period with an even larger surplus than they have at present, is it not outrageous that they are still charging the public to visit Buckingham palace throughout the summer? At the very least, access to the royal palaces should be free. In addition, as I understand that the Cabinet has had a frank and free discussion about royal accommodation, would my right hon. Friend care to comment on the possibility of relocating the royal family to some smaller and more modest accommodation in the future?

§ The Prime Minister
No, I cannot agree with that. As for the other expenses, such as grant in aid for the upkeep of palaces, those figures are all set up and subject to National Audit Office and PAC scrutiny in the normal way. The additional costs that are now to be borne by the Queen's civil list will amount to about £2.5 million a year over that period of 10 years—that is £25 million, which is a significant amount. If we look at this overall, to have kept the Queen's civil list static, in cash terms, for 20 years is a pretty good recommendation.

§ Mr. Crispin Blunt (Reigate)
Nothing that the Prime Minister said in his statement came as a surprise. Why, even on this issue, when there is no controversy between the parties, could the Prime Minister and his advisers not resist spinning it to the newspapers and the "Today" programme first before coming to the House?

§ The Prime Minister
That is simply not the case. [HON. MEMBERS: "It is."] It is not. The timing of the statement is precisely the same as it was back in 1990.

§ Mr. Gordon Prentice (Pendle)
There are 58 royal bedrooms in Buckingham palace and no fewer than 78 royal bathrooms. Nine occupied royal palaces receive grant aid, leaving aside Sandringham and Balmoral. Given that the civil list helps to run occupied royal palaces, is there not a very real question about how many palaces the royal family needs to discharge its functions to the state?

§ The Prime Minister
Buckingham palace is, of course, a palace and there is likely to be more than one bathroom. 168 I think that I am right in saying that the palaces receive more than 2 million visitors a year, which is a significant number. I would simply point out to my hon. Friend that since 1993, all the annuities paid to members of the royal family, apart from the Queen Mother and the Duke of Edinburgh, are reimbursed by the Queen.

§ Mr. Michael Fabricant (Lichfield)
The Prime Minister rightly paid tribute to the work of the royal family. Will he join me in paying tribute to the people who work at the palace and to the considerable dedication that they show? He knows that more than 70 per cent. of the civil list is spent on salaries. Will he confirm that nothing in this settlement will result in any redundancies?

§ The Prime Minister
As far as I am aware, it will not, but obviously I do not know what plans the royal household may have. The hon. Gentleman is right to say that the vast bulk of the money is for salaries, which have to keep pace with inflation and, what is more important, with earnings in the public and private sectors as well. If he considers the figures overall, he will see that the royal family and the royal household have done a pretty extraordinary job of keeping the cost down.

§ Mr. Paul Flynn (Newport, West)
Does the Prime Minister recall our debate about the loyal oath, in which 150 Members, I believe, expressed the desire to have the choice of an alternative form of oath—to the country rather than the monarch? He will be aware that many hon. Members qualify the oath that they take. As at least a third of the population believes that we should be considering an alternative form of head of state, and a growing group of young people feel that way, why can we only discuss these matters once every decade? The debate on the monarchy and the way in which it should be modernised is happening outside this place. Should we not also debate it here?

§ The Prime Minister
The House is entitled to debate whatever it wants and the oath is, of course, a matter for the House, but I do not believe that it should be changed. On the civil list, I also believe that the fact that I, as the Prime Minister, am making a statement on £7.9 million-worth of expenditure is opening up the matter for debate considerably.

§ Mr. Norman Baker (Lewes)
I welcome the statement as far as it goes, which is probably the best that can be achieved against the background of the Civil List Act 1972. Was it not a serious misjudgment 10 years ago when the House agreed a settlement for a 10-year period with inflation built in at 7.5 per cent., which has resulted in the building up of a huge surplus? If it were allowed under that Act, should we not be recommending a cut this afternoon?
Furthermore, will the Prime Minister undertake a review of royal taxation to ensure that all members of the royal family are subject to the same tax rules as everyone in the House and in the country? Why is the Queen allowed to pay tax voluntarily rather than it being mandatory? How can the right hon. Gentleman explain to my constituents who are on income support why there are all these tax loopholes which, for example, allow the 169 monarch to avoid inheritance tax when possessions are passed from one monarch to the next? Is it not time for a review of royal taxation as well?

§ The Prime Minister
I must correct the hon. Gentleman on two points. First, the Queen pays tax voluntarily and has done so for several years, and I think that that shows the way in which the monarchy has adapted and modernised. Secondly, on inheritance tax, we are talking of sovereign-to-sovereign assets, which are inalienable assets belonging to the monarchy. It would be wrong to treat those differently from the way in which they are treated today. I think that most of the hon. Gentleman's constituents would agree that that is the case.

§ Mr. Desmond Swayne (New Forest, West)
How does the reduction in costs that the Prime Minister has announced today compare with the performance of non-executive presidencies in the rest of Europe? Will the right hon. Gentleman re-examine the question of having a royal yacht to boost our exports and inward investment, in the face of the damaging uncertainty of the Government's policy on the euro?

§ The Prime Minister
We might have known that the Tory party would find some way of getting an attack on Europe into a statement about the Queen's civil list. I do not have the faintest idea about the costs of presidencies abroad. As for a replacement for the royal yacht, I shall take that as yet another public expenditure commitment on behalf of the Conservative party.

§ Mr. Ian Bruce (South Dorset)
I am sure that the Prime Minister would agree that, without the 1972 Act, he would, in effect, be announcing a third decrease in the civil list because of the transfer of £2.5 million in a year. As the monarchy has become increasingly popular over recent years and will, no doubt, become even more popular with the reduction in cost to the Treasury, is there any lesson that the right hon. Gentleman can learn for the funding of his own office?

§ The Prime Minister
I am delighted that, as a result of the efficiencies that have been made and, of course, as a result of lower inflation, there is a 55 per cent. real-terms drop over 10 years. That is an indication not just of the efficiency itself, but of the fact that we are now going to use the surplus to incorporate another £25 million of expenditure. It is a great tribute to the way in which the monarch's civil list has been managed. That is probably the right and the most sensible thing to say.