The Firm: The Troubled Life of the House of Windsor (5 page)

It was a major undertaking which took a full year, but in 1987 Peat came up with a report that ran to 1383 pages, with no fewer than 188 recommendations for change. They were wide-ranging but fundamentally changed the working practices of every department in the Palace, from the dining arrangements to the way in which the private secretaries operated.

Michael Peat gives all the credit to David Airlie, on the grounds that identifying what was wrong was the easy bit; persuading the Queen and everyone else in the Royal Family and the household to accept it and to agree to change, was quite another matter. And, to his lasting credit, David Airlie achieved it, although he is equally modest and says that Michael Peat was the mastermind. In truth they were a formidable double act who both became extremely unpopular in the process. It was an unhappy time in the Palace with everyone uncertain about their future. One of Airlie’s stipulations was that there would be no job losses – natural wastage yes, but no one would find themselves out of a job. That was paramount because he could not put the Queen in a position where she had to sack people – they couldn’t afford bad publicity during this process – but there was a lot of uncertainty and edginess
nevertheless and a feeling that each department was the next for change. But between them they achieved what many thought was the impossible.

I can’t help thinking about A. A. Milne again and his wonderful poem, ‘The King’s Breakfast’ in which the King laments the lack of butter on his breakfast table. He isn’t a fussy man but he knows what he likes. And so he tells the Queen and the Queen tells the dairymaid who goes to tell the cow. But the cow wants to go to sleep and suggests he try marmalade on his bread instead of butter. So back goes the suggestion from the cow to the dairymaid and the dairymaid to the Queen and from the Queen to the King. But the King is forlorn and sobs and whimpers and when the news reaches the cow, via the Queen and the dairymaid, the cow relents and gives him milk as well as butter. And the King is so delighted he does a little jig.

I am not sure that the dairymaid actually attended the royal breakfast before Lord Airlie called in Peat Marwick McLintock to see how Buckingham Palace might be modernized, but the royal household was certainly overrun with flunkies – ‘Why have I got so many footmen?’ the Queen was said to have asked when she saw the report. And whether A. A. Milne knew it or not, milk and butter for the royal breakfast does come from a royal herd of Jersey cows in Windsor Great Park, delivered to the Palace each morning before dawn.

The Palace dining arrangements were definitely in need of
an overhaul and Peat and Airlie discussed them but decided this was one change too far for the immediate future. In the grand scheme of things, five tiers of dining and waiting staff in tailcoats was a mere detail compared with the other 188 problems they had earmarked for change, and they feared that coming between their colleagues and their comestibles might be the straw that broke the camel’s back.

It was a very quaint system nonetheless and one which was only changed a couple of years ago. The most senior members of the household ate in the grandest dining room; that included the Lord Chamberlain, the private secretaries, the Master of the Household, ladies-in-waiting, press secretaries, and chaplains, senior Women of the Bedchamber, the Mistress of the Robes and the Keeper of the Privy Purse. A second dining room was the province of senior officials such as the assistants to the Master of the Household, the Chief Housekeeper and the Paymaster. Then there was one for the officials – secretaries and assistants, clerks, press officers, typists and administrative personnel. Next rung down were the stewards: pages, yeomen, the Queen’s dressers and her chauffeur. And below stairs – in the basement – was the fifth and final dining room for the most junior members of the domestic staff: under-butlers, footmen, chefs, maids, porters, postmen, plumbers, gardeners, grooms and chauffeurs.

The first summer the Palace was opened to the public, the most senior of the dining rooms was given over to the summer opening administrative staff which involved some very unpopular rearrangements. The occupants of that room took over the room belonging to the next tier down, and they in turn were forced to double up with the junior staff in the basement. Some of them had never ventured into the basement and so many got lost en route that they had to put up signs to direct them. August was not a happy month.

When change finally came, in June 2003, the four dining rooms were reduced to two. The household continues to eat separately, except during the summer opening and on a few other occasions, and everyone else has a snazzy new self-service restaurant. There is also a separate room with comfortable chairs for coffee and tea which is also open to every grade of employee. Since so many work shifts and odd hours it was the only sensible solution, and in a stroke attacked the rigid hierarchy that most enlightened companies abandoned years ago.

The organizational structure Lord Airlie discovered inside Buckingham Palace when he arrived there as Lord Chamberlain in 1984 was unique. And although he implemented well over 160 of 188 recommendations for change to make it more efficient and businesslike – including the role of the Lord Chamberlain – it remains unique to this day. Nothing compares, and yet the monarchy is more of a business today than it ever was in previous reigns. In a typical company you have a chairman, a chief executive who reports to the chairman, and four or five departmental heads who report to the chief executive. All of these posts exist in the royal household, by one name or another, but in the final analysis the Queen is the one who makes the decisions about the day-to-day affairs and so the departmental heads have direct access to the Queen over the head of the Lord Chamberlain. ‘The Lord Chamberlain is a sort of hands-on chairman of a company with one shareholder’ is the way it was described to me. The departmental heads do report to him and he chairs regular meetings with them all, but he does not get involved in the detail of whether the Queen goes to New Zealand or Birmingham, who she invites to lunch or which state coach she uses for a state visit. Before Lord Airlie took up the post there was no cohesion at the top of the household, no communication and no reporting
structure, and although it is still not set in stone because of the Queen’s role in the decision-making process, it is a lot more efficient than it was before.

The names of the posts, however, are still from another era. The Lord Chamberlain is not, as the name might suggest, in charge of the Lord Chamberlain’s Office. That is the Comptroller’s job – currently held by Lieutenant Colonel Sir Malcolm Ross, a thoroughly charming old Etonian of sixty plus, who spent twenty-three years in the Scots Guards and the remainder of his career in the royal household. He is a wonderful product of the two and perfect for the job of running the ceremonial side of the monarchy, which he does except when there are ‘issues of import’ such as the Princess of Wales’s funeral to be arranged. In that event, the Lord Chamberlain swings into action and takes charge of the Lord Chamberlain’s Office, which is where you would have expected him to be in the first place.

Once he had completed the report, Lord Airlie arranged for Michael Peat to stay on at the Palace for the next three years to help him develop and implement the recommendations Peat had made. The two men had worked very closely together during the writing of the report and got on well together; Airlie’s past experience at Schroders and General Accident had taught him that it was vital for the chairman to work closely with the consultant. Airlie knew that many of Peat’s ideas would never fly and he was able to say so right away and eliminate unnecessary work. The entire thing was the art of the possible and some reforms had to be sacrificed in the interests of progressing more important ones.

Among the most important was sorting out the Civil List. This is the sum voted by Parliament to pay for the sovereign in carrying out her duties as Head of State, and for the running of the royal household. It is much misunderstood and has
caused more grief over the years to the monarchy than anything else. It is worth putting the cost into perspective. The monarchy costs £36.8 million a year to run; the Atomic Physics Particle Research Laboratory, by comparison, costs about £100 million, the Welsh fourth television channel (S4C) about £74 million a year, the British Museum about £40 million. But where the comparison falls down is that the last three are paid for by the taxpayer, and the taxpayer doesn’t actually pay for the monarchy at all. It is paid for by the revenue that comes from the Crown Estates. The taxpayer doesn’t pay a penny. After the Norman Conquest in 1066 all the lands of England belonged to William the Conqueror and he and his successors received the rent and profits from the land, which they used to finance the government. Over the years monarchs sold bits of land or gave away large estates to nobles and barons in return for military service until, by 1702 (historians must forgive me for simplifying the story), there wasn’t enough income from what remained to pay for the cost of the government (which had grown in the intervening seven hundred years) and the royal household. Parliament therefore introduced an Act to stop the Crown selling off more of its land, and took over management of the estates. When George III came to the throne in 1760 he relinquished his right to the revenue in return for a fixed annual sum of money from Parliament, which became known as the Civil List. The Crown Estate still belongs to the sovereign ‘in the right of the Crown’, which means it is not her private property, but at the beginning of each reign the new sovereign traditionally hands over the revenue from the Crown Estate to the Exchequer for his or her lifetime.

It is a huge business. The Estate owns more than 250,000 acres of agricultural land throughout England and Scotland: 7500 acres of forestry at Windsor, another 7500 at Glenlivet, more in Somerset and smaller amounts elsewhere; and it owns
Windsor Great Park – a further 5313 acres which includes Ascot Racecourse. It also has urban estates, mostly in central London – residential property in Regent’s Park, Kensington and Millbank; and commercial property in Regent Street, Victoria Street and in the City, including the site of the Royal Mint. It also owns more than half of the United Kingdom’s foreshore and almost all the seabed to a limit of twelve miles from the shore, which is used for everything from marine industries to leisure activities.

All of this is run by a Board of Commissioners which employs experts in various fields of estate management, and under the Crown Estate Act of 1961 has a duty to maintain and enhance the value of the Estate. Management fees are taken out of the revenue, but the remainder – about £150 million – goes to the Treasury. Thirty-six million pounds from that sum is paid to the Queen, and the government pockets the rest to meet general government expenditure.

Even with my limited grasp of mathematics, the Queen is not the leech we have been led to believe. She does not cost the country a brass farthing, but is actually saving the taxpayer something like £114 million. If that money wasn’t coming from the Crown Estate you can bet your boots it would come from the taxpayer, and, indeed, if the Queen went mad and splashed out on a new aircraft, or a flashy new coach and spent too much the taxpayer would have to pay more for the shortfall. Parliament decides how much money the sovereign should have, and in that respect acts like a trustee of an old family trust, which in a constitutional monarchy is just as it should be. Parliament needs to make sure the Queen isn’t more of a financial burden than she has to be, not because it has to pay for her if she is, but because the more money there is left over after paying the Civil List, the more there is for general expenditure.

When Airlie arrived the Civil List was paid and reviewed annually, and this had been the arrangement since the 1970s when inflation had started running rampant. Some years it was running in double figures and each year there were increases in the Civil List, announced in Parliament, in line with inflation. From the public relations point of view this was bad news. It looked as though the Queen was being voted a 10 or 15 per cent pay rise, which, of course, was nonsense but made a very provocative headline. In practical terms it was disastrous too; government was so heavily involved in the detail and the everyday running of the organization, checking and rechecking expenditure to the point where it was impossible to make any long-term decisions and impossible to do what they wanted to do with the money. Airlie and Peat wanted the Treasury off their backs and were determined that the royal household should be master of its own destiny.

Their plan was to get the Civil List agreed for a ten-year period and be allowed to manage the money themselves, free from government interference. The Treasury agreed in principle; the difficulty was agreeing a figure, which, even if inflation continued to rise, would not leave the household short of funds. The Treasury’s refusal to acknowledge the existence of inflation made life difficult, but they found another way. They calculated the average rate of inflation during the past ten years, which was 7.5 per cent – acceptable to the Treasury – and settled on a figure for the ten-year period from 1 January 1991 of £7.9 million. If they had taken too much money, there was a deal that the surplus would roll over into the next ten years’ allowance. The Earl of Airlie took a punt. At the time, inflation was running at 9 per cent. If it had continued to rise the household would have run out of funds before the ten years were up and caused untold damage to the monarchy. As it was, inflation went down during the nineties
and David Airlie was roundly praised for having struck such a good deal. Little did anyone know how very concerned he was that it might so easily have gone the other way.

Having stayed at the Palace on secondment from his own family firm for three years to implement the first round of changes and to work on the Civil List negotiations, Peat was persuaded to join the household for another three years to see in those changes which were announced by Margaret Thatcher in the House of Commons in 1990. For the first three years he had been called Administrative Adviser; but for the next three years, as a member of the household, he was called director of Finances and Property Services, a new title Airlie created to oversee a whole new business that was another calculated gamble.

Having established that the household had a ten-year Civil List to manage, it seemed sensible to bring the maintenance of the occupied palaces, run by yet another government department, under Palace control. And so they created a department called Property Services which covered not just the maintenance but everything involved in running the occupied royal palaces, from heating and cleaning them to mowing the lawns, training personnel and meeting fire, health and safety regulations. All of this had been farmed out many years before to the Department of the Environment (which became and is now the Department for Culture, Media and Sport) and they were spending over £20 million on the palaces. Peat and Airlie reckoned they could do it more cost-effectively themselves. It was yet another cry to be masters of their own destiny. They knew the buildings, knew what they wanted and knew whether a tap worked or not; why not take it over? And so once again they stuck their necks out. It was a mammoth undertaking, and, as they are the first to acknowledge in retrospect, quite brave. They had no expertise and, apart from the odd plumber
on the books, no manpower; and there are a lot of occupied palaces – Buckingham Palace, St James’s Palace, Clarence House and Marlborough House Mews, the residential and office areas of Kensington Palace, the Royal Mews and Royal Paddocks at Hampton Court and Windsor Castle and buildings in the Home and Great Parks at Windsor. But they pulled it off. They effectively started up a brand-new business, contracted out some of the services such as cleaning, took on staff for other jobs, employed specialists and, while reducing the amount that was spent on the palaces, nevertheless carried out a huge number of improvements and came in well under budget. It was, and still is, paid for by the Department for Culture, Media and Sport by way of Grant-in-Aid, but the savings and improved efficiency have continued. For the last five years funding has remained at £15 million – savings of around £50 million since Peat took it over in March 1991.