Читать книгу The Firm - Penny Junor - Страница 11

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.

By the time Michael Peat was due to return to Peat Marwick McLintock (by now renamed KPMG), in 1993, there was a great deal going on in which he was heavily involved. Fire had devastated Windsor Castle; another new department – Royal Enterprises, the trading arm of the Royal Collection – was just coming on-stream; there were plans for Royal Travel, Communications and the Historic Royal Palaces – all changes that he had recommended in his report – and he was far too busy to leave. KPMG, who had been paying him a very generous partnership share all the while, began to get restless and Peat had to make a choice: to stay at the Palace and see through what he had begun, or go back to a very lucrative number in the City and amass a fortune for his declining years. To his family’s chagrin he opted to stay, becoming Keeper of the Privy Purse, and has so far resisted all enticements to return. Indeed, in 2003 he took on the ultimate challenge and became Private Secretary to the Prince of Wales, just in time to field the fallout from the Burrell trial.

Peat is not universally liked; he is frequently described as lacking charisma, being a faceless accountant, a cold fish; but new brooms are seldom liked and it’s too easy to attach damning labels. He was effecting radical change in a cosy, hierarchical environment and interfering with working practices that no one has questioned for decades. He disturbed some well-feathered nests. No wonder he upset a few people along the way. As he has been heard to say, ‘We changed a huge amount in terms of the head; whether we changed the heart I don’t know.’ The heart was easier to change in those areas where staff were better educated, among those who come into the Palace in administrative posts – finance, press, property, private secretaries – but it was more difficult to change the heart in the domestic areas, the Mews, the Master of the Household’s department, areas where there was a very strong military background.

Educated at Eton and Oxford, Peat is tall and slim, a year younger than the Prince of Wales and two years younger than Robin Janvrin. I first met him in April 2003, shortly after his move to St James’s Palace. He was impeccably mannered, charm itself and as cool as a glacier; I was happy then to believe what people said about him. But I have changed my view; I had known and liked Mark Bolland – and Peat was making a break with the past and the methods of the past. I was probably seen as part of that and I think he was expecting hostility. He was in a new job, he had the reputation of being a ruthless accountant, and the Prince’s staff, members of which had always enjoyed a more luxurious life than their counterparts across the Mall, were extremely wary. First impressions were misleading. Peat is far from glacial and far from grand; he makes his own calls and answers his own telephone (as opposed to routing calls through his secretary, as many at his level do); he gets around London on a bicycle; and he has a real life outside the Palace with a wife, three children and a farm in Berkshire. Given what he has achieved over nearly twenty years, he is remarkably self-effacing.

During the period of his secondment, in 1991, Peat began working on new tax arrangements for the Queen. He had decided not to mention tax in his report, but, having looked at her finances from top to bottom during its preparation, he felt strongly that the Queen could and should be paying income tax. He knew it was a matter that needed careful handling; the Queen had never paid tax, but that was not a tradition that went back generations. Queen Victoria and Edward VII had both paid tax, George V and George VI had paid tax on investment revenue, and complete exemption only began at the start of the present Queen’s reign in 1952. However, the feeling in the household had always been that the Queen could not afford to pay tax and maintain her current lifestyle, given her outgoings: she was paying for her children and other members of the Royal Family, paying for the upkeep of Balmoral and there was the small matter of horseracing. There was also a fear that any change would involve time-consuming legislation.

But the tax issue was inflicting grave damage and David Airlie was in full agreement with Peat. The monarchy was coming under heavy fire from the media on a number of counts, but the underlying malaise was its expense. The Waleses were at war with one another, Prince Andrew had married Sarah Ferguson, who was proving to be too much the girl next door and had an appetite for parties and holidays, and Prince Edward had shown himself to be arrogant and petulant. People were beginning to question why the taxpayer should be paying for the Royal Family to live the life of Reilly when they were patently no better than anyone else. The Palace had always been very coy about how much the Queen was worth, and in the absence of hard information journalists speculated. She was consistently reported to be worth billions; in 1989 the American business magazine Fortune placed it at £7 billion, making her the world’s richest woman and the world’s fourth richest individual. It was wildly inaccurate, but in PR terms it didn’t matter. While the rest of the country paid tax on their comparatively meagre incomes, she was exempt; and the Prime Minister’s announcement in 1990 that her income from the Civil List was to be increased by more than 50 per cent as part of the ten-year deal simply added insult to injury.

Peat’s first challenge was to convince the household that the Queen could in fact afford to pay tax and still maintain a lifestyle commensurate with her position as sovereign, and then to convince the Treasury and the Inland Revenue that this could be done without a change in the law. Once he had Airlie’s support, neither challenge proved insurmountable; and in February 1992 he set up a small working group with representatives from both the Treasury and the Inland Revenue to work out the detail. The plan was to announce the scheme in April 1993.

On 20 November 1992, however, five months before the proposed announcement, catastrophe struck. Fire broke out at Windsor Castle, the oldest of all the royal residences and the only one that has been in continuous use since William the Conqueror selected the site for a fortress after his conquest of England in 1066. The fire began in the Private Chapel when a curtain that had accidentally been touching a spotlight for a prolonged period burst into flames. By the time the alarm was raised fire had taken a firm hold of the north-east wing and smoke was billowing from the roof. It took fifteen hours and a million and a half gallons of water to put out the blaze. Mercifully no one was injured, and thanks to the Duke of York, who hastily organized a rescue operation, most of the artwork was moved to safety, but the fire caused millions of pounds’ worth of damage to a glorious and historic building that was uninsured. Nine principal rooms and more than a hundred others over an area of nine thousand square metres were damaged or destroyed by the fire – approximately one-fifth of the castle area.

The Duke of Edinburgh was in Argentina at the time and spent hours on the telephone trying to console the Queen. She had stood watching her childhood home burn, a small, sad figure in a mackintosh with the hood pulled over her head. She was clearly distraught and the nation felt huge sympathy. But that sympathy quickly evaporated when the Heritage Secretary, Peter Brooke, announced that since the castle had been uninsured the government would foot the bill for the repairs, estimated at between £20 and £40 million. ‘When the castle stands, it is theirs,’ wrote Janet Daley in The Times. ‘But when it burns down, it is ours.’

And so, when John Major rose in the House of Commons six days after the fire and announced that from 1993 the Queen and the Prince of Wales would pay tax on their private income and that Civil List payments of £900,000 to five other members of the Royal Family would cease, it looked as though the Palace had been bounced into paying tax as a placatory measure. How the tabloids crowed.

It was very bad luck, because all they had actually been bounced into was making the announcement earlier than they had intended – and instead of gaining brownie points for having volunteered the idea, the Palace was once again caught on the back foot apparently reacting to bad publicity. In fact Airlie and Peat had not yet talked to the Queen about the detail of their proposals. She knew that they had undertaken a study into the feasibility of her paying tax but the whole business had been enormously complex and, although they had almost completed it, it was not yet entirely ready when the flames took hold.

In the end the restoration work at Windsor Castle was completed at no extra cost to the taxpayer – and in a round-about way at considerable pleasure to visiting tourists. The irony was that, having worked so hard to become masters of their own destiny, the newly formed Property Services department was landed with the awesome task of repairing the damage. It took five years to complete and turned out to be the biggest and most ambitious historic-building project to have been undertaken in this country in the twentieth century. Privately it was a nightmare. First, all the debris had to be cleared and the salvaged pieces sorted, dried out and numbered. Next the building had to be stabilized, then re-roofed. Some of the rooms were restored and reinstated as they had been before the fire to accommodate the original furnishings and works of art that had been rescued. Other areas, such as the Private Chapel where the fire had started, were so badly damaged they had to be built from scratch. Miraculously, it was completed six months ahead of schedule and came in £3 million below budget. The final cost was £37 million. To help pay for it, Michael Peat suggested opening the state rooms at Buckingham Palace to the public. This could only be done for eight weeks of the year, during the summer when the Queen was in Scotland, but it proved so popular that it paid for 70 per cent of the total cost of the work. The shortfall was met by the annual Grant-in-Aid funding by Parliament for the maintenance and upkeep of the occupied palaces. But it was a very difficult period and one on which everyone looks back in horror.