WINNING a seven-figure tax rebate from Westminster council enabled the Queen to trim £100,000 from her household budget last year.

But the savings would have been much greater had her children not spent hundreds of thousands of pounds chartering aircraft and summoning the royal train to get themselves around.

Palace officials are particularly pleased this year to have won a four-year tax appeal, after a decision in 2000 by the valuation office at the Inland Revenue to double the rateable value of Buckingham Palace, which has to pay business rate as the monarchy’s head office, to £850,000.

Palace officials summoned expert consultants and lodged an appeal, claiming that the increase was unfair and unjustified. After four years they persuaded the valuers that the increase had been unwarranted, and recently received a rebate of more than £1 million covering four years of overpayment.

At the same time, by shopping around and putting the work out to tender, the Palace has cut by half the premiums it pays on a range of essential insurance policies covering such areas as public liability.

In the financial year to the end of March 2005 the monarchy cost the taxpayer £36.7 million, substantially less than a decade ago and the equivalent of 61 pence a year for every British citizen.

Figures issued by Buckingham Palace yesterday show that rigorous cost control brought the cost of monarchy down by 0.3 per cent compared with the previous year, a reduction of 2.3 per cent in real terms. The Palace balance sheet, however, paints only a partial picture. The cost of providing the Royal Family with security cover from police and the Armed Forces remains undisclosed, but is understood to have increased markedly since the 2001 terrorist attacks.

Royal security is funded by the Home Office and the Ministry of Defence, but does not show up as a separate item in the published accounts. Palace officials refuse to discuss it.Alan Reid, Keeper of the Privy Purse, guardian of the Queen’s money and formerly an accountant with KPMG, said yesterday that savings over the past year had not been achieved at the expense of any of the 417 staff, from himself down to the most junior footman, who work for the Queen at public expense.

Junior household grades had had an above-average pay rise in the past year, giving a footman a pay package worth £20,000, including a £13,000 basic salary, accommodation, food and free insurance, Mr Reid said.

“We are not trying to achieve the cheapest possible monarchy; our aim is a value-for-money monarchy,” Mr Reid said. At a recent conference in Copenhagen of treasurers from other European royal households the British had been envied for their efficiency, Mr Reid said.

His continental counterparts had also been surprised at the transparency of the Buckingham Palace accounts, and had taken them as an example should they be forced by their own governments to be as accountable.

The Queen’s Civil List is set every ten years, and pays for official duties as head of state; nearly three quarters of last year’s £10.6 million grant went on staff salaries. Spending on parties, catering, entertaining and housekeeping remained largely unchanged.

The only other member of the Royal Family funded by the taxpayer is the Duke of Edinburgh, who receives £400,000 a year. Much bigger is the grant from the Department of Culture, Media and Sport — currently frozen at £15 million a year — to maintain the royal palaces. With the refurbishment of York House at St James’s Palace, which the Prince of Wales used as offices before decamping to Clarence House, the only major project during the year, annual expenditure fell by £1.8 million.

Ian Davidson, Labour MP for Glasgow South-West and a former member of the Commons Public Accounts Committee, said yesterday: “I am disappointed that there is not a more substantial fall in expenditure. The previous year’s accounts included a spike because of the Jubilee celebrations. Now it looks as if they have used that spike to establish a new and higher plateau.”

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