THE Queen is seeking the first increase in the annual civil list for nearly 20 years to plug a looming £5m-a-year funding gap for the royal household.

Palace officials have told the Treasury they need the dramatic rise to the £7.9m grant because they are exhausting their cash reserves and cannot make further cuts in spending.

The demand is likely to pitch the palace into political controversy. Ministers have rejected earlier appeals for extra funds towards the upkeep of the royal palaces.

MPs will use the request to try to extract more concessions from the palace, including greater public access to royal collections, more disclosure on spending and a clampdown on perks such as grace and favour homes for long-serving retainers.

Richard Bacon, a Conservative MP and member of the public accounts committee, said: “If there is to be a quid pro quo, there must be far greater access to Buckingham Palace. The White House also has a head of state and security concerns, but is open most of the year round.”

Palace officials have opened informal talks with the Treasury, according to Whitehall sources. A Buckingham Palace official confirmed this weekend: “The civil list has been fixed for many years, but costs have gone up and we are looking for an increase.”

The £7.9m annual grant covers the cost of the official royal household, from banquets and furnishings to housemaids and footmen.

Accounts to be published tomorrow reveal the monarchy costs more than £40m a year in public funds, excluding security costs, which are thought to be about £50m per year.

Apart from the civil list, the palace receives government “grants-in-aid” for maintenance of the palaces and travel.

The Queen also draws on personal income from the Duchy of Lancaster.

The current level of the civil list was agreed by former prime minister John Major when he was chancellor of the exchequer in 1990, in what was retrospectively viewed as a generous deal.

It was later frozen by Tony Blair in 2000.

Palace officials have been dipping into a surplus accumulated in the 1990s, which peaked with a cash reserve of £35m.

Officials insist this surplus was built up by careful financial management but is now fast running out.

In 2007, the most recent year for which accounts are available, the Queen took nearly £5m from the reserve.

It is thought that she took even more last year and if she keeps on depleting the funds at the current rate they will be exhausted by mid-2012 - when she will be celebrating her diamond jubilee.

The Queen has attempted to reduce her demands on the taxpayer, recently paying from her own funds for the Princess Royal’s trip to Australia during the bush fires in February and Prince Harry’s visit to New York to help raise money for his African children's charity, Sentebale.

The Queen is not immune from the fallout from the Commons expenses scandal.

An ICM Research opinion poll released this weekend and conducted for Republic, which campaigns for an elected head of state, has found that 62% of people want details of the royal family’s public spending to be fully available.

Graham Smith, campaign manager for Republic, said: “The royal family keeps coming back for more money, but there is still scope for more cuts. Other heads of state cost a fraction of the royal family. It’s an enormously wasteful institution.”

The civil list has been paid to the monarch since George III surrendered income from the Crown Estate to the government in 1760, in exchange for a fixed annual payment from the Treasury.

The Crown Estate last year made a profit of £211m. About 70% of the civil list money goes towards salaries and pensions for staff. It also pays for official functions such as garden parties, receptions and official entertainments.

Norman Baker, the Liberal Democrat MP, said: “It’s hardly sensitive for one of the richest families in the country to be demanding millions of more pounds from the taxpayer when most people are struggling with household bills. I’m not convinced they have been prudent enough.

“If the royal family are convinced they are offering value for money, they should subject themselves to the freedom of information act like every other part of the public sector.

“Until there is that level of transparency, any rise should be resisted.”

The palace has already appealed for an extra £4m a year from the culture, media and sport department to help pay for the maintenance of the occupied palaces, including Buckingham Palace and Windsor. They say there is £32m maintenance backlog.

The public accounts committee published a report last April which said that the royal palaces provided accommodation for 171 staff and pensioners. An accountant to the privy purse, a press secretary and a Queen’s page were among staff who enjoyed grace and favour homes on the royal estate when they retired.

Many of the grace and favour homes are outside the security cordons of the royal residences.

MPs said the estate should seek more opportunities to rent out these properties commercially.

The new civil list will be effective from January 2011, but any proposed rise must be laid before parliament by July next year.

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