The Queen will have to ask for a 150 per cent increase in the Civil List to fulfil the Palace’s intentions of keeping spending at current levels.

The total cost to the taxpayer of the monarchy rose last year by £1.5 million to £41.5 million, the Queen’s annual financial report showed. However, the Civil List, which is meant to cover roughly a third of royal expenditure — the cost of running the Royal household, including salaries — has remained fixed for two decades at £7.9 million a year.

According to an accountant who has studied the royal finances for that period, it will have to go up at the end of next year to nearly £20 million to fund current spending levels.

For the past few years the Civil List has not been sufficient for the spending areas it is meant to fund. However, that has not mattered because the Queen has built up a cash reserve to deal with such shortfalls. Last year she took out £6 million. The reserve is down to £21 million and will, on current trends, last another three years.

The Civil List is up for renegotiation at the end of 2010, when it will be fixed for another ten years. The Palace refuses to say how much it will be asking the Treasury for. A senior royal aide said: “What I am looking for is the ability to keep maintaining the head-of-state expenditure at £41.5 million in real terms, however that is achieved.”

Mike Warburton, senior tax partner at Grant Thornton, the accountants, said that the Civil List would have to go up to around £19.5 million if the Queen were to avoid substantial spending cuts. “That may seem a large jump from £7.9 million and it is above inflation, but most of the costs are wage-related and on that basis, £7.9 million in 1990 would by now have grown to about £17 million,” he said.

However, he admitted it was unlikely to be politically acceptable at a time of economic hardship. “It is a bitter pill for people to swallow,” he said.

The Civil List, which does not cover transport, security or palace maintenance, was fixed in 1990 by John Major when he was Chancellor. By making a generous settlement for a ten-year fixed term, the idea was that the Queen would put money aside in the first few years, and draw on the reserve in the last years of the cycle.

However, inflation was lower than expected and by 2000 the reserve was up to £35 million. With the agreement of the Palace, there was no increase in the Civil List that year so that the Queen could spend the next ten years drawing down the reserve.

Sir Alan Reid, the Keeper of the Privy Purse, said that overall spending was down 1.3 per cent in real terms over the last eight years.

“The money provided by the taxpayer to enable the Queen to fulfil her role is equivalent to 69 pence per person in the country,” he said. Last year’s figure was 66 pence per person.

Civil List spending, which rose by 9.4 per cent because of salary inflation and IT investment to a total of £13.9 million, included £9.9 million on salaries and pensions, £700,000 on housekeeping and furnishings and £400,000 on ceremonial functions. The catering and hospitality budget was £1.1 million, of which £600,000 went on garden parties. Grants-in-aid from the Government, which include travel and property maintenance, accounted for £22.6 million of spending.

Despite pleadings from the royals, ministers have refused to increase the £15 million grant from the Department for Culture, Media and Sport for the maintenance of Buckingham Palace and the other palaces.

This month the Commons Public Accounts Committee called on the Palace to raise more money by extending the hours that Buckingham Palace is open to the public.

The most expensive journeys were the Prince of Wales and Duchess of Cornwall’s overseas tours, which cost £1,310,669 including staff reconnaissance trips. A charter flight by the Duke of York to Egypt in May for the World Economic Forum cost £55,269.

Last week the Prince of Wales’s accounts revealed that his official funding rose 23.5 per cent to £3,033,000, mainly due to travel costs. However, he cut his personal spending by £500,000. “Travel is determined by the Government,” said a spokesman. “We are not cutting down on that — it is part of the job description of a member of the Royal Family.”

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