Examination of witnesses (Questions 180
MONDAY 18 DECEMBER 2000
BOURN, KCB, MR
YOUNG and SIR
180. In that case could we have a note to that
effect as to who sanctioned or approved the decision of the Royal
Collection Trust to that effect.
Thank you. Mr Young, can I ask you to address Recommendation 1
in the report where it says "The Department should ensure
that each year they have sufficient information to satisfy themselves
about the amount available from Windsor Castle precincts receipts
for property services." The implication is you have not had.
Why did you stop verifying the money paid to the Royal Collection
Trust? When did you stop doing so? Who was the Accounting Officer
responsible at that stage?
(Mr Young) The answer to that can be referred to on
page 16, paragraph 3.6. The receipts were no longer subject to
departmental audit when they ceased to be shown on the face of
the departmental accounts. They ceased to be shown on the face
of the departmental accounts because we decided to fix our grant-in-aid
sum whatever the receipts from the Windsor precincts. That happened
181. Can you repeat that, I do not think I quite
caught what you said?
(Mr Young) The receipts are no longer shown on the
face of the department's accounts because we altered the previous
habit of having a net grant-in-aid. We now set out a single figure
for grant-in-aid, which is £15 million, and that figure is
not altered by the actual quantum of receipts from Windsor. So
it is a fixed amount that we pay and, whatever they get from Windsor,
the Household then add to that.
182. I understand that.
(Mr Young) That was the reason that we did not show
them on the face of the accounts.
183. It is not a reason, it simply tells me
that is what happened. The question I asked in the first place
was was there a conscious decision on the part of the department
no longer to require that information? If so, why did you no longer
require that information? Did you not think that it was relevant
(Mr Young) Let us be plain. The figures are shown
in the department's annual report, so they are not kept secret
in any way. They just do not come into the department's accounts
because our grant-in-aid is now paid out as a cash quantum not
affected by the quantum of receipts. They are not secret, they
are in the annual report. They were not shown on the face of the
department's accounts because that was what the Treasury advised
was the consequence of that different treatment. That happened
in 1998-99. My predecessor was the Accounting Officer.
184. We have got two parts of the question answered,
let me keep on about the first part. We have a recommendation
in an agreed report that the department should ensure that each
year they have sufficient information to satisfy themselves about
the amount available from Windsor Castle precincts receipts for
property services. As an agreed report you agree with that recommendation?
(Mr Young) I do and I have implemented it.
185. Why do you agree with it, first of all?
(Mr Young) Because it was thought better to have two
audited amounts rather than one. Although I think it was acceptable
and respectable to rely on one, after the NAO suggested it I was
happy to agree with that recommendation and I have had the audited
186. Therefore, when the change was made back
in 1989, what was the reason, the obverse of the reason that you
have now given for accepting the recommendations?
(Mr Young) That it was reasonable to rely on the audited
accounts from the Trust. That was the reason that my predecessor
went for it and, I repeat, I think that was a perfectly respectable
point of view. As I said in answer to the first question from
the Chairman, I nevertheless accept the recommendation and we
have now a separate Certified statement of account from the external
187. Sir Michael, how do you set the rents for
the 12 apartments outside the security cordon?
(Sir Michael Peat) We use chartered surveyors who
let them for us, who market them and advise us what the rent should
188. How do the surveyors do that?
(Sir Michael Peat) They are general surveyors who
operate in the London letting market or the Windsor letting market.
189. What do they do?
(Sir Michael Peat) Like any professional they get
as much rent as they can. The surveyors look at what other similar
properties are being rented for and we look at that.
190. On the basis of what?
(Sir Michael Peat) On the basis of the size of the
property, the location, the way it is fitted out. It is like when
you are selling anything, when you are selling your car.
191. When you are selling something what do
you automatically do?
(Sir Michael Peat) You try to get as much money for
it as you can.
192. Before you do that, what do you do?
(Sir Michael Peat) Before you do that?
193. Do you not get a valuation of it? Do you
not evaluate what it might be worth?
(Sir Michael Peat) Of course we do.
194. Is that what your surveyors do?
(Sir Michael Peat) Yes, absolutely.
195. Did you not say to Mr Williams earlier
on this afternoon that valuation was difficult, if not impossible,
because of course these are historic Palaces and there is nothing
to compare them with?
(Sir Michael Peat) But we are not renting out bits
of the historic Palaces. As you have just said, we are renting
out bits outside the historic Palaces, firstly. Secondly, we do
not value them for capital purposes, we value them for rental
purposes. We are not selling them, we are renting them.
196. If you value them for rental purposes then
there is a basis for those 12 apartments that Mr Williams was
seeking to get you to talk about earlier upon which an assessment
for a tax could be made, is that not correct?
(Sir Michael Peat) I cannot comment on tax, it is
for the Inland Revenue. I have already said, what tax people pay
is their own concern and the Inland Revenue's concern.
197. Absolutely. It seems to me an extremely
(Sir Michael Peat) It is not evasive in the slightest.
198. I am not asking you to be a tax expert,
what I am asking you to do, in effect, is to make an evaluation
of what the accommodation that is being given for grace and favour
apartments is worth so that we can all know what that is.
(Sir Michael Peat) Yes. Of course we can value the
ones outside the Palaces because, as you say, you can get the
capital value as a factor of the rental value. The ones outside
the Palaces are not historic buildings that have been occupied
by members of the Royal Family and have huge historical connotations.
To value a Palace, no-one has ever done it. To try to put a value
on Buckingham Palace or No.10 Downing Street or the building here
would be a hypothetical exercise.
199. Would your estimation be that those apartments
within the Palace were worth more or less or approximately the
same as the 12 outside?
(Sir Michael Peat) As was said in the report of this
Committee published in 1997, with which I agreed entirely, of
course they are worth more.
4 Note of Witness: See Evidence, Appendix 3,
p.42 and Appendix 5, p.44-46. Back