Her Majesty

by Robert Hardman

  The Palace of the mid-1980s was a computer-free zone and not exactly teeming with original thinkers. Indeed, some believe that the mindset had scarcely changed since the reign of Queen Victoria. ‘Prince Albert was a great force for change,’ says one who remembers the Royal Household of the 1980s, ‘but after Prince Albert had gone, it went to sleep until David Airlie became Lord Chamberlain.’

  A new arrival recalls it as follows: ‘A nice Household in tweed jackets and grey flannel trousers enjoying delicious teas and nice, set programmes; drinking copiously; having a lovely time. What it needed was more professional people. It’s always been in the nature of royal courts that you hang around, you backbite, you look for the next event in the social calendar, you shoot and you fish. But what was needed was people who did things. We’re all like dogs. Some dogs are lapdogs and like sitting around. Some dogs like chasing rabbits and rats. We needed to recruit those that were good at chasing rabbits and rats and give them the money and the set-up to do it.’

  Lord Airlie and some of the Queen’s most senior officials had a plan. If the monarchy could become more efficient, the government would give it greater control over its own financial affairs. ‘We wanted to become masters of our own destiny,’ explains Lord Airlie. Sir William Heseltine says that relations with the government paymasters were becoming more and more strained. ‘It was always going to be a running sore and none of us liked being run by the Treasury,’ he remembers. ‘More and more, the Treasury had become the masters and they were controlling everything from the stable boys’ pensions to the salary of the Lord Chamberlain.’

  Greater efficiency would also help counter the embarrassing annual headlines about royal ‘pay rises’ every time the Civil List was increased. Heseltine remembers his futile attempts to explain to the press that the Civil List was not ‘pay’ for the Queen: ‘Even from the very beginning, with all that romance about the “New Elizabethan Age”, there were always voices against the cost of monarchy and they were getting louder. Why did the Queen have to be “paid” so much? The press were always insisting that the Civil List was the Queen’s pay. As Press Secretary, I tried for years to disabuse them of the idea but it was to no avail.’

  The Civil List arrangement went back to 1760 and George III. He struck a deal whereby the government would fund the monarchy in exchange for all the profits from the Crown Estate. And back in 1984, Lord Airlie could see potential disaster. The Civil List was providing £5 million a year and it was not enough. Inflation was rampant, and if the monarchy did not get more money, it could become insolvent. But why should the government give more money to an Edwardian organisation which was still employing an army of footmen, handing out a ‘soap allowance’ and serving a sovereign routinely described as ‘the richest woman in the world’?

  ‘I didn’t want to go to the Treasury for more money until we were a tight ship because who knows what they might have said?’ says Lord Airlie. ‘So that was the catalyst for bringing in Michael Peat.’

  If Lord Airlie was the conductor, Michael Peat was the orchestra. Educated at Eton and Oxford, he came from chartered accounting aristocracy – a son of the eminently respectable firm of KPMG Peat Marwick, auditors to the Royal Household. He was no stranger to the quirks of the Palace. When Peat’s father was called in to audit the royal accounts, officials would arrange for a tablecloth and silver to be laid out in the Privy Purse Office. In those days, it was not appropriate to ask an accountant to lunch in the Household dining room. A generation later, his son was consigning that way of thinking – and eating – to the royal dustbin. At the same time, he was producing ideas which would cause apoplexy all the way from the pantry to the ballroom.

  Lord Airlie remembers the speed with which Michael Peat and his small team worked their way through the entire Royal Household – and the tension as they produced their recommendations. ‘Michael did this, believe it or not, in six months and I worked very closely with him. We’d just done the same thing at Schroders and I was very conscious that it stirs the pot. Human beings just don’t like change very much. It upsets people personally because they think they’re being got at.’

  Michael Peat duly presented a 1,383-page report containing 188 recommendations. ‘Individually, they weren’t very significant. Collectively, they were very important,’ says Lord Airlie. Within the Royal Household, they were not merely viewed as important. Some caused uproar. Most proposals were hard to argue with – the introduction of combination boilers at Buckingham Palace or the use of hydroelectricity from the Thames at Windsor. The proverbial institutional joke ‘How many people does it take to change a light bulb?’ was no laughing matter. The Palace was spending £92,000 a year on changing light bulbs. In due course, the proposals would lead to one of the most important single innovations of the entire reign: the transformation of the Royal Collection from a dusty curatorship into a self-financing, world-class assembly of great treasures employing hundreds and viewed by millions. Some plans, however, caused tension, not least the idea of portion control – fixed helpings – in the five rigorously segregated staff dining rooms. Worse still was the suggestion that those five dining rooms should merge into one. As with any big change, it’s the small details which cause the greatest pain. For many years, the Ascot Office, which had the less than onerous task of vetting those admitted to the Royal Enclosure during one week’s racing each June, had been located at St James’s Palace rather than Ascot Racecourse. Michael Peat’s conclusion that the office should vacate St James’s led to almost comic levels of resistance, much of it led by the Queen Mother.

  ‘I remember thinking “What’s all this fuss about the Ascot Office? Ascot is only one week once a year,”’ recalls a member of the Household. ‘Then I looked into it and it was a hornet’s nest. I didn’t want to go near it. These were just the sort of neuralgic issues which very traditional institutions can go nuts about. The Belgians have a saying: “Put a pebble in a man’s shoe and he ceases to ask questions about the meaning of life.” It was like that with the dining rooms and the Ascot Office. It could enter the bloodstream and no one could talk about anything else for days.’

  Another source of institutional angst was a proposal to open up the use of the Royal Box at the Royal Albert Hall. On those nights when it had no royal occupant, the box could be used by senior members of staff. Michael Peat’s recommendation that the privilege should extend to all ranks generated months of heat and fury.

  ‘If you were a footman or a clerk, that was a big difference in perks,’ says one of the modernisers. ‘But it was an open sore for years.’

  Whatever the Queen thought – and many imagine that she was entirely happy with the status quo – she could see the need for change. At the end of 1986, the Lord Chamberlain presented her with the Peat Report. ‘The Queen saw it, gave it her approval and just said: “Get on with it,”’ says Lord Airlie. ‘She was hugely supportive and I should say that Prince Philip also played an important part. He came up with all sorts of ideas and you had quite a job arguing him out of it if you didn’t think they were good ones. He challenges you!’

  Lord Airlie was adamant that there should be no job cuts, merely natural wastage. Even so, parts of the institution were appalled that their routines might have to change for the first time since Queen Victoria. In the Royal Mews, they were still wearing Victorian state livery. In the kitchens, they were still cooking with Victoria’s pans. Despite the opposition, Lord Airlie won the day. ‘He was a spectacularly good commanding officer if I could put it like that,’ says one senior official from those days. Lord Airlie admits that it was not easy. ‘They were a great bunch of people,’ he says. ‘But, on the whole, they reacted uncomfortably. I had meetings and if you want to make a criticism of me, it is that I should have held even more.’ He accepts that, even today, there are some who still resent the modernisation which he and Michael Peat brought about. ‘The important thing,’ he points out, ‘is that it changed attitudes.’ The report certainly changed one cruci
al attitude: that of the government.

  As the costs started to come down, the Treasury was impressed. These courtiers, it seemed, weren’t so bad at running their own finances after all. During the early seventies, things had got so bad that a House of Commons Select Committee had recommended the nationalisation of the Duchy of Lancaster and the Duchy of Cornwall (which, respectively, provide the private income of the Queen and the Prince of Wales) and putting the most senior members of the Royal Family on state salaries. The rest would be ‘sacked’.

  Nearly twenty years later, at the tail end of Margaret Thatcher’s tenure as Prime Minister, the Royal Household had now shown that it could be trusted to take greater control of its own money. But the Palace was still dependent on an annual Civil List handout. ‘It was pretty unsatisfactory,’ says Lord Airlie. ‘It was a period of high inflation and every year, when it was reviewed, it was “The Queen’s getting another pay increase.” We wanted to be in a position to manage the Household affairs on a much longer-term basis. You can’t plan for one year. You want to plan for much longer.’ So he went to the Treasury with a plan: if the monarchy was given a ten-year deal then, for better or worse, it would get on with it.

  It was a big risk. By 1989, the Monarchy’s Civil List allowance had crept up to more than £6 million. In 1990, Lord Airlie wanted to fix a single figure for the next decade. If inflation surged, then that fixed sum might be hopelessly inadequate in a few years’ time. If so, the Queen would have to go begging to the Treasury. The Palace’s financial credibility would be shot to pieces and the monarchy really might end up with Whitehall civil servants running the Household.

  Lord Airlie and his team were effectively gambling the financial future of the monarchy against the future rate of inflation. The sum agreed was £7.9 million, a figure based on average inflation over the previous ten years. It looked good, but Lord Airlie admits that these were nervous times.

  Parliament would need to agree the new deal. And the Labour-led Opposition might have raised hell had Mrs Thatcher not discussed it with the Labour leader, Neil Kinnock, in advance. In a rare display of unity, Thatcher and Kinnock organised an old-fashioned stitch-up. On a July afternoon in 1990, the House of Commons was given a few hours’ notice and just twenty minutes of parliamentary time to discuss the plans. Even so, there was no rejoicing in the Palace camp. ‘I have to say that I was quite concerned we hadn’t done a good enough bargain because inflation was going to go further,’ says Lord Airlie. To his eternal satisfaction, he was wrong. ‘What actually happened was inflation went down. We needed a bit of luck. It worked. It really did work!’ It worked so well, in fact, that the monarchy would not need a rise for another twenty years.

  Lord Airlie and his team had struck another deal at the same time. They were allowed to take over the maintenance of all the royal palaces. Up to this point, it had been the job of various government departments. But why should it be left to civil servants to fix a hole in the roof? Michael Peat, with his keen eye for institutional blubber, was soon trimming away. ‘We think like the housewife. She knows how to run her house,’ says Lord Airlie. ‘We knew more about these palaces than they did.’ Within six years, the success of the new property system would persuade the government to take the royal transport budget off the civil servants and give that to the Peat team, too.

  As a result, the nineties would see the overall royal bill run completely counter to the rest of the state’s expenditure. The whole royal show – including Civil List, maintenance and travel – cost £65.5 million in 1991-92. By 2000, that cost would be down to £38 million. Palace officials were wise enough not to expect any applause. They had pulled off a management triumph but the outside world was not paying any attention. Those twin issues of ‘sex and money’ were now dragging the monarchy into new and more dangerous territory. In media terms, clever stewardship of the light bulb budget was irrelevant compared to increasingly lurid stories about the younger members of the Royal Family. These, in turn, had kick-started an entirely different debate: why was the Queen not paying income tax?

  In every organisation people can usually look back to an incomprehensible event which makes everyone roll their eyes, shake their heads and go very red or very pale. All those record labels which turned down the Beatles must have had their painful post-mortems. Likewise the publishers which gave the thumbs-down to J. K. Rowling’s Harry Potter. Most of the country, the Queen included, have asked similar questions about the brains in charge of the banking sector when the collapse of Lehman Brothers took the world to the brink in 2008. In the Royal Household, the Beatles-Potter-Lehman moment is still the day, in 1987, when Prince Edward put on Tudor fancy dress and cajoled certain members of his family to take part in a televised game show.

  ‘Oh God!’ winces a former Private Secretary, eyes closed, body stiffening, as if awaiting an unpleasant injection. ‘An unmitigated disaster,’ sighs another. Such is the reaction, even today, to the words It’s a Royal Knockout.

  It was an idea born of good intentions and a myopic understanding of public opinion. Having graduated from Cambridge, Prince Edward had joined the Royal Marines only to resign before completing the infamously unpleasant basic training. It had been a bold decision to choose arguably the toughest unit in the Forces and an equally bold step to walk away from a corps whose Captain-General was his own father. Few of those who set out to become a Royal Marine succeed, a fact largely overlooked by an unsympathetic press. Undaunted, the Prince was keen to make his mark elsewhere. He decided to recreate the once-popular show It’s a Knockout, where rival teams in fancy dress have to compete in various custard-pie-style comedy capers. He would recruit his siblings as team leaders and sell the media rights to generate large sums for charity. In the process, it would show that the younger members of the Royal Family were unstuffy and happy to let their hair down in aid of good causes. Who could object?

  The Prince and Princess of Wales smelled trouble straight away and declined. But the Princess Royal and the Duke and Duchess of York signed up. Whether they genuinely thought it was a good idea or whether they were simply being sympathetic to Prince Edward after his setback with the Forces is unclear. But with a healthy royal line-up secured, there were plenty of celebrities keen to join in, too – singer Tom Jones, footballer Gary Lineker, racing driver Nigel Mansell and many more.

  In retrospect, it might seem extraordinary that neither the Queen nor her advisers found a way of quietly suffocating the project. ‘I think like all parents, she finds it quite hard to say “no” to her own children,’ says one senior official charitably. ‘We all do.’ Another says that the Prince had been ‘very sneaky’ in planning the event. ‘We all tried to stop it,’ he says, ‘but it had been organised already without the knowledge of anybody in the Household. The only person who could have stopped it was the Queen and she wasn’t prepared to do it. I bet she now wishes she had. It was a step down the slippery slope. It brought ridicule on the organisation.’

  At one level it was a genuinely well-intentioned piece of prime-time fun with celebrities pelting and dunking other celebrities during a series of harmless faux-gladiatorial contests. However, a large section of the population found it condescending. The sight of members of the Royal Family in medieval costumes cheerleading all this buffoonery was not merely incongruous but somehow inappropriate, with echoes of a latter-day Petit Trianon.

  The organisers had also made a fundamental error in their handling of the media. Exclusive rights to the action had been sold to one newspaper while the rest were left to watch it on television in an adjacent press tent. The journalists who had been barred from the big event were, therefore, somewhat underwhelmed before the thing had even started. When it was over, a weary but exhilarated Prince Edward arrived for a post-match press conference, expecting some amiable banter. He had put months of work and effort into what, after all, was a colossal exercise in charitable fundraising. Having described the occasion as ‘one of the best fun afternoons that I have ever h
ad’, he asked the journalists if they had enjoyed themselves, too. A phalanx of stony faces stared back. ‘Well thanks for sounding so bloody enthusiastic,’ he snapped. ‘Did you watch it? What did you think of it?’ Before anyone could answer, he then stormed out. Any lingering sense of goodwill towards the project left with him.

  From that point onwards, the behaviour of the younger royal generation was the subject of increasingly caustic media coverage. Anything which smacked of extravagance or questionable taste was highlighted. The Yorks’ new home at Sunninghill Park was an early example. The absence of royal mourners at the memorial service for the Lockerbie bomb victims in 1989 was held up as evidence of royal disengagement from the rest of society.

  Being a junior member of the Royal Family can be a thankless task. The trappings are there, of course, but you are destined for an ever-diminishing role as younger generations are born closer to the centre. But how wide is the orbit? At the Palace, the Green Book – the Royal Household directory – extends the Royal Family as far afield as Lady Saltoun, the widow of the Queen’s distant cousin and late Highland neighbour, Captain Alexander Ramsay of Mar. The Court Circular, however, chronicles the official activities of just sixteen members of the Royal Family, the latest addition being a future Queen, the Duchess of Cambridge. They are each supported by an office and by the national network of Lord-Lieutenants. The rest do their own thing at their own expense. The dividing line can be confusing. Prince Edward, now Earl of Wessex and seventh in line to the throne, gave up his own television production company, embraced traditional royal duties and now, with his Countess, represents the Queen all over the world. Princesses Beatrice and Eugenie, fifth and sixth in line, are of a different generation and will lead private lives. Princess Alexandra, thirty-ninth in line and falling, performs around ninety engagements a year. Peter Phillips, eleventh in line, is a full-time marketing man and performs none.