NATIONAL AUDIT OFFICE
REPORTBY THE COMPTROLLERAND AUDITORGENERAL
PropertyServices in the English OccupiedRoyal Palaces
ORDEREDBY THEHOUSEOFCOMMONS TO BEPRINTED 17JANUARY1994
LONDON:HMSO f8.95 NET 132 PROPERTY SERVICES E-4 THE ENGLISH OCCUPIED ROYAL PALACES
This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act.
John Bourn National Audit Office Comptroller and Auditor General 7 January 1994
The Comptroller and Auditor General is the head of the National Audit Office employing sane 800 staff. He, and the NAO, are totally independent of Government.He certifies the accountsof all Government departments anda tide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Contents
Page
Summary and conclusions 1
Part 1: Background 8
Part 2: The Department’s Financial Controls and Procedures 13
Part 3: The Royal Household’s Works Programme 20
Part 4: Fire Protection 27
Appendices
1. The Provision of Property Services to the Occupied Royal Palaces 35
2. External Auditors’ letter of Appointment - Extracts 41
3. Suggested Framework for Monitoring Projects and Works Tasks 45
4: Government Policy on Insurance 51 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Summary and conclusions
Paragraphs 1.1-1.3 I The Government have been responsible for the upkeep of the English Royal Palaces since the mid 19th century. In April 1991 the Royal Household took over the management of the property services in the Occupied Royal Palaces, a development which the Government expected would achieve better value for money. For this work, the Royal Household are funded by a grant-in-aid from the responsible Department, originally the Department of the Environment and from April 1992 the Department of National Heritage (the Department).
Figure 1 and Box 1 2 The Royal Household spend around 70 per cent of the grant-in-aid on improving and maintaining around 100 buildings and other structures on the estate. This is a major undertaking given the size and historical importance of the buildings concerned, which include Buckingham Palace and Windsor Castle. The remainder pays for staff and services such as fuel, telecommunications, grounds maintenance and fire protection.
Paragraphs 3 The grant-in-aid was set to fall substantially in real terms over the six years from 1.8-1.10 1992-93. But on 20 November 1992 a fire at Windsor Castle caused damage which will cost some E30-40 million to salvage and restore. Whilst the Government are committed to pay for the restoration work, in April 1993 the Royal Household offered to fund around 80 per cent ofthe costs by charging the public for admission to Windsor Castle and Buckingham Palace and by savings elsewhere in the property services programme, an offer accepted and welcomed by the Government. The grant-in-aid will in addition still fall by 11 per cent in 1993-94.
Paragraphs 4 Under the Memorandum of Understanding and Financial Memorandum which 1.4-1.7, Appendix specify the arrangements for management of property services by the Royal 1 and Box 4 Household, the Department’s Accounting Officer is responsible for the annual grant-in-aid to the Royal Household and for satisfying himself that appropriate financial and other management controls are applied by the Department and the Royal Household. Whilst the Financial Memorandum does not specify that the Department have access to the Royal Household’s internal processes or documents, the Royal Household have provided papers or information on request and have stated that they would be content for the Department to have access. The Department intend to amend the Financial Memorandum to specify that any reasonable request for access will be met. The National Audit Office have access to information provided by the Royal Household to the Department to enable them to discharge their responsibilities. But they du nut have access LU the Royal Household’s internal processes or documents, except where the latter are provided to the Department. The Department and the National Audit Office, prior to April 1991, had access to information relating to property services when these were managed within Central Government.
Paragraphs 5 The National Audit Office examined the Department’s arrangements for funding 1.12-1.14 property services in the Occupied Royal Palaces and securing propriety and value for money, with particular reference to:
. the Department’s financial controls and procedures (Part 2);
1 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
. the evidence available to the Department as regards provision by the Royal Household of works services (Part 3); and
. the Department’s oversight of the Royal Household’s fire protection arrangements and actions in relation to the fire at Windsor Castle and insurance (Part 4).
The main findings were as follows.
The Department’s 6 The Department have established a comprehensive framework for controlling the financial controls grant-in-aid and securing the accountability of the Royal Household. The main and procedures features are summarised below. Paragraphs 2.2-2.9
Paragraphs (4 From the evidence available to them, the Department have formed a high 2.10-2.15 opinion of the Royal Household’s management abilities and have delegated considerable responsibility to them, whilst retaining responsibility for certain major decisions.
Paragraphs 2.3, [bl The Department receive and examine a regular supply of financial and other 2.6, 2.15-2.24 information relating to future and current years. The Royal Household’s annual report contains a very detailed account of financial matters and efforts being made by the Royal Household to improve value for money.
Paragraphs (cl The assurances provided by the external auditors of the grant-in-aid, 2.20-2.21 including reports on aspects of financial management, form a key element in securing the accountability of the Royal Household.
Paragraphs 2.15, Id) The Department and the Royal Household’s external auditors have 2.20-2.22 periodically reviewed the documentation of the Royal Household’s financial procedures and reviews of their operation by the Royal Household’s internal auditors. The procedures appear generally satisfactory.
Paragraphs (e) The Royal Household, on assuming responsibility for the Occupied Royal 2.25-2.29 Palaces in 1991, had much work to do in developing control and monitoring systems and accounting and management information systems from scratch. Evidence available to the Department shows that the Royal Household have streamlined procedures and taken various initiatives to obtain better value for money, resulting in reported reductions in expenditure in specific areas. The Royal Household’s 1992-93 annual report listed 72 procedural improvements in the first two years of the grant-in-aid.
Paragraph 3.19 0-l Further, the Royal Household have stated that projects costing fl1.4 million had been undertaken during 1991-92 and 1992-93 in addition to those originally planned. This suggests substantially improved efficiency.
7 The National Audit Office concluded that the Department had established satisfactory general arrangements for monitoring the grant-in-aid and that significant improvements had been achieved in the first two years. Observations arising from their examination included the following:
2 ‘\ PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Paragraphs 2.7-2.8 (a) The estimated value of the Royal Household’s creditors at the end of 1992-93 was around f1.9 million higher than at the start of the financial year. The Royal Household explained that this was because of the large volume of work in the last quarter of the year, interim payments for some of which had been deliberately scheduled for 1993-94. The Department accepted that scheduling payments in this way enabled financial savings to be made and important work to be accelerated. From information provided by the Royal Household and their external auditors they concluded that the increase in creditors in no way breached Government Accounting rules on delaying payments to avoid an overspend.
Paragraph 2.9 (II) Between April and August 1993 the Department clarified their understanding of whether specific items of expenditure, amounting to one per cent of the grant-in-aid, were proper to the grant-in-aid rather than other sources. With one exception, which is to be transferred from the grant-in-aid, the Department concluded that funding these items from the grant-in-aid accorded with the Memorandum of Understanding as interpreted by custom and practice.
Paragraphs (c) The Department accept that a review of the Financial Memorandum is 2.13-2.14 needed: some changes to it have been agreed in advance.
Paragraphs (d) The Department’s review of the Royal Household’s annual report was delayed 2.16-2.20 in 1991-92 but proceeded more quickly in 1992-93. The annual reports included performance indicators, devised by the Royal Household and agreed by the Department, to facilitate assessments of value for money. When the Royal Household assumed responsibility for property services there were no performance indicators. They set five, with targets, for X991-92 and nine more for 1992-93, with targets for these nine taking effect from 1993-94. The performance indicators generally form a realistic measure of the degree to which primary objectives of economy and quality are fulfilled. In response to a National Audit Office suggestion that a measure of the extent of the maintenance task to be undertaken and any backlog would be useful, the Royal Household explained that the former was fully identified in the rolling programme proposed in the plans submitted to the Department and that, except for projects already included in the current five year programme, there was now no maintenance backlog.
Paragraph 2.23 (e) Until August 1993 the Department did not receive and review all Internal Audit reports, relying instead on External Audit’s review.
The provision of 8 Works expenditure accounts for over 70 per cent of the grant-in-aid. The National works services Audit Office reviewed the Department’s control arrangements against a framework Paragraphs of criteria to test whether the Department adequately satisfy themselves regarding 3.2-3.3, 3.9, 3.23 the Royal Household’s arrangements for managing the works programme. The National Audit Office recognised that the extent of detailed monitoring appropriate was a matter of balance and judgement having regard to a variety of factors. Generally the Department’s procedures were satisfactory, given their perception of the quality of the Royal Household’s key staff and their management but there was scope for improvement. The Department have been closely involved in the appointment of senior staff.
3 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Paragraphs 3.4-3.5 9 Objectives and standards - The Royal Household have detailed management objectives and targets for the provision of works services. Performance indicators have been established. There are standards for refurbishment of residential and office accommodation and for conservation but the Department believe that it is not practicable to specify standards for the whole estate.
Paragraphs 2.27, 10 Organisation and staffing In taking over responsibilities for managing works 2.29, 3.6-3.10 services, the Royal Household have achieved substantial savings in staff costs. In some cases this has been done by bringing in-house functions representing five per cent of total expenditure previously performed under contract, for example telephone operators, the fire patrol service and some maintenance functions. The Department asked for details of these changes and accepted that they were unavoidable or represented the most cost-effective option. Given the large savings achieved, the Department have not yet sought to examine in detail the Royal Household’s arrangements for monitoring productivity.
Paragraphs 11 Plans, budgets and Departmental monitoring The Department are satisfied that 3.21-3.23 the Royal Household’s works programme is systematically assembled and generally rely on the Royal Household’s judgement as to its content. Whilst the individual projects are not explicitly prioritised, the Department seek further details where they see fit and there is evidence that they can make some assessment of priority. The Department have not specified how information which the Royal Household provide to enable them to monitor expenditure against budget should be presented. The Royal Household have provided comprehensive and detailed information. During the first two years this was complex and time-consuming for the Department to monitor. But this has been rectified, particularly in 1993-94, as the Royal Household have progressively refined the presentation.
Paragraphs 12 Surveys - The results of surveys of the Estate carried out by the former Property 3.15-3.26 Services Agency between 1985 and 1990 informed works programmes at the time and are used by the Royal Household as a checklist of projects completed. But they are not ideal for use as planning documents or assessing current work programmes. The new round of surveys starting in Autumn 1993 should facilitate performance measurement of the quality of maintenance work and the extent, if any, of work outstanding.
Paragraphs 13 Building Conservation-The Royal Household do not have specialist conservation 3,17-3.18 expertise but rely as appropriate on English Heritage. While in the past consultation has sometimes been inadequate, English Heritage believe that since the transfer of responsibilities, the Royal Household have sought their advice on all significant schemes requiring clearances.
Paragraphs 14 Cost control Controlling the costs of works projects in historic buildings is 3.19-3.22 difficult. The Royal Household have introduced various measures to improve cost control. Of 16 projects costing E150,OOOor more, twelve showed increases during 1992-93 overthe project estimates beforethestartoftheyeartotalling~l.4million, much of which represented work added after the start of the project. But, overall the aggregate actual cost for the 16 projects was about the same as estimated. Taking the 35 projects costingE25,OOO or more completed during 1992-93, which had an aggregate value of E11.2 million, project costs were some three per cent over contract prices, suggesting good control over contract variation.
4 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
15 The detailed annual plans submitted by the Royal Household in 1991-92 and 1992-93 enabled the Department to compare the latest project estimates with the previous year’s project estimates. Until October 1993, the Department had not requested information to compare latest project estimates with the original progmmme estimates, many of which were prepared before the Royal Household assumed responsibility for the programme. The Royal Household and the Department consider contract prices are the most reliable figures for monitoring purposes but the Department need to be able to assess the efficiency of the initial estimating process which underpins the programme as well as the Royal Household’s control of current project costs. The Royal Household do assess variances horn initial estimates.
Paragraphs 16 The Department of National Heritage Resources The Department’s Royal Estate 3.23-3.24 branch have sufficient staff for their normal functions but, as indicated in paragraph 11, would have been better able to discharge their role had they sought information in a form which they could more readily monitor. The Royal Household have progressively refined the information they provide to this end. The Department’s monitoring would also be assisted if they could call upon independent specialist expertise where appropriate, possibly within the wider context of the Department’s role in monitoring Non Departmental Public Bodies.
Windsor Castle 17 The Royal Household acted quickly to initiate salvage and restoration work restoration works following the Windsor fire, to produce costed options for the restoration project Paragraphs and, with the Department, to decide on the basic approach to be adopted. A 3.25-3.27 framework for project management and control has been drawn up. The Department are involved and will approve proposals for each phase.
Fire protection 18 The Department also quickly established an inquiry into fire protection in royal arrangements palaces. The Inquiry report outlined the fire precautions and strategies to be Paragraphs followed to minimise the risk of and damage from fire, within the constraints set 4.3-4.13 by historic buildings. The report found that basic fire safety precautions were in place and that there was a programme of work to introduce further measures. It concluded that the fire arose from an unfortunate combination of circumstances. The National Audit Office note that the report listed nine measures which should help to prevent a repetition or reduce the loss from a fire such as occurred at Windsor. The Department and Royal Household accepted the report’s recommendations for measures to prevent or minimise loss from fire, stating that many were being implemented or planned, and for there to be coordination and common funding of research into fire safety in heritage buildings.
Paragraphs 19 Some of the recommendations were similar to those made in earlier reports on fire 4.17-4.27 in heritage buildings - the 1986 Hampton Court fire and the 1990 guide “Heritage Under Fire”. When the Royal Household took over responsibility in 1991, the Department did not institute any formal means of checking whether they had applied the lessons learned from earlier fires. In the two years to March 1993, the Royal Household were not asked to report their fire protection measures to the Department in a consolidated form, and the Department did not seek specific details of all fire protection measures, although they were heavily involved in major projects which included such measures. However, it was evident to the Department that the Royal Household had acquired a basic fire protection
5 PROPERTYSER”IcE3 IN THE ENGLISHOCCUPED ROYAL PALACES
capacity, had reviewed their fire service and accelerated their programme for improving structural fire precautions, including automatic fire detection in all Palaces’ strategies. At the time of the fire, new fire protection measures in the part of Windsor Castle damaged by the fire were within weeks of commissioning and palace-level fire protection strategies were being drawn up. The Royal Household’s March 1993 five year plan made the shift of emphasis towards fire protection more readily apparent.
Paragraphs 20 Following their acceptance of the recommendations in the Inquiry report, the 4.34-4.15.4.27 Department required the Royal Household, and other agencies covered by the report, to prepare annual position statements on their progress in implementing the recommendations. The Royal Household provided a first position statement in October 1993, showing that action had been taken or was in-hand on all the recommendations. The Department are also committed to pursuing the wider recommendations of the Inquiry report and have initiated, or are considering, actions with other relevant bodies.
Paragraphs 21 The Government’s policy is that departments should take out commercial 4.32-4.36 insurance only where this would be more cost-effective than non-insurance. In accordance with this policy, the Royal Household have not insured commercially the Occupied Royal Palaces. A Treasury review in 1992 confirmed this policy but emphasised the importance of sound risk management arrangements. The Treasury issued draft guidance in June 1993. At the time ofthe fire, the Department had not sought information on the Royal Household’s risk management arrangements but these had been discussed between the Royal Household and the Department of the Environment in 1991.
zz In examining the value for money to be obtained from different fire protection strategies, the Inquiry team considered that there was not an appropriate methodology which would have enabled them to quantify the benefits likely to accrue. However they rejected the extensive installation of sprinkler systems, for which insurance companies give large discounts, because the costs in heritage buildings had not been shown to be justified by equivalent reductions in risk. In monitoring the Royal Household’s implementation of the Inquiry report recommendations, the Department will need to ensure that effective risk analysis underlies the decisions which are taken, particularly where the use of automatic sprinklers is an option. The Royal Household state that such analysis is already undertaken.
OVtWdI 23 The National Audit Office’s examination took place while systems were still being conclusions and developed and refined to implement the arrangements introduced in 1991. recommendations However it is evident that the transfer of responsibilities to the Royal Household has been successful both in reducing costs and improving the way property services are delivered. The Royal Household’s imaginative initiative of opening Buckingham Palace to the public to contribute to the costs of fire damage restoration illustrates the benefits arising from this change. It is unlikely that this initiative, which gave rise to a substantial workload for the Royal Household, could have been implemented so quickly under the previously divided management arrangements.
6 PROPEKrY SERVICESIN THE ENGLISHOCCuPIEn ROYAL PALACES
24 Monitoring by the Department indicates that the transfer of property management responsibilities to the Royal Household has led to improvements in value for money. The Department have worked with the Royal Household in this process and have reduced the grant-in-aid to reflect and encourage the achievement of savings. During the bedding-in period they have relied heavily on the quality of the Royal Household’s senior management, informal contacts and assurances provided by the external auditors rather than direct examination of procedures and papers.
25 During 1993 the Department have moved to a more active monitoring role. They and the Royal Household are seeking to build on what has been achieved to date. The latter’s systems have been developed from scratch in 1991 and are gradually being refined. Further refinement is expected, which will help the Department to discharge their responsibilities for ensuring that proper procedures exist to secure propriety and value for money from the grant-in-aid. They have taken note of suggestions made by the National Audit Office.
26 Improvements made or planned by the Department during 1993-94 include:
(a) updating the Financial Memorandum;
(b) more focussed review of the refined information being provided by the Royal Household;
(c) more specific Departmental monitoring of the most cost-effective balance between in-house and contracted services;
(d) the provision of annual position statements on fire protection measures;
(e] consideration of whether specialist expertise could assist the Department’s monitoring of the Royal Household.
7 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Part 1: Background
Property services in the English Box 1: The report covers: Occupied Royal Palaces The grant-in-aid for Property Services in the Occupied Royal Palaces. It funds 1.1 Before 1760 the hereditary revenues of the Crown funded the upkeep of the Royal Palaces. (a) works services within specified parts of the By 1760 these revenues had been surrendered following palaces and their estatesincluding in return for a fixed Civil List. Since 1831, in around 100 buildings and other structures consideration of a reduction in the Civil List, responsibility for repairs and maintenance of . Buckingham Palace the Royal Palaces and Gardens has passed to successive government departments, including . Kensington Palace from 1970 the Department of the Environment, and from April 1992 the Department of . St James’sPalace with Clarence House and National Heritage (the Department). Marlborough House Mews
1.2 For management purposes the estate divides . Windsor Castle into: . Windsor Great and Home Parks and l the Occupied Royal Palaces, ie properties properties therein occupied or used by the Royal Family and Royal Household; . Hampton Court Mews and Paddock
. properties not occupied by the Royal (b) furnishings and equipment, Family, managed by the Historic Royal telecommunications services, fuel and utilit] Palaces Agency; bills at smne of the above properties.
. Osborne House, managed by English (cl the cats of someYeomen of the Guard, Heritage. craftsmen and other staff: and provision of telecommunications services, and payment This report covers Property Services in the for utilities at the Queen’s and Queen English Occupied Royal Palaces, which are Elizabeth the Queen Mother’s private funded by a Grant-in-Aid from the Department. residences used as part of the Sovereign’s Boxes 1 and 2 and Figure 1 distinguish the official duties. properties and services covered by the Grant-in-Aidfrom those not covered. (d) ~X,OOOper annum forfurnishings, decoration and works at the discretion of the Sovereign in accommodation used partly for Management Arrangements State purposes and partly by the Royal Family. 1.3 Until 31 March 1991 the Department of the Environment and the former Property Services In March 1993 the Royal Household employed Agency were responsible for tbe upkeep of the 165 staff on activities funded from the Occupied Royal Palaces, with the former grant-in-aid: 95 of them in the Property having the principal role from 1 April 1990. Services Section. From that date, government departments were not obliged to use the Agency. In 1990 tbe Costs of specified services provided to other Department of the Environment decided in parts of the Royal Household, particularly the discussion with the Royal Household, that day Royal Collection and the occupants of grace to day responsibility should be delegated to the and favour apartments, are recovered.
8 PROPERTY SERVICES IN THE ENGLISH OCC”PIED ROYAL PALACES
Fiwre 1: Roval HouseholdGrant-in-Aid Exwnditure in 1992-93
Expenditure(fmillion)
propmymaintenance
“LilWS Ealvage runningcosts dim,,) employedstall felecOmm”nicatiOnE fW”it”W,~~“ipLTE”t ram meprotection gadenS
0 2 4 6 8 10 12 14 16 18 20 Headof service
Source: Annualaccount of the grant-in-aid 1992-93 71 per cent of the Royal Household’sgrant for 1992-93was spent on property maintenance.excluding tire salvageand restorationwork.
Box 2: The report does not cover: Royal Household and funded by a grant-in-aid, which would also cover other services, such as (a) Palaces managed by the Historic Royal grounds maintenance. On 24 July 1990 the Palaces Agency: that is, the Banqueting Prime Minister told Parliament of the proposed House, most of Hampton Court Palace, the change which she stated was to give the Royal State Apartments in Kensington Palace, Household greater responsibility for the Kew Palace and The Tower of London. management of and expenditure on the (b] The Palace of Holymadhouse: the Occupied Royal Palaces in keeping with modern financial management. She added that Sovereign’s official residence in Scotland, it would be much easier for the Royal for which different management Household to look after the palaces under the arrangements apply. new arrangement than the old. (c) Expenditure of the Royal Family funded 1.4 A Memorandum of Understanding between the from the Civil List Department of the Environment and the Lord Chamberlain of Her Majesty’s Household [d) Expenditure of the Royal Family funded (Appendix 11, set out the conditions under from non-government sources, such as: which the grant-in-aid would be administered. It states that the Royal Household’s objectives . The upkeep of properties which the Royal in managing expenditure out of the grant-in-aid Family own as private individuals, notably are to: Sandringham House and Balmoral Castle. . maintain the Palaces as buildings of State . The Royal Collection of works of art and to a standard consistent with the historical artifacts. Although much is on Household’s operational requirements and display to the public, it receives no with the royal, architectural and historic government funding. status of the buildings, in a manner which ensures value for money; and [e) Physical security protection for the Royal Family and expenditure on State Ceremonials: the Department fund these separately.
9 PROPERTY SERWCES IN THE ENGLISH OCCUPIED ROYAL PALACES
. organise and obtain works and other Household must provide information for property services in the most economic, monitoring purposes, including an annual efficient and effective way to achieve report on their activities and performance and financial and other performance targets as accounts certified by external auditors (Box 4). specified. 1.6 The Financial Memorandum does not specify Box 3: The Occupied Royal Palaces _ an whether the Department have rights of access important part of Britain’s heritage to the books and records of the Royal Household. The Department have requested The palaces are buildings of the foremost and received internal papers or information historic interest. Parts of Windsor Castle date from the Royal Household and have no reason back to the twelfth century. St James’sPalace to believe that any reasonable request would be was built by Henry VIII in the early sixteenth refused. Requests are rarely made because of century and Kensington Palace by William III the amount of information regularly provided in the late seventeenth century. All palaces are to the Department. The Roval Household stated Grade I listed buildings; Windsor Castle is also that theywould be content for the Department a scheduled ancient monument. There are to have accessand pointed out that their further associated Grade I and Grade II listed external auditors also have access on the buildings in Windsor Home and Great Parks. Department’s behalf [paragraphs 2.5, 2.20). I Prior to April 1991, the Department had automatic accessto information relating to the 1.5 A Financial Memorandum specifies the property services when these were managed conditions under which the grant-in-aid is within Central Government, but did not - paid. The Department must satisfy themselves consider it appropriate under the new that the financial and other management arrangements, given the extent of information controls applied within the Royal Household to be provided by the Royal Household. The in respect of the grant-in-aid are appropriate Department intend to amend the Financial and sufficient to safeguard public funds and Memorandum to specify that any reasonable conform with the requirements of propriety request for accesswill be met. and good financial management. The Royal
Box 4: Responsibilities of the Department and the Royal Household (from the Financial Memorandum) The Accounting Officer of the Department of In summary, the Director of Finance and National Heritage remains responsible to Property Services at the Royal Household is Parliament for the grant-in-aid and in held accountable for: particular for: . submitting an annual and a five year . ensuring that payments of grant-in-aid are forward programme to the Department for within the ambit and amount of the Vote, approval and seeking authority for various andthat Parliamentaryauthority has been mattersoutwith his delegatedauthority; sought and given; . submitting to the Department quarterly . satisfying himself that the financial and outturn reports and, at the end of the other management controls applied by the financial year, a stewardship report, Department and within the Royal including accounts in an acceptable Household in respect of the grant-in-aid format; are appropriate and sufficient to safeguard public funds, that they conform with the . ensuring that effective audit arrangements requirements of propriety and of good are in place: financial management, and that the Royal Household observe the conditiom ol the . appearing, if necessary, in support of the Financial Memorandum. Department’s Accounting Officer before the Committee of Public Accounts.
10 PRCIPERTYSERVICES IN THEENGLISH OCCLIPIEII ROYAL PALACES
1.7 On 5 July 1990 the Permanent Secretary of the The grant-in-aid Department of the Environment wrote to the Comptroller and Auditor General about these 1.8 The grant-in-aid was 223.9 million in 1991-92 new arrangements, indicating that he expected and f23.2 million in 1992-93. The five year them to obtain better value for money. He plan agreed in March 1992 proposed a stated that the National Audit Office would progressive reduction in the grant-in-aid by continue to have accessto all Departmental approximately 25 per cent in real terms. On 12 papers concerned with the control of these November 1992, the Department informed the property services and the management of the Royal Household of further reductions, for Vote from which the grant-in-aid was paid, example from f22.0 million to f19.3 million in including the reports of the Royal Household’s 199596 (Figure 2). external auditors. However, as under previous arrangements, the National Audit Office would 1.9 On 23 November 1992, following the fire at not have sight of the Royal Household’s Windsor Castle, the Government confirmed internal processes 01 documents. On 2 October that the Castle was State property and that they 1990 the Comptroller and Auditor General were responsible for its maintenance and thus informed the Committee of Public Accounts of for paying for its restoration. The Department these arrangements, indicating that the increased the grant-in-aid for 1993-94 by some expenditure was currently presented on an f0.9 million to E20.3 million (subsequently Appropriation Account subject to his audit. reduced to f19.8 million) including a EZZZ,OOO The Comptroller and Auditor General has full contribution towards the initial restoration statutory access to Departmental books and costs. On 22 February 1993, the Secretary of records for the purpose of auditing State for National Heritage announced that the Appropriation Accounts and undertaking early estimate of the cost of reconstruction was examinations of economy, efficiency and E30-40 million (Figure 2). On 29 April 1993 he effectiveness. announced that the Queen was to open the
Figure 2: ExpenditureTrend 1990-91 to 1997-98
Expenditure (fmillion) 35
30 Salvage& restoration Propelty” maintenance \ 25
20
15
10
5
0 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 Financial year
Soorce: Roy& Householdgrant-in-aid a~counh and pfmans1990-91 to 1992-93actual; 1993-94onwards planned, showing total plannedexpenditure including resforatfonfunded from sourcesother than the grant-in-aid. Excludingrestoration costs, the grant to the Royal Householdfell by 19 per cent between1991-92 and 1993-94.and was plannedto remainroughly constantin realterms thereafter. Windsor Castle restoration will add approximatelyf33 million to the Royal Household’sexpenditure owl the next five “WS.
11 PROPERTY SERVICES Ii’, THE ENGLKH OCCUPIED ROYAL PALACES
State Rooms in Buckingham Palace to the Scope of the report public for eight weeks each Summer to help pay for the cost of restoring Windsor Castle. 1.12 Following the Windsor Castle fire and a This, plus the proceeds from a new charge for request from the Committee of Public entering the precincts of Windsor Castle, were Accounts, the National Audit Office examined: expected to meet some 70 per cent of the
estimated cost of reconstruction. The Director l the Department’s arrangements for of Finance and Property Services, acting ensuring that expenditure out of the through Royal Collection Enterprises Limited, grant-in-aid is proper and cost-effective, will administer the arrangements. In the event including an assessmentof the impact of that the income provides insufficient funds transferring management responsibilities within the timescale of the planned restoration to the Royal Household (Part 2); programme, the Royal Household are prepared to borrow. . the evidence available to the Department concerning the effectiveness of the Royal 1.10 The Department have told the Royal Household’s procedures for prioritising, Household that because of the Windsor fire planning and executing works services, so they will provide an additional f5.6 million as to meet the objectives in the over the three years starting in 1994-95, subject Memorandum of Understanding (Part 3); to Parliamentary authority, and an equivalent and increase in the remaining year of restoration. Over the whole restoration period the Royal . the Department’s oversight of the Royal Household plan to spend an estimated E35 Household’s fire protection measures and million on restoration work. They will action to prevent a repetition of the loss therefore have to find some E28 million (80%) incurred in the Windsor fire, through the from admission charges and reductions in Inquiry into fire precautions at Royal other spending, while taking account of the Palaces and implementation of need for extra expenditure on fire prevention Government policy on insurance (Part 4). measures, estimated by the Royal Household at about Gl million. 1.13 The National Audit Office were advised on aspects relating to the works programme by Watts and Partners, a consulting firm of Public use and access building surveyors, project managers and architects. On matters relating to fire 1.11 The primary function of the Occupied Royal protection, the National Audit Office consulted Palaces is to enable the Sovereign and her the Fire Protection Association. immediate family to discharge the duties of Head of State in a fitting manner, including 1.14 The National Audit Office examined the facilities for entertaining important guests. Department’s records and interviewed the They are vested in the Monarch in right of the Department’s staff. The Department arranged Crown and are in effect the property of the for the Royal Household to answer questions State. They are working buildings for the Royal whererelevant to thescope of theexamination, Household, providing office accommodation and to organise visits to Buckingham Palace for business of State and the Monarch’s private and Windsor Castle. The National Audit Office affairs, and are generally not open to the public acknowledge this assistance, which was fully as a matter of course. In addition to the and freely given, as they do the full arrangements described in paragraph 1.9, the co-operation of all others concerned. But they public can view parts of the Royal Collection at operated within the terms outlined in Windsor Castle and the Queen’s Gallery and paragraph 1.7 and did not have direct access to Royal Mews in Buckingham Palace: the the Royal Household’s records and papers, admission charges contribute to the upkeep of except where these had been provided to the the Collection. Department.
12 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Part 2: The Denartment’s financial controls and procedurk
Property services in the English Household provide to the Department are not Occupied Royal Palaces published but are available to the National Audit Office. In contrast, other government-funded bodies, such as executive 2.1 This Part considers the new arrangements introduced and whether: proper accountability agencies and non-departmental public bodies, include less detailed financial and of public funds was assured; the Department performance information in their annual have properly controlled the payment of reports, but these are published. grant-in-aid to the Royal Household and monitored their expenditure therefrom; and 2.4 The Memorandum of Understanding requires the objective of improving value for money has the Lord Chamberlain to seek the agreement of been achieved. The National Audit Office the Department before advising The Queen on examined these matters in general terms for all the appointment, remuneration and aspects of the grant-in-aid and in greater detail responsibilities of the head of the section in relation to works services (Part 3). responsible for property services and the official responsible for stewardship of the grant-in-aid. These responsibilities have been Accountability combined since 1990 in the post of Director of Finance and Property Services (the Director). 2.2 Before April 1991, expenditure on the Box 4 shows the respective accountabilities of Occupied Royal Palaces was not separately the Department’s Accounting Officer and the detailed in the published accounts of the Director. Department of the Environment and Property Services Agency but was subject to audit by 2.5 The Department approved the appointment in the Comptroller and Auditor General. Under 1990 of Michael Peat as tbe Director on the new arrangements, the National Audit secondment from KPMG Peat Marwick, and his Office have accessto all Departmental papers reappointment, not on secondment, for a concerned with the control of these services further four year term from September 1993. and the management of the Vote from which They were also consulted on the terms of the grant-in-aid is paid, but do not have sight appointment (Appendix 2) and choice of the of the detailed payments and receipts which external and internal auditors for the are administered by the Royal Household. grant-in-aid. In 1991 the Lord Chamberlain Parliamentary accountability remains so long appointed as external auditors, without as the Department obtain suffXent evidence competition, KPMG Peat Marwick, because from the Royal Household and their auditors to they were the auditors of other Royal discharge their duties under the Financial Household accounts. The Department have Memorandum. been content that they should be reappointed each year since. 2.3 The National Audit Office examine the Department’s papers when auditing the appropriation account which funds the Approval of plans and expenditure grant-in-aid. Whilst this reports only the total grant paid in the year, the Supply Estimates 2.6 The Department have approved the Royal provide some details of the planned Household’s five year corporate plans, annual expenditure from the grant-in-aid and works programmes, grant-in-aid budgets and long-term capital projects costing over E2 payments of grant-in-aid based on quarterly million. More financial information is therefore reports and forecasts. The documents provided routinely available to Parliament than before. have included at least as much information as The detailed annual reports which the Royal required by the Financial Memorandum. It was
13 PROPERnSERVICESINTHEENGLlSHOCCWIEDROYALPALAWS
evident that the Department had carefully f760,OOOin total, at Marlborough House Mews, scrutinised plans and some, at least, of the ought to be funded by the Royal Collection, but quarterly reports. The Royal Household have agreed that they were proper to the generally kept within approved budgets. In grant-in-aid. In April 1993, the Department 1992-93, expenditure was higher than asked the Royal Household to txansfer the cost budgeted only on property maintenance, and of tapestries to the Royal Collection from 1995, then because efficiency savings elsewhere and to provide a statement of responsibilities allowed the Royal Household to bring tasks in the other ‘grey areas’, which they did in forward. Overall, expenditure was in line with July. In August 1993, the Department decided the figure granted. that all other expenditure accorded with the Memorandum of Understanding as interpreted 2.7 As noted in the 1992-93 annual accounts, at by custom and practice. 31 March 1993 invoices received but unpaid were estimated at approximately s2.2 million, compared with CO.9million at 31 March 1992, Specific controls and work completed or services provided but not invoiced were estimated at approximately 2.10 The Department have delegated to the Royal fl million compared with so.4 million the Household considerable responsibility for previous yea. Had the annual accounts been approving projects, contracts and writes-off, prepared on an accruals basis, expenditure subject to the approval of their plans. However, could therefore have been around El.9 million the Financial Memorandum requires the higher than on a cash basis. Department to approve various major new commitments or projects and contracts above 2.8 After the National Audit Office drew attention specified values, and specified types of gifts to this, the Royal Household explained that the and writes-off. The Royal Household have increase reflected the substantially increased additionally suggested, and the Department level of building work in the last quarter of have agreed, that they should seek approval for 1992-93 compared with 1991-92. The work new measured term contracts over f75,OOO. was brought forward to make Windsor Castle The Royal Household have complied with ready for the Portuguese state visit in April these requirements. 1993, and to enable financial savings to be made by accelerating work while market 2.11 The requirement to obtain Departmental conditions were favourable. It was provided for approval for any works project over EXLOOO in the 1992-93 plan on the basis that interim where expenditure exceeds the approved payments of El.3 million (including VAT) figure by E20.000 or 10 per cent, whichever is were scheduled for 1993-94, and other work greater, is interpreted by the Royal Household completed near the year-end would in the and the Department as relating to the tender normal course of events not be paid for until price, rather than the original cost estimate the new financial year. A schedule of included in Royal Household plans. The payments was agreed with the contractors 1992-93 annual report showed increases in concerned at an early stage. Therefore, neither estimated project costs during the year for 12 KPMG Peat Ma-wick nor the Department out of 16of thelarger projects, although overall considered that the increase in creditors at the estimated costs of the 16 projects were little financial year-end represented an infringement changed (paragraph 3.20). Some of the Royal of the requirements in Government Accounting Household’s initial cost estimates are against delaying payments to avoid an inevitably imprecise and the absence of any overspend. requirement for the Department to approve in-year increases from the original estimate 2.9 There have been several caseswhere the during the period before the contract is let Department were unclear from the reduces the value of the Departmental approval Memorandum of Understanding whether of plans based on initial cost estimates. expenditure, which they estimated amounted However the Royal Household provide to around one per cent of the total, was proper updated forecasts of the total cost of each to the grant-in-aid. The Department’s practice project in their rpmrtnrly reports to put the has generally been to follow custom and Department in a position to question increases. practice. Casesincluded the maintenance of Also, the Royal Household are not permitted to tapestries, furniture and chandeliers. In 1992 enter into any major commitment or significant they queried whether two projects, costing
14 PROPERnSERVICESINTHEENGLISHOCCUPIEDROYALPALACES
new field of activity outside the accepted Memorandum, which contains extensive annual programme without the Department’s procedural requirements. The Department do approval. this through personal contacts and review of the Royal Household’s plans, reports and 2.12 Controls over the use of non-competitive performance indicators and audit reports procurement appeared to be effective. The rather than direct scrutiny of their papers. Royal Household sought authority for single Although no access is specified in the tender action on four contracts wer E25,OOO; Financial Memorandum, it is provided where the Department refused in one case. In 1992-93 requested (paragraph 1.6). The Department the Royal Household let by single tender eight have formed a high opinion of the Royal per cent of contracts between EZSOOand Household’s senior and administrative staffs E25,OOO(only one per cent by value) plus the management abilities. In 1991 and 1993, they major contracts relating to emergency work obtained copies of the Royal Household’s desk immediately after the Windsor fire. instructions and concluded that these were generally satisfactory. 2.13 In October 1992, KPMG Peat Marwick questioned whether the Financial 2.16 The Royal Household’s annual report and Memorandum required authority to be sought accounts provide extensive performance for single tender letting of consultancy jobs information including full explanations of over~E25,000,and whether the authorities variances between the previous year’s outturn required for new works projects applied to and current year budget and outturn. Although maintenance. In July 1993, the Department told the Department’s examination of the 1991-92 them that the Royal Household had properly report was delayed by the transfer of been treating consultancy jobs like any others, departmental responsibilities, their review of and that there was a distinction between new the 1992-93 accounts was proceeding mwe works and maintenance, but it could be quickly at the time of the National Audit Office abolished when the Financial Memorandum examination. was revised. It is due for renewal by March 1994. 2.17 The annual reports include performance indicators. No performance indicators existed 2.14 There are a number of instances, some referred in April 1991. The Royal Household to in this report, where the Memorandum established five at the beginning of 1991-92. needs to be clarified, and has been added to, The targets for four out of the five were and one instance where it is not being applied achieved in 1992-93, with the one not achieved by mutual consent. As regards the last, the being outside the Household’s control. The Financial Memorandum requires the Royal annual report for 1992.93 referred to a further Household to maintain a fixed asset register. nine indicators. The Royal Household had The Department have agreed that this introduced these for 1992-93, but with targets requirement should lapse, in part because a taking effect from 1993-94 (Table 1 overleaf~. detailed register covering matters such as asset The Department consider that the indicators lives is not needed where cash accounts are provide a good measure of quality of service, prepared. Instead the Department require a including efficiency, although they do not basic inventory of valuable items to be directly measure whether the palaces are being maintained. Although they have sought no maintained to a higher or lower standard, in documentary evidence that such an inventory relation to the funds provided. This is largely exists, the Royal Household have confirmed unavoidable as it is difficult to find other that it does. The Department accept that a organisations with which performance can review of the Memorandum is needed. validly be compared. And the indicators do provide good indirect measures of output where they measure the extent of competitive Departmental monitoring of tendering and the cost of activities where procedures output is largely pre-determined, such as utilities.
2.15 The Financial Memorandum requires the 2.18 The National Audit Office reviewed the quality Department to satisfy themselves about the of information provided by the latest financial and managerial controls of the Royal performance indicators, taking advice from Household and compliance with the their consultants. They found that they
15 PROPERTY SERVICES IN THE ENGLISH OCCUPlED ROYAL PALACES
Table 1: OccupiedRoyal Palacesin England:Summary of Royal Householdperformance indicators 1992-93
Indicator 1991-z 1992-3 19924 1993.94 O”“W” Target OUUUr” Target Introducedin 1991-92
(i) Movementin funding in real terms t2.6% -12.5% -7.9% -12.96% a Showing how total grant-in-aidhas increased/decreased,t&ding inflation into account. (ii) Movementin recurringexpenditure in real terms +t.5% -10.8% -16.0% -4.6% a Spendingwhich is largely fixed. (iii) Indirectcosts ratio 18.4% 13.0% 14.4% 15.6% . Spendingon administrationand fees c.f. buildingwork. (iv) Movementin energy &water costs in real terms - water - -11.8% -56.5% +0.5% - Gas -11.8% -16.2% -2.5% Electricity -11.8% -12.1% -3.7% Otherfuel - -11.8% -33.3% -16.6% (v) Movementin telecommunicationscosts in real +t7.g% -4.8% -16.2% t0.26% terms Introducedin 1992-93 (vi) Percentageof projects (over WOO) let as measuredterm contracts - by number - 37% 5% - Aim isto keep measuredterm contracts by value - 19% 2% to a minimum.
(vii) Percentageof lump sum jobs (over f2.500) let as lump sum contracts - by number 63% 95% - by value 81% 98% (viii) Percentageof lump sum jobs (over f2.500) where competitivetender/quote not obtained - by number 8% NOW - by value 1% NOW (ix) Lump sum contracts(over f2.5,000) let an . One NOM . Aim is to let all an a competitivetender singletender basis basis. (x) Percentageof lump sum lobs (over f25.000) . 29% 100% completedto budget (xi) Percentageof lump sum fobs (over f25.000) . 60% 100% completedto time
(xii) Commissionsto professionalsan basis other f224k None than competitivetender
(xiii) Percentageof costswhere supervision is 11.6% extelllal
(xiv) Percentageof costs where supervisionis . 8.2% in-house Source: RovafHousehold Annual Accounts
generally provided a realistic measure of the and to compare their costs with those of other degree to which the primary objectives of organisations where sensible and practical (for economy and quality were fulfilled and that instance, rebuilding costs). there was little scope in practical terms for improvements in the current performance 2.19 The National Audit Office suggested that the indicators. The Royal Household aim to Department’s monitoring might he facilitated continue to refine performance measurement in future by indicators of overall performance against initial cost estimates, and the maintenance workload still to be undertaken,
16 PROPERTY SERVICES IN THE ENGLISH 0CC”PIED ROYAL PALACES
categorised by priority, and any backlog. They drawn on his work in forming their recognised that all the necessary information is conclusions. A summary of his work and not yet available to give a true measure of the findings during the year was attached to the Royal Household’s performance in these areas 1992-93 annual report. In it he concluded that: but this position should change as pre 1991 projects are completed and the next round of . reports during the year highlighted several building surveys is carried out [paragraphs areas of weakness, which had been acted 3.15-3.X). The Royal Household pointed out upon and would be reviewed in 1993.94; that the plans currently submitted to the Department identify the full rolling . there were improvements in adherence to maintenance programme and there was now no desk instructions as staff became aware of maintenance backlog except for projects compliance testing and as a result of already included in the current five year works memoranda highlighting exceptions; progranune. . the operation of accounting and administration systems appeared to have Audit reports improved during the year.
2.20 The external auditors are required to give 2.23 The Department saw only one internal audit assurances beyond that normally given in an report before April 1993. They did not seek a audit opinion, on matters such as the quarterly copy of a major review of overtime which, cash forecasts, financial procedures and according to the Annual Report, concluded compliance with the Financial Memorandum. that there were inadequacies and They must also draw attention to cases inconsistencies in the Royal Household’s identified during the audit of significant losses policies and procedures. They originally arising from misconduct, fraud or other considered that since they placed reliance on irregularities, lapses from high standards of assurances by the external auditors, who in financial integrity, waste or extravagance. This turn relied extensively on the internal auditor’s requires the auditors to form judgements about work, it was not necessary for them to see all the management of the Property Services internal audit reports. But they did see a Section. summary of internal audit’s activity in the Royal Household’s annual report. Since August 2.21 KPMG Peat Marwick gave assurances for 1993 the Department have asked to see all 1991-92 and 1992-93 on the matters specified reports for review purposes. in their letter of appointment. They found no material problems to report. They have also 2.24 Taking account of all evidence available, the provided the Royal Household with a report on National Audit Office consider that at the time the adequacy of their financial procedures and of their examination, the Department could be a management letter after each annual audit, broadly satisfied with the Royal Household’s copied to the Department. In these they have financial procedures. Refinements have been recommended improvements to the procedures and are being identified in these procedures, for controlling property maintenance (Part 3) which continue to be developed. and have noted that the level of compliance with some procedures could be improved. However, they concluded that the terms of the Improvements in value for money Financial Memorandum were being observed and that if the accounting and management 2.25 The Royal Household, on assuming control system functioned as prescribed, it was responsibility for the Occupied Royal Palaces sufficient to safeguard public funds and give in 1991, had much work to do in developing reasonable assurance that the requirements of control and monitoring systems and propriety and good financial management were accounting and management information being complied with. systems from scratch. The Department have seen evidence that concentrating 2.22 The Royal Household’s internal auditor is responsibilities in the Royal Household has led responsible for checking that procedures are to a streamlining of procedures, which coupled sound and complied with. He reports to the with the reviews of all activities since Lord Chamberlain. KPMG Peat Marwick have undertaken by the Royal Household should
17 PROPERTY SERVKXS IN THE ENGLISH OCCUPIED ROYAL PALACES -
have improved value for money. Consequently, 2.27 Efficiency gains could readily be discerned in the Department felt able to make a substantial the costs of those recurring services, such as reduction in the grant-in-aid from 1993-94 telephones, utilities and minor maintenance, (paragraph 1.8). where economy of provision is itself a fairly good measure of value for money [Figure 3). 2.26 Value for money in the works programme is Expenditure on these fell by 14.5 per cent in considered in Part 3, paragraphs 3.19-3.22. real terms between 1990-91 and 1992-93. There Although specific savings in other services, were some large savings in specific areas: outlined below, could readily be identified, it was more difficult to quantify how much value the proportion of expenditure on for money had improved for building and administration and fees fell from 22.9 per maintenance. This was due to the absence of cent to 14.4 per cent; comparative figures prior to 1990-91 [and in some cases 1991-92) and the difficulty in expenditure on fuel and utilities devising performance indicators for service (excluding telecommunications) fell by 26 delivery in this area. Cash expenditure in per cent, due to energy saving measures 1992-93 was 5.3 per cent lower in real terms and new systems for monitoring utility than in 1990-91, the last year before the new bills; arrmgements. It was not clear how much the underlying level of expenditure had fallen telecommunications costs fell by 16 per given the invoices unpaid by the Property cent from 1991-92 to 1992-93 following Services Agency of over f2 million at the end renegotiation of contracts and other of 1990-91 and the increase in unpaid invoices measures, despite continuing demand for in 1992-93 (paragraph 2.7). However the major additional equipment; impact on expenditure will occur from 1993-94 which, before taking account of restoration bringing the fire patrol service in-house work at Windsor Castle, was planned to show a saved some ~300,000 a year. reduction in real terms of 17 per cent compared with 1990-91.
Figure 3: Royal HouseholdRecurrent Expenditure 1991-92 to 1992-93 Headof Service
1-91-92 runningcost* l-92-93 ‘I_” ,,
directlyemployed labour I’
mm I I
0 0.25 0.5 0.75 i 1.25 1.5 Expenditure(fmillion)
Source: Annualaccounts 1991-92and 1992-93 Expenditurein mcst areas of recurrent spending has fallen since 1991-92
18 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
2.28 The Royal Household included a ‘value for activities should be subject to market testing, money log’ in their 1992-93 annual report. It the Department in May 1992 queried whether listed 72 procedural improvements an in-house solution necessarily represented implemented in the first two years of the the best value for money. The Royal grant-in-aid, including: time-sheets and Household replied giving a breakdown of their assessmentfor all staff, and improvements in in-house staff and indicating why overtime management; 13 energy saving contractorisation would be inappropriate or measures such as building management not cost-effective. In-house staff were systems to reduce heating costs and energy employed only in low technology areas, where audits; and tighter control over stationery there were continuing full-time jobs, areas usage and furniture and equipment ordering. where direct management supervision was required or had been lacking under previous 2.29 One element in the Royal Household’s strategy arrangements, or where pieces of work were for efficiency has been to bring in-house too small for contracts to be economic. The telephone operators, a small team of Department accepted that the arrangements maintenance staff, and fire patrol men. adopted were unavoidable or represented the However, bearing in mind that it is most cost-effective option. Government policy that most departmental
19 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Part 3: The Royal Household’s works programme
3.1 This Part considers how the Department satisfy performance against the criteria, the National themselves that the Royal Household have Audit Office recognised that the extent to effective procedures for prioritising, planning which the Department monitor the activities of and executing works services. Over 70 per cent the Royal Household is a matter of balance and of the grant-in-aid is spent on the works judgement, having regard to various factors. programme for maintaining the fabric of the These include the cost of checks and the need Palaces. Figure 4 analyses the works to avoid bureaucracy, the level of assurance programme expenditure in 1992-93. The work regarding the Royal Household’s performance necessary as a result of the Windsor fire will gained from various sources, the desirability of delay planned reductions in works maximum delegation and the Accounting expenditure. The discretionary nature of the Officer’s accountability to Parliament. works expenditure, its complexity and long However the necessary information should be term impact mean that the Department need to available so that all aspects can be covered scrutinise this part of the programme closely over a period of time. and ensure that the Royal Household have appropriate procedures in place to achieve 3.3 The National Audit Office’s findings on the value for money. agreed criteria [Appendix 3) show that in many respects, satisfactory arrangements were in place, but some observations arose, the most Figure4: PropertyMaintenance Expenditure 1992-93 important of which are covered in paragraphs 3.4 to 3.24. Some general issues were covered 3% routineinspection and maintenancecontracts in Part 2. 6% salvage/restomtio 9% minor Objectives, roles, targets and mainfenanc standards
3.4 Objectives were set by the Memorandum of Understanding. The roles of the respective parties are clearly defined. Performance targets agreed with the Department in the five-year plans set the Royal Household objectives for cost reduction and &cient contracting procedures. Performance indicators have also been established to measure cost variances, Source: Annualaccount of the grant-in-aid 1992-93 delivery performance, planning and The Royal Householdspent fi7.6 million on works services in administration costs and use of competitive 1992-93.of which 59 per cent was on major projects.Salvage tendering. The Annual Plan for 1993.94, the and restorationwork at WindsorCastle accounted for 6 oer cent first to be prepared since the Royal of works costs. Household’s staffing complement and management information systems were fully established, for the first time contains a Framework for the examination comprehensive list of management objectives for the Property Section, such as enhancements The National Audit Office invited consultants in management information to improve the Watts and Partners to draw up a framework cost and timely completion of work, increasing against which to examine the Department’s emphasis on fire precautions, and reducing oversight of the works programme, which was expenditure on minor maintenance. then agreed with the Department. In assessing
20 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
3.5 The Row1 Household have standards for 3.8 In addition, in-house teams were established in refurbishment of residential accommodation, 1992 to carry Out minor maintenance work which comprises a large part of the estate, previously carried out by contractors, mainly comply with English Heritage requirements as through the former Property Services Agency. regards conservation standards and have In-house costs are expected to account for 29 introduced independent audits to monitor per cent of minor maintenance expenditure compliance with Building Regulations and (jobs costing under f2,500) in 1993-94. There British Standards. For offices and working is no specific performance indicator measuring areas, where conservation considerations are the efficiency of in-house staffing and one not paramount, the policy is to maintain the would be difficult to devise. To be able to existing standard when refurbishing monitor efficiency the Department would need accommodation. The Department believe it to be able to see the results of smne market would not be practicable to set formal testing of minor maintenance work which had standards for the rest of the estate because of been undertaken by the Royal Household, the wide variety of uses to which it is put, and and/or assess(with specialist help as because the large majority of the work is repair appropriate] the Royal Household’s procedures and maintenance. They believe that the senior for applying control in this area. This they staff of the Royal Household have a good have not yet done. However, this was working knowledge of the standards expected understandable given that expenditure on in each area and would ensure that building or minor maintenance and inspection fell from refurbishment works would not be carried out LX.7 million in 1990.91 to f2.2 million in to an inappropriate standard. 1992-93 (Figure 5 overleafJ. The Royal Household told the National Audit Office that they undertook financial assessmentsand Organisation and staffing of the comparisons before bringing staff in-house and Royal Household’s works function monitored the productivity of their staff through timesheets and regular internal checks. They said that the external auditors 3.6 A 1988 Department of Environment review had seen the assessmentsand had not raised identified problems in managing the works programme at that time. There was widespread any concerns. concern about the separation and diffusion of 3.9 The Department were closely involved in the responsibilities between the Department of appointment of the Director and Deputy Environment, the former Property Services Director and are satisfied with the experience Agency and the Royal Household, leading to a of other key staff in the Royal Household’s lack of clear overall focus of direction and property section. The Royal Household buy in decision-taking, especially in determining and ordering priorities. professional services from consultants on most projects, including all large schemes. The Royal Household have told the Department 3.7 The Royal Household decided in January 1991, in preparation for the grant-in-aid that having a small in-house professional team has allowed procedures to be streamlined and arrangements which commenced in April 1991, to set up their own works section to run become more responsive to changing priorities the maintenance programme. Under the and requirements. The Department are not in a previous arrangements the former Property position to make a direct assessmentbut are Services Agency had made extensive use of satisfied that evidence for this is to be found in in-house resources. The Royal Household substantial cost savings and significant established a smaller in-house client team by improvements in procedures, control and management information systems achieved engaging 20 of the 34 existing former Property Services Agency District Works Office staff, since 1 April 1991. saving around ~C350,000a year in reduced staff costs and fees. They continued to use other 3.10 In total the Royal Household employ 28 fewer services provided by the Agency initially but in-house staff than the Property Services Agency did to manage a similar programme. gradually moved away from the Agency as new (These included other Property Section projects were put out to competitive tender. headquarters staff in addition to the
21 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Figure 5: Elfectof movingproperly services in-house
Movementin StaffCosts MinorMaintenance and Inspection Costs
Staffcosts (fmillion) Minormaintenance costs (fmillion) 2.4 2.2 3.2 2.0 1.6 1.6 1.4 1.2 1.0 0.8 2.4 0.6 0.4 0.2 C 90-91 91-92 92-93 90-91 91-92 92-93 Financialyear Financialyear
Source: 1990-91 Departmentof Environmentestimates 1991-92and 1992-93 Grant-in-aidaccounts
me: The 1990.91sfaff cost figure may includeadditional overheads not in later costs and should be treatedwith caution The Royal Householdhave achieved significant savings by bringing in-housework previouslyperformed by the PropertyServices Agency. and by a ram of other actions.
maintenance team referred to in paragraph explicitly prioritise them. The Royal 3.7). Their annual report for 1992-93 showed Household stated that they had replaced the that supervisory and professional staff costs categorisation used by the Property Services made up 8.2 per cent of the cost of projects Agency, which they believed was relatively when provided in-house compared with 11.6 arbitrary, with decisions based on a detailed per cent where consultants were used. The knowledge of each project, supported by RoyalHousehold believe that economiesof improvedcontrol procedures and management scale on large projects, where consultants are information systems. The Department, as invariably used, might suggest that this supervisors rather than managers and without percentage (11.6 per cent) should be lower specialist expertise, do not share this detailed than for the smaller projects, if it were not for knowledge and rely on the judgement of the the efficiencies of using in-house staff. Royal Household’s professional staff.
3.12 However, the Department are in a position to Plans, budgets and Departmental ask for further information about any projects monitoring and there is some evidence that they can make some assessmentof priority. In order to begin the process of discussing possible savings to 3.11 To support the five-year plans presented to the fund the restoration at Windsor, they suggested Department each year, the Royal Household some apparently low priority projects totalling provide a complete list of projects in the works E2.5 million to be cut in 1993-94. The Royal programme showing expenditure over the Household indicated that most of these following five years. The programme does not
22 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
projects had relatively high priority and and descriptive material. However they did not instead suggested savings aggregating E4.25 lend themselves to use as planning documents. million spread over the next five years, They were not produced to a common format, although they pointed out that deferring these their recommendations were not consistently projects would increase costs in the longer prioritised and there were only very broad term. In the event most of the projects brush costing% They did not contain a originally suggested by the Department have summary of recommendations which could be been deferred or expenditure on them in assessedby non-experts or a management 1993-94 substantially reduced. overview of the standard of maintenance, although a summary of the main findings for 3.13 The Department have not advised the Royal each palace was provided. When the Royal Household on the presentation and selection of Household took over responsibility they information needed in the quarterly reports to reviewed the surveys to identify work the Department nor sought specialist advice on outstanding for inclusion in their five year how this could best be done. The Royal plans and have marked up the Household prepare the reports by extracting recommendations set out in the reports to information from their management show how and when they have been information system. The information is implemented. The Royal Household indicated detailed and comprehensive. During the first that the backlog of maintenance tasks two years this was complex and time identified in the surveys had been cleared by consuming for the Department to monitor the end of that year. although the Department on occasion sought further explanation on key projects. The Royal 3.16 A new round of surveys has started in Autumn Household have progressively refined the 1993. The Royal Household have invited presentation as their system has developed and tenders for the first of these, to cover St James’s the 1993-94 quarterly reports are easier to Palace, Clarence House and Marlborough follow. The Royal Household explained that on House Mews. The Department agreed the terms assuming responsibility in 1991, their of reference for this survey, which is to be approach was to establish the systems and independent, costed and to a specified format. database of all relevant information first, much This format should facilitate performance of which was not previously available, and measurement of the quality of maintenance then to move on to refining and slimming work and the extent of any outstanding down the presentation. maintenance [paragraph 2.19). In order to maintain a five-year cycle, surveys should have recommenced in 1991. However, the Royal Royal Household procedures Household did not consider it appropriate to launch a second cycle before their Department 3.14 Taking account of action taken in response to of Property Services was fully established and audit reports, the Department consider that they had completed reviewing the earlier they have obtained satisfactory assurance from S”lVSYS. internal and external auditors about the Royal Household’s procedures. They have been able to assessthe quality of the Royal Household’s Conservation works procedures through examining the latter’s desk instructions, monitoring of project 3.17 The Royal Household do not employ cost outturns and their own active involvement conservation specialists, although their staff in major projects, where they attend project have considerable experience of working in committees, are involved in decision-making historic buildings. Since their establishment, and make site visits. the Department of Property Services have involved English Heritage in planning and monitoring of works. Under the previous Surveys arrangements English Heritage were not consulted regularly; for instance, they did not 3.15 The former Property Services Agency arranged beconwinvolved in the Windsor Castle surveys of the estate in a programme running rewiring project, which started in 1987, until from 1985 to 1990. The surveys were the first 1991. to be carried out and contain much historical
23 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES -
3.18 Although they have Crown immunity from indicator of substantially improved efficiency, listed building and scheduled monument suggesting that the measures taken by the legislation, the Royal Household, like Royal Household have proved valuable. Government departments, must consult English Heritage about alterations to listed 3.20 The National Audit Office also examined buildings, and about all works to scheduled project cost information provided to the monuments, under Department of the Department. The detailed annual plans Environment Circular X1/84. This requirement submitted by the Royal Household in 1991-92 covers all the Palaces and Windsor Castle. and 1992.93, listing all the individual projects English Heritage examine and discuss with the in the programme with their estimated costs, Royal Household the content of the annual enabled the Department to compare the latest works programme to identify at an.early stage project estimates with the previous year’s works with conservation implications which project estimates. The Royal Household’s might require consents. They are routinely 1992-93 report listed 19 projects over!Z150,000 consulted on major projects, advise on the and for 16 of them compared the estimated conservation expertise of firms being total project cost at the end of 1992-93 with the considered for Royal Household camacts and budgeted total cost at February 1992. For four inspect sane ongoing works on site. Since the projects the total costs had fallen from f9.4 current arrangements were introduced, English million to Ea.0 million, including one Heritage believe that the Royal Household have reduction of f1.3 million (45 per cent] on consulted them on all significant schemes phase six of the Kingsbury rewiring project at requiring their clearance and that liaison Windsor. For the other 12, the total costs had arrangements have substantially improved. increased from fl1.7 million to f13.1 million, including one increase off333,ooo (70 per cent] on two phases of a project to repair brick Cost control and achievement of and stonework at St James’sPalace (primarily value for money because the scope of the project was extended to cover re-roofing). Overall, the aggregatecost of the 16 projects was approximately the same 3.19 The National Audit Office examined whether there was evidence available to the Department as estimated. At the time of their fieldwork, information was not readily available to the that the Royal Household’s procedures were achieving value for money. In order to control National Audit Office to compare the latest project estimates with the initial estimates costs the Royal Household have minimised non-competitive work and replaced daywork made when the items were first included in the programme, which in many caseswould have and measured term contracts with lump sum tenders where possible. They told the National been before the Royal Household assumed responsibility. However, such information is Audit Office that they are also improving the cost-consciousness of in-house building staff, available in the Royal Household’s records and analysing and monitoring expenditure nmre from September 1993 has been included in the closely, reviewing specifications more quarterly reports to the Department. thoroughly and assessing requests from user 3.21 The Royal Household believe that a firm figure departments of the RoyalHousehold more monitoring effectively. The majority of these measures are for purposesis not availableuntil tenders are received. Using this measure, the the subject of performance targets in the Royal Household’s annual plans. New measured term Royal Household’s own performance indicator on project cost shows that 10 out of 35 projects contracts of f75,OOOor more must be approved over +X5,000 were completed in 1992.93 by the Department. They have also introduced within the contract amount specified at the a computerised cost control system to improve time the tender was let. Nine of the other 25 monitoring of project costs and timescales. The projects had cost increases of more than 10 per Royal Household stated that they were able to accelerate the work programme to undertake cent. Of the six largest of the 35 projects costing smne f9.4 million, the total excess projects with a value in aggregateof around Ell.4 million during their first two years of costs were less than three per cent of contract prices and overall costs exceeded tender prices operation, 1991-92 and 1992-93, which were by 3.5 per cent, suggesting good control wer additional to the projects included in the plan contract variation. Most increases were for these years drawn up by their predecessors. Performance of this nature provides a good
24 PROPERTY SERVKES IN THE ENGLISH OCCUPIED ROYAL PALACES
ascribed in the annual report to additional with information in a readily usable form work found to be necessary after the start of the [paragraph 3.13). The Department’s monitoring project. role would also be assisted if they could call on specialist works expertise other than that 3.22 Controlling the costs of works projects in employed by the Royal Household where historic buildings is notoriously difficult as the appropriate, for example in evaluating extent of work required cannot necessarily be proposals for significant new expenditure, gauged until previously hidden parts of the assessingthe works programme (paragraph structure are opened up. This is particularly so 3.11) and examining procedures [paragraph in the Occupied Royal Palaces which have 3.8). The role of such specialists should not be been subject to numerous alterations during to second-guess the professional judgements of their history. This puts a premium on effective the Royal Household’s own staff, but to assist estimating and planning procedures during the the Department’s staff in directing their specification phase so that tenders can be attention to, and asking questions on, the key based on a realistic estimate of the work areas of activity. involved. The Department told the National Audit Office that they knew that early estimates might often be inaccurate, but Salvage and restoration work at because of the above difficulties, did not Windsor Castle believe this represented a weakness in the Royal Household’s procedures. 3.25 After the fire, the Royal Household established a Steering Group to deal with the immediate practical response to the fire. As soon as they Department of National Heritage were allowed on site, they took steps to protect resources the building from further damage and initiate salvage work, using contractors already on site 3.23 Four staff in the Department’s Royal Estate working on a major project. This involved the division are directly responsible for monitoring temporary roofing of the fire-damaged area, the Occupied Royal Palaces grant-in-aid; their detailed examination of the surviving aggregateinvolvement is equivalent to about structure, erection of scaffolding, clearing and one full-time person. None of them has any sifting debris and dehumidification. professional property management expertise. Their other responsibilities include a number 3.26 In January 1993, the Steering Group completed of other historic buildings and monuments, a comprehensive report which produced initial such as the Albert Memorial and Royal Naval cost estimates for restoration of each part of the College, Greenwich, and State Ceremonials. site. For each of the nine principal rooms, The staff have been stretched by work related estimates were produced for authentic to the Windsor fire. Procedures are restoration, for replicating the former documented and disseminated as fully as appearance of the rooms using modern required given the small number of staff methods, and for reconstruction to involved. The branch has access to financial contemporary designs. The cost of restoration expertise within the Department and was estimated at between f 30 million and E40 conservation expertise through English million depending on the method used. The Heritage, but do not have professional report indicated that different methods could expertise on works expenditure. Nor do they be adopted for different parts of the building, have the resources to examine in detail the according to the extent of loss and value of extensive information provided by the Royal what was damaged. The Secretary of State and Household. the Royal Household then decided on the basic approach to the restoration project with advice 3.24 The systematic analysis of the extensive from the president of the Royal Institute of financial information provided by the Royal British Architecture and the Chairmen of the Household initially would have been Royal Fine Arts Commission and English relatively time-consuming. However the Royal Heritage in their personal capacities. A high Household have progressively refined the level Restoration Committee chaired by the quarterly reports to provide the Department Duke of Edinburgh was established in July 1993 to advise on the detailed restoration of
25 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Photograph1: FrogmoreHouse. in the groundsof WindsorCastle, one of the lesserknown of the around100 propertiesin the care of the Royal Household’sDirectorate of Financeand PropertyServices
Photograph2: The Royal Household’simaginative initiative of opening BuckinghamPalace to the public to contributeto the costs of fire damage restorationillustrates the benefitsarising from the transfer of responsibilitiesto the Royal Household.
Photograph3: The Royal Mewsat Buckingham Palaceshowing the new canopyerected by the Royal Householdin a mannersympathetic to its historic surroundingsand cleanedbrickwork. PROPERTY SERVICES IN THE ENGLISH OCCLIF’IEDROYAL PALACES
Photograph4: The fire burning at WindsorCastle during the night of 20Navember1992.
Photograph5: The PrivateChapel in WindsorCastle after the fire. The fire started in cuItains coveringthe alto‘vein the centre of the picture, probably due to the close proximity of a spotlight.
Photographs1 to 6: Reproducedwith the kind permissionof the Royal Household.
Photograph6: The scaffoldingand temporary roof put in place over the fire damagedarea of WindsorCastle within days of the blaze. PROPERTY SER”lCES IN THE ENGLISH OCCUPED ROYAL PALACES
the nine principal rooms. Box 5 shows the four Box 6: The Windsor restoration project has project phases and estimated costs and four phases: timescale. The works will incorporate full fire protection to latest standards. 1. Salvage and stabilisation (paragraph 3.25) completed in April 1993 at a cost of El.4 3.27 The Royal Household have engaged million. consultants to manage the restoration project and a framework for project management and 2. Provision of permanent roofing over the control has been drawn up. The Steering Grand Reception Room, St George’s Hall, Group have general oversight, with reporting Chester Tower and the Equerry’s Staircase lines to the Royal Household and the landing, and reglazing of windows in these Department. The Department recognise that areas where possible to assist this is a very special project and intend to take dehumidification: expected completion a close interest in its implementation. The date February 1994 at a cost of El.2 Royal Household will submit proposals to million. them for each phase of the project for consideration and approval. English Heritage 3. Re-roofing of remaining areas (except for are represented on the Steering Committee and the previous Private Chapel Area), are being extensively consulted. reprovision of mechanical and electrical services, restoration of the Great Kitchen, reconstruction of kitchen support accommodation, repair of other ground floor staff areas and principal floor circulation areas and design and construction of replacement staff accommodation.
4. Reconstruction and restoration of the nine principal rooms damaged in the fire, on the basis of proposals submitted by the Royal Household and approved by the Restoration Committee -Phases 3 and 4 ar expected to be completed in August 1996 and 1998 respectively, at a total cost of around f33 million. This timetable may be subject to adjustment if the drying out of the fire damaged area progresses more slowly than expected.
26 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Part 4: Fire protection
4.1 This Part considers the arrangements by which by an eminent heritage architect and a former the Department satisfy themselves as to the senior official in Her Majesty’s Fire Service adequacy of fire prevention measures, having Inspectorate. The Inquiry’s terms of reference regard to previous fires in historic buildings. Wi3X Since April 1991 the Royal Household have taken over from the Department of the “In the light of the Windsor Castle fire to Environment responsibility for ensuring that assessthe adequacy of fire protection there are adequate fire protection measures in measures for the royal palaces and the Occupied Royal Palaces. Before 1 April residences for which the Secretary of State 1990 the former Property Services Agency for National Heritage has financial were responsible, and they continued to responsibility and to report to the provide the service for the Department of the Secretary of State”. Environment in 1990.91. 4.5 The Department stated that the Inquiry was to 4.2 In July 1993 the Committee of Public Accounts concentrate on general strategy rather than reported on Fire Prevention in England and detailed fire protection measures for each Wales (52nd Report, 1992.93). The Committee palace, and that the heart of the Inquiry was were concerned at the serious backlog of fire assessment of value for money of existing fire safety certification work in Crown premises protection strategies, and alternative or and that many types of higher risk premises, additional strategies. It was not the role of the including Royal Palaces, were not required to Inquiry to look back over the past. The Royal be certificated. They welcomed the announced Berkshire Fire and Emergency Service intention to carry out a comprehensive review undertook a statutory examination of the of fire safety legislation with specific causes of the fire and supplied a copy to the consideration of the provisions and Inquiry, who made use of its findings. As is immunities at present applying to Crown customary, this earlier statutory report was not premises. published.
4.6 The Inquiry consulted twenty-six organisations The Windsor Castle Fire and the with an interest or role in fire protection. The Bailey Inquiry Department published the report ‘Fire Protection Measures for the Royal Palaces’, which discharged the remit provided by the 4.3 On 20 November 1992 a fire started in a first floor private chapel. 104 rooms were destroyed Department, on 26 May 1993. It examined the or damaged and 2,800 square metres of roof circumstances of the fire and set out a strategy for fire protection in historic buildings which were destroyed. Much of the irreplaceable original historic fabric of the affected area was recognised the constraints of cost and the need to minimise changes to historic fabric. The Fire lost but Castle staff and contractors were able to save most of the valuable antiques and Protection Association told the National Audit works of art. Office that they welcomed the report as an , important and definitive contribution to fire 4.4 As a result of the fire, the Secretary of State for protection in historic buildings. National Heritage announced on 15 December . 1992 that he would be commissioning an inquiry into fire protection at all royal palaces Summary of the Inquiry’s findings - for which his Department have financial Cause of fire responsibility, ie including those managed by the Historic Royal Palaces Agency and English 4.7 The Inquiry noted that the likely cause of the Heritage. He appointed Sir Alan Bailey, former fire was that pictures placed in front of Permanent Secretary at the Department of curtains screening the altar made them come Transport, as Chairman of the Inquiry, assisted too near to or touch oue ufa number of
27 PROPERTY SERVICES IT.4THE ENGLISH OCCUPIED ROYAL PALACES
tungsten spotlights used to illuminate the altar, causing a smouldering fire. The chapel was Figure 6: Extentof fire damageat WindsorCastle being used for storage of pictures in the Royal Collection displaced by work elsewhere in the Castle, A single bank of unlabelled switches controlled the lights in the chapel. The picture restorers, who usually work at Buckingham Palace, put on all the switches.
4.8 The picture restorers discovered the fire between 11.25 and 11.3Oam.The Castle fire brigade was alerted at 11.35 and reached the scene at 11.42, followed soon after by the local authority brigade. The fire had by then spread rapidly, assisted by the many cavities and voids in the building structure and room panellings. Fire fighting continued for 13 hours. The Inquiry report praised the Castle’s well rehearsed pre-planned salvage arrangements and the liaison between the Castle management, its fire brigade and the local authority fire service. This liaison played a major role in what was a successful fire-fighting operation. The value of a recently installed compartment wall between the fire damaged area and the nearby private apartments was demunstrated as it enabled the fire brigade to effect a fire break, stopping the advance of the fire towards the apartments, which were virtually undamaged [Figure 6). Source: WindsorCast/e Fire: Optionsfor Reconstruction,January 1993. 4.9 The report found that although the fire did not Figure6 showsthe extent of fire and water damage(shaded) display any unusual characteristics in its from the fire at WindsorCastle. development and spread, there were important lessons to be learned. Some of these were positive, in particular the effectiveness of the fire risk management and actions to take in salvage operations, but the need for case of fire, and the need for fire separation or improvements in fire risk assessmentand compartmentation to reduce the spread of fire. training was also demonstrated. It was not within the Inquiry’s remit or intention to 4.11 Overall, the Inquiry found that basic fire safety ascribe any blame: the particular combination precautions were generally in place across the of circumstances was particularly unfortunate palaces and that work on improvements was and extremely unlikely to recur. Instead the already in train. Fire precautions in place Inquiry drew lessons from these circumstances included good security and salvage to minimise the risk of any fire on a similar arrangements, first aid fire-fighting equipment, scale occurring in the Royal Palaces, detailed break-glass warning and alarm systems in most in Box 6. situations, regular exercises and close liaison with local fire brigades. The Royal Household 4.10 The National Audit Office noted that the report and Historic Royal Palaces Agency which had has identified nine measures which should taken charge of fire protection arrangements in help prevent a repetition of or serious loss recent years were aware that there was a great from a fire such as occurred at Windsor. In deal still to do to bring their fire precautions summary, the main lessons were the need for up to date. In particular only three palaces had the earliest possible detection of fire by a fully comprehensive automatic fire detection reliable automatic fire warning system, the systems; the standard of documentation was need for effective training of all staff in basic inadequate; and fire certificates had not generally been obtained (although for most parts of the premises they were not required).
28 PROPERTY SERVICES IN THE ENGLISH OCCWlED ROYAL PALACES
Box 6: National Audit Office summary of the (g) Not all staff received training in the use oi main lessons to be learned f&n the Windsor fire-fighting equipment. Early use of the fire, as identified by the Bailey Inquiry Report. hose-reel within easy reach of the fire could have checked its development. All (a) value of well-rehearsed salvage staff should be given training in the use of arrangements underlined. available equipment and familiarisation with the location of equipment where they @) excellent liaison between Castle are working. management,their fire brigade and local authority fire service. [h) Training of visiting workers with the action to take in the event of fire. The (cl Need for thorough professional fire risk workers who discovered the fire were not assessment survey to identify all possible based at Windsor Castle and the training fire risks and measuresto eliminate them. they had received did not cover the Existing fire safety surveys did not centre on Castle’s fire routine. assessmentand limitation of fire risks nor spot this particular danger ignition of (i) Comprehensive automatic fire detection fabrics by sourcessuch as light bulbs is not would have bought precious time before unknown. the fire had developed. A system which was due to be commissioned within weeks cdl Change of use The Chapel was put to an of the fire would not have provided full unusual use, which a comprehensive fire coverage in the Chapel. safety strategy should identify as altering assessedrisk and seek-tolimit the risk. [j) The need for effective comparbnentation and fire-stopping, a lesson from earlier [el Strong casefor flame-retardant treatment fires in historic buildings, was of all curtaining material, particularly if not reemphasised in this instance. Effective historic or valuable, during routine cleaning compartmentation had been installed the curtains in which the fire originated were between the Chapel and the Private not treated. Apartments as part of the ongoing rewiring project. VI Fire prevention training needed for all staff, casual workers and contractors. That at (k) Wherever possible openings into voids ani Windsor could have been more cavities should be closed, if only comprehensive and better documented so as temporarily, as soon as practicable. The to be likely to alert staff to hazards such as contribution of voids and cavities to fire were noted in this case. spread was probably greater because of the opening-up carried out in connection with electrical i-e-wiring works.
At Osborne House, which had been English already implemented, or well in hand, before Heritage’s responsibility for longer [and as a the fire. The Inquiry did not analyse in-depth more recent palace is in some ways easier to the cost of their recommendations. but noted protect), the Inquiry found the fire precautions that most could be implemented at little cost. generally adequate and commended their Fire However, automatic fire detection, based on Safety Manual, in draft at the time of the fire, estimates at two of the larger palaces, was to the other agencies. likely to cost Efi-9 million and, from experience at Windsor, a full programme of 4.12 The Inquiry concentrated on a strategic compartment&m might cost some +Z4million. analysis making 19 recommendations, covering These costs were not apportioned between the the whole range of procedures and measures to different agencies. be taken in the palaces to prevent a fire occurring and minimise the damage in the event of fire [Box 7 overleaf). The Inquiry noted that a number of these measures were
29 PROPERTY SERVKES tN THE ENGLISH OCCUPIED ROYAL PALACES
Box 7: The main strategic recommendations of implemented at once would be. He confirmed the Bailey Inquiry were as follows: that detailed professional surveys were being or had already been undertaken for each palace . a senior manager to be responsible for all to recommend safety improvements consistent aspects of fire protection, including with preserving the historic fabric and that implementing a fire safety Policy automatic fire detection systems would be statement and manual, fire surv,eys, and installed in each palace which did not have training; such a system. The timing of these and other measures would depend on survey reports, the . comprehensive professional fire surveys in scope for adjusting planned works programmes each palace to make recommendations on to accommodate additional fire protection management systems and capital works; measures and the availability of funds.
. automatic fire detection systems and fire 4.14 The Department then wrote to the Royal compakmentation throughout the palaces Household asking for a position statement but partial sprinkler systems only as referenced to the 19 recommendations in the required by individual fire surveys: Inquiry report as soon as possible, describing what had already been done in each palace and . safety precautions for those working, including an estimate of how much the Royal visiting and resident in tbe palaces; Household expected to achieve in a year’s time. Further progress reports are to be submitted by the end of May 1994 and l the palaces to obtain fire certificates for annually thereafter. parts of the premises designated under the Fire Precautions Act 1971. See Note below: 4.15 In October 1993, the Royal Household submitted their position statement describing l procedural measures relating to training, the extent to which the report’s fire safety requirements in contracts, fire recommendations had been in place before the safety checks on change of use, liaison Inquiry, and the further actions in hand or with fre brigades, salvage and planned to comply with the recommendations. photographic recording of significant It stated that: the Royal Household were interiors: already conducting regular fire surveys; had established fire safety policies: had staked a . the agencies (The Royal Household, programme to install automatic fire detection Historic Royal Palaces, Royal Annouries systems in each palace; were providing some and English Heritage] to co-ordinate and compakmentation; and complied with many of fund research into fire safety in heritage the detailed recommendations in the report buildings. relating to fire precautions, safety and salvage procedures. Since the Inquiry they had Note: This had been done for all Palaces by the appointed in-house tire safety staff, applied for time the report was published; the Inquiry fire certificates, staked to develop a policy found some uncertainty about the need to statement and fire manual consolidating apply but notedthat the Home Officewere existing practices, and introduced tighter fire reviewing the application of the Act to Crown safety procedures and more comprehensive premises. training. Newly established fire safety committees will consider any additional precautions identified by the fire certification process, and scope for further measures such as greater compakmentation and sprinkler Response to the Inquiry Report systems will be identified by detailed surveys planned for each palace. Implementation costs 4.13 On 26 May 1993, the Secretary of State for would be largely found from within the funds National Heritage announced that he and the already allocated for works services. Royal Household accepted the general strategy recommended as sensible and necessary. Many 4.16 It was not within the Inquiry’s remit to report recommendations were already being on the role of the Department in ensuring that implemented or planned and those measures the Royal Household benefited from past which the Inquiry team considered should be experience and had effective arrangements for
30 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
insurance and risk management. The National detection and the provision of some fire Audit Office therefore examined these issues to compartments. This addressed concerns determine whether the Department had given expressed by the local fire brigade. sufficient priority to the prevention of loss from fire. 4.20 In 1990 a Working Party, chaired and co-ordinated by the Fire Protection Association, produced a guide on the fire Application of past experience protection of historic buildings ‘Heritage Under Fire’. The Working Party was supported by 23 4.17 Fires in historic buildings are not uncommon. organisations with an interest in fire safety or Fires in 1986 at Hampton Court Palace and in historic buildings, including the Department of 1989 at the National Trust property Uppark the Environment and English Heritage. At least cost JZll million and at least !?13million nine of its recommendations were restated in 1 respectively to restore. Between 1984 and 1992 some form in the Bailey report. These included the Fire Protection Association logged 36 fires the appointment of a fire safety manager, each causing damage of over f50,OOOin United consideration of structural fire prevention Kingdom historic buildings. In one case, a measures, establishment of an action plan and serious fire at a sixteenth century mill in May effective staff training arrangements. The 1990 was caused by heat from an electric light emphasis on staff training and fire prevention bulb igniting a curtain. There have been and suppression procedures is particularly similar fires in non-historic buildings. relevant to circumstances of the fire at Windsor Castle where the Bailey report identified the 4.18 In the Hampton Court fire, the automatic fire lack of staff familiarity with procedures as a detection system failed to give the alarm due to contributory factor. Most of these measures human error and an unsatisfactory design were also implicit in the Garlick report. feature. The fire spread extensively in the absence of compakmentation. The Department 4.21 The Department considered that ‘Heritage of the Environment commissioned Sir John Under Fire’ was a useful report and that most Garlick to report on the fire. Although his remit of the recommendations were consistent with was restricted to Hampton Court and the action already being taken by the former circumstances of the fire, five of his detailed Property Services Agency as a consequence of recommendations reappeared in the Bailey annual fire inspection reports prepared by report albeit given much wider application. qualified fire officers. Nevertheless they noted that the report was not specific to palaces and 4.19 English Heritage told the Department of the presented guidance in a fairly general manner, Environment in August 1986 that they had reflecting the disparate views of those on the decided to implement the recommendations of Working Party. the Garlick report, and from the Bailey report appear to have done so. As the relevant papers 4.22 Some ‘Heritage Under Fire’ recommendations were not all available following the transfer of also appeared in the Department of the Departmental responsibilities, the National Environment’s ‘Fire Precautions Guide’, which Audit Office were unable to assessthe was issued to all government-funded bodies adequacy of the response in the Occupied including the Royal Household. The current Royal Palaces to the Hampton Court fire, but (1991) edition covers, in particular, procedures they saw evidence from the papers made for applying for Fire certificates, historic available to the Bailey Inquiry, that the former buildings and precautions where contractors Property Services Agency took steps to are present. However, it provides little improve fire protection arrangements in all the guidance on fire protection strategies or senior Palaces following the fire at Hampton Court. In management oversight, although the particular, major m-wiring projects were Department of the Environment have now commenced, improvements made to issued additional guidance drawing attention fire-fighting water supplies and action taken to to the findings of the Bailey report. respond to recommendations made by fire safety officers. For example, the major 4.23 The findings of the Bailey Inquiry confirm that rewiring Kingsbury Project at Windsor Castle there was much in already published reports included the installation of automatic fire on fire protection which was applicable to the Occupied Royal Palaces. The division in management responsibilities between the
31 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Royal Household and the former Property Household had reviewed the provision of fire Services Agency prior to April 1991 cannot patrolmen (a decision which in no way have helped the implementation of such contributed to the Windsor fire). They told the measures. When the Royal Household assumed National Audit Office that they knew that the responsibility for fire protection, they took Royal Household had a regular programme of over any plans which existed for ensuring that fire protection surveys [albeit without seeing the lessons of the Garlick report and ‘Heritage copies). The Department did not see the Under Fire’ were effectively applied. The palace-level strategies being drawn up at the Department did not at that time institute any time of the fire until March 1993. formal action plan or other monitoring mechanism against which they could check 4.27 The shift of emphasis towards fire protection that appropriate measures were implemented became more readily apparent in the five year with due speed, in the way that the reporting plan supplied to the Department in March arrangements they introduced after the 1993. This showed that in 1993-94 the Royal Windsor fire do. Household plan to spend ~430,000 from the I grant-in-aid on day to day fire protection, 4.24 In fact the Royal Household’s submissions to primarily for 17 in-house fire patrolmen and I the Bailey Inquiry show that they had done fire protection officers, and over E5 million on much to give fire protection a higher priority in works projects aimed primarily at improving 1 line with the recommendations subsequently fire protection. The latest five year plan shows made in the report. These included measures works projects of this nature costing f 17 I which had either not been identified by the million over this period. These include: 1 Property Services Agency following the fire at Hampton Court or not given sufficient priority . the installation of a full automatic fire for work to have finished by 1993. detection system at St James’sPalace by 1994-95 and at Buckingham Palace and 4.25 In 1991 the Royal Household took two major Clarence House by 1996-97; decisions, following discussion with the
Department, to install automatic fire detection l fire safety surveys of each palace by fire systems across the entire estate and to consultants: and accelerate the ‘Kingsbury’ rewiring project at Windsor Castle. The latter project included the . a range of other measures to implement installation of automatic fire detection and fire fire safety officers’ recommendations. compartmentation and had been planned by the former Property Services Agency in six Some of these projects were brought forward phases spanning ten years to 1996. The Royal after the Windsor fire. They may need to be Household accelerated the remaining phases so supplemented by other measures to implement that most of the work would be completed by the Inquiry report. Easter 1993. Ironically the fire destroyed much of the work of phase III, which had cost s4.7 4.28 The Department are committed to reviewing j million, shortly before it was to be progress in implementing the commissioned. recommendations of the Inquiry report. This commitment requires them to have an active I 4.26 In the absence of specific monitoring and informed approach to ensure that progress procedures, there is only limited written is satisfactory, and to implement the Inquiry’s evidence as to the Department’s knowledge or recommendation that there should be consideration of the Royal Household’s other co-ordination and common funding of research I’ fire protection measures, prior to the Windsor into fire safety in heritage buildings. By fire. However, the Department could see that December 1993 they had held two meetings of the Royal Household had taken over many of all the relevant bodies, such as English I/ the staff employed by the Property Services Heritage, to consider how to implement the Agency on fire protection, who, they expected, recommendation. They were also considering 1 would continue the arrangements previously the establishment of a working party with the ! in place, such as regular inspections and national museums and galleries to review the / implementation of guidance in the ‘Fire strategy of fire protection and identify best Precautions Guide’. They could also see that practice. there was greater emphasis on fire protection in the works programme and that the Koyal
32 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Insurance 4.32 Instead the review emphasised the importance of a sound management strategy as a means of 4.29 The buildings at Windsor Castle were not reducing the risks of potential losses. It commercially insured against fire. The recommended that the Treasury prepare Financial Memorandum allows the Royal guidance for departments. The Treasury Household to undertake commercial insurance circulated the review’s conclusions to all where this offers better value for money, departments. They were copied to the Royal subject to Departmental consent. The Royal Household in June 1993. The Royal Household Household discussed the question of insurance told the Department that without information with the Department of the Environment in on the commercial cost of insuring other August 1991 and were advised not to take out Government properties, they could not commercial insurance. The Department do not determine in isolation whether self-insurance insure buildings against fire; this is in line with was more cost-effective. The Department stated Government policy, which is to take out that commercial insurance companies inspect commercial insurance only where this is more the fire precautions at Buckingham Palace and cost-effective than non-insurance. Windsor Castle in the context of the Royal Household’s business disruption insurance for 4.30 Following a review, the Financial Secretary to the Royal Collection’s commercial activities. the Treasury told the House of Commons on 14 July 1992 that the Government had decided to retain the existing rule about insurance Risk management and evaluation [Appendix 4). The policy remained that in deciding whether to insure against the risk of 4.33 The Bailey report noted that ‘one way of losses or claims f&m third parties, the stating our task would be to ensure that fire underlying principle which departments precautions at the palaces are at least as should observe was that of cost-effectiveness: effective as a commercial insurance company namely whether commercial insurance or would require if it were taking the fire risk’. non-insurance would be expected to offer a However, it concluded that it may not be worth better financial outcome taking one year with an insurance company’s while to calculate a another. In this respect, the Treasury discounted premium to reflect precisely any considered that there was no difference in precautions decided on by individual practice between the Public and Private managers. Therefore, managers would have a Sectors. In most cases,commercial insurance special responsibility to protect their buildings was not judged to be cost-effective for however the Government arranged its Government bodies. insurance.
4.31 The Treasury provided the Committee of 4.34 The Treasury circulated draft guidance on risk Public Accounts with a note on the outcome of management in June 1993. This defined risk the review in July 1992 and gave oral evidence management as the planned and systematic to the Committee later that year. The paper approach to the identification, quantification indicated that one option considered was and control of risk. It provided a framework whether the Government should set up an and a range of techniques for assessing the internal fund into which departments, costs and benefits of reducing the risks to Executive Agencies and other government which an organisation was exposed. In funded bodies would pay insurance premiums particular managers should be held responsible and out of which the cost of claims would be for controlling risk and the organisation should met. This would follow the practice of some identify risks, quantify their exposure, identify large commercial organisations which had set and appraise the costs and benefits of options up their own ‘captive’ insurance companies to for controlling risks and agree and implement a provide cover for losses which the risk management strategy. Several other organisations themselves were prepared to Government departments had already taken carry. However, the review concluded that the steps to implement such an approach. The cost of running such a fund and the extra layer Financial Memorandum does not mention risk of bureaucracy involved would not be justified. management but in the October 1993 position statement (Paragraph 4.15) the Royal Household told the Department that they had carried out in-house fire risk assessmentsat
33 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
every palace, either before the Windsor fire or, were adopted,bncausn the additional cost, I in the case of Windsor Castle and Kensington estimated at some f25 to E35 a square metie, Palace, in early 1993. even for a relatively straightforward building, and damage to historic fabric from installing 4.36 The Bailey Inquiry rejected the application of such systems had not been shown to be quantitative risk analysis methodologies as justified by equivalent reductions in risk. The these were not sufficiently well-established or report did not rule out partial sprinkler applicable to a strategic approach. Instead the systems where detailed fire surveys showed Inquiry drew cm professional judgement and the fire risks to be particularly high and the existing guidance on good practice without costs and extent of damage from installation / quantifying the costs or benefits of the relatively low. strategies considered. 4.37 A form of risk analysis was implicit in the 4.36 The Inquiry considered the case for installation Inquiry’s findings, in that the Inquiry applied ,! of sprinkler systems which in the United States their expert feel for risk and benefits in are required by law in federal buildings, drawing their conclusions on sprinklers. The including historic buildings. It noted that Royal Household told the National Audit United Kingdom insurance companies give Office that they already use such an approach large discounts (50 to 60 per cent) where when they take decisions as to the need for and sprinkler systems are fitted, and smaller prioritisation of expensive measures such as reductions for partial systems. This reflects the sprinklers and some forms of high proportion of cases (estimated at 98 per compartmentation. They also draw on the cent) where sprinklers have extinguished fires experience of the insurance companies, which before major fire-fighting efforts were required. give discounts for measures such as sprinkler However, the report also noted that sprinklers systems, as referred to in paragraph 4.36, and were less likely to be effective in complex on the recommendations made by insurance / historic buildings such as the palaces. It companies for Sandringham and Balmoral, I rejected the extensive installation of sprinkler which, being the private property of the Queen, I systems if the report’s other recommendations are insured. /
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34 PROPERTYSERVICES IN THEENGLISH OCCUPIED ROYAL PALACES
Appendix 1
[For Environment read National Heritage) Memorandum of Understanding [As approved by the Lord Chamberlain, the Secretary of State for the Environment and the Permanent Secretary, DOE) The Provision of Property Services to the Occupied Royal Palaces
1 On 1 April 1991 the Lord Chamberlain as head of the Queen’s Household will become responsible for arrangementswithin it for the managementof property servicesto the occupied Royal Palacespreviously managedby the Department of the Environment. The Royal Palaces covered by this arrangementare Buckingham Palace,Windsor Castleand certain other Palaces as listed in more detail in the Appendix [not shown but see Box 11together with the property services provided in each case.
2 This Memorandum of Understanding statesthe conditions under which the Lord Chamberlain and the Household will managethe property services and the funds provided for the purpose.
3 The Secretary of State for the Environment has ultimate responsibility for the provision of property services to the occupied Royal Palacesand is answerableto Parliament in this respect, including the provision of funds for the purpose. The Lord Chamberlain is responsible to The Queen for all aspectsof the managementand administration of The Queen’s Household. The Lord Chamberlain will consult with and obtain the agreementof the Secretary of State before advising The Queen in respect of the managementof the property services referred to above and of the funds provided for the purpose. In dealing with matters raised in Parliament the Secretaryof State will seekadvice from Department of the Environment officials, and from the Household as necessary.The Lord Chamberlain will provide the Secretary of State with all relevant information required in this respect.
4 The PermanentSecretary, Department of the Environment, is responsible as Accounting Officer for the propriety and regularity of expenditure against the Department’s Votes and for the prudent and economical administration of such expenditure. Voted funds will he provided to the Household in the form of Grant-in-aid to he used within the terms of a Financial Memorandum issued by the Permanent Secretary.
5 In this connection the Household’s objectives are as follows:
a) to maintain the Palaces as buildings of State to a standard consistent with the Household’s operational requirements and with the royal, architectural and historic status of the buildings, in a manner which ensures value for money;
b) to that end, to organise and obtain works and other property services in the most economic, efficient and effective way to achieve financial and other performance targets as specified.
6 The Lord Chamberlain will obtain the agreementof the Permanent Secretary before advising The Queen on the appointment, remuneration and responsibilities of any Head of Department or Head of Branch who is to control or managethe property services programme and funds. A member of the Household who reports directly to the Lord Chamberlain and is a member of his Committee will be designated by the Lord Chamberlain after consultation with, and with the
35 PROPERTYSERVICES IN THEENGLISH OCCUPIED ROYAL PALACES
agreementof, the PermanentSecretary to be responsible for stewardship of the Grant-in-aid and I for compliance with the Financial Memorandum. He will account for that stewardship to the Department of the Environment in an annual waitten report. I
I 7 Adequate financial managementsystems will he in place within the Household to protect the , Grant-in-aid to the satisfaction of the Permanent Secretary.He will also be consulted about the I terms in which the Household’s auditors are appointed to audit expenditure from the Grant-in-aid, and about any change in that appointment. The Household will act consistently / with the principles set out in ‘*Government Accounting”, in so far as the Grant-in-aid is concerned and will comply with any relevant general guidance that the Treasury may issue on , accounting or audit matters, or any recommendations which the Government have accepted from the Public Accounts Committee or any Parliamentary Committee or authority. The Department of the Environment will notify the Household of these. Membersof the Household will not be expected to appearbefore Departmental Select Committeesof Parliament in respect r’ of matters pertaining to the occupied Royal Palaces.However, they may be expected to appear in support of the Department ofthe Environment’s Accounting Officer ifhe is required to appear before the Public Accounts Committee in respect of any matter relating to the administration of the Grant-in-aid.
8 Staff in the Household provided for from the Grant-in-aid will be members of The Queen’s Household and not civil servants.However, they may be membersof the Principal Civil Service Pension Scheme. The terms and conditions of their employment will be a matter for the Household. However, the Permanent Secretary may request the Lord Chamberlain to approve the commissioning of external inspections of the numbers, grading and pay levels of the posts whose costs are met by the Grant-in-aid. ! I AIRLIE TERRYHEISER
Lord Chamberlain of Her Permanent Secretary Majesty’s Household Department of the Environment
14 March 1991
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36 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Annex Property Services and Royal Palaces included in grant-in-aid arrangements
ProperlySerwice scope A Worksservices As set out in the Scheduleta this Appendix. Procurementand managementof:- Capitalprojects, maintenanceworks, plant operation:wveys and inspections; generaland specific advice on building fabric and services.External and non-domesticcleaning. Internal repair and decorationof apartmentsbefore occupation.Internal repair and maintenanceof Officialapartments during occupation.
B Provision and maintenanceof furnishings and equipment Primarily St James’s Palacebut can apply to any of the Propertieslisted in the Scheduleand includesHeads of Departmentresidences.
C Telecommunicationsservices 1) The Queen’sHousehold. ii) OtherHouseholds with offices in BuckinghamPalace. Offices of the Prince i. Costof equipment,rental. call chargesand maintenance and Princessof Walesat St James’sand The OueenMother’s Household. ii. Costof telephonists. BuckinghamPalace, Windsor Castle to the extent requiredand other properties when The Queenis in residence.
D Fuel and utility bill paying The Queen’sHousehold plus other Royal Householdswithin propertieslisted in the Scheduleto this Appendix.
E Utility charge recoveries Occupiersof apartmentsand other propelties granted on an official or Grace Recoveryof utilities’ chargesto occupiers. and Favourbasis from the agreed scheduleretained by the Royal Household. F Furnishings, decoration and works Primarily BuckinghamPalace and WindsorCastle but can apply to any of the Propellies listed in the Schedule,(as covered by the SeparateAllocation). Worksand other expenditureon accommodationat the discretionof the Sovereign.
G Miscellaneous payments i. Expenses,eg. travelling, uniform. of the other ranksof the Yeomen of the Guard.Salaries of the officersof the Yeomenof the Guard. ii. Wagesand relatedexpenses of craftsmen,porters and BuckinghamPalace and WindsorCastle. night watchmen. iii. Basementcleaners. BuckinghamPalace iv. CustodyGuard service. York Houseand MarlboroughHouse Mews. Ii Recoveries of costs i. Maintenanceof fire fighting equipmentunder control of WindsorCastle Deanand Chapter. 1 ii. Windowcleaning. At BuckinghamPalance Mews to the extent specificallyrequired for openingto the public.
iii. wages Oftwo porters. WindsorCastle State Apartments iv. Maintenanceand servicesat Queen’sGallery BuckinghamPalace “. Ad hoc servicesfor Functions. St James’sPalace
37 Schedule Occupied Royal Palaces covered by grant-in-aid arrangements for provision of works services
A Buckingham Palace 15. Kent Cottage
I. The Palace (excluding internal guardrooms and 16. Colonnade Studio MOD sentry boxes). 17. Garages 2. The Royal Mews (including the Office Block, apartments, CDXWl Equerry’s HOUse, 18. Chapel used as store Superintendent’s House, Comptroller of Stores House and Apartments 16 and 17, Lower Grosvenor 19. The Paddock [also known as Perks Field] Place). C St James’s Palace 3. Royal Lodge The external fabric and services. 4. Garden House 1. The State Apartments 5. The Queen’s Gallery (fabric of the building only) 2. Apartments in Engine Court B Kensington Palace 3. Apartments in Friary Court The external fabric and services. 4. Apartments in Stable Yard 1. Apartment I, PalaceAvenue 5. Apartments in Ambassadors’Court 2. I,2 and 3 King’s Kitchen Cottages 6. Apartments in Marlborough Road 3. Apartments in Clock Court 7. Stable Yard House 4. Apartments in Upper Stables 8. The Queen’s Chapel [including organ) 5. Apartments in Prince of Wales’ Court 9. Chapel Royal [including organ) 6. Apartment 7 10. Apartment adjoining the Queen’s Chapel 7. Apartment 819 11. Birdman’s lodge 8. Apartment 10 12. Marlborough Gate Lodges 9. Upper Lodge D Clarence House (including offices in 10. Ivy cottage Ambassadors’ Court]
Il. Nottingham Cottage E Marlborough House Mews
12. Wren House 1. Flats and garages
13. Old Barrack Block 2. Workshop, stores and armoury
14. The Old Stables 3. Laundry drying rooms
38 PROPERTYSERVICFS IN THEENGLISH OCCUPIED ROYAL PALACES
4. The SquashCourt 22. Royal Gardens (Official and Grace and Favour accommodation, mushroom sheds and F Windsor Castle greenhouses)
1. The external fabric and services, boundary walls of 23. 3 New Albert Lodge Cottages the Castle and Home Park 24. 1 and 2 Albert Gate Lodge 2. The State Apartments 25. Bungalows 1 and 2 Royal Gardens 3. The Private Apartments 26. Exterior of Crown Estate workshop and stores 4. Within the Castle,the official and Graceand Favour apartments, stores, workshops, offices and shops, 27. Home Park Cottage (structural maintenance), roads and footpaths and statues 28. Adelaide Cottage
5. Garden House 29. Adelaide Lodge
6. The Police Lodge 30. Kennel Cottage
7. The Royal Archives (Round Tower) 31. Golf Cottage
8. Military Knights Houses 32. Slopes Cottage
9. Albert Memorial Chapel and Royal Vault 33. Albert Cottage
10. Superintendent’s yard, garagesand lean-to 34. Double Cottage
11. The Royal Mews (includes Royal Stables House, 35. Albert Bridge Lodge Burford House, St Albans Close, Turnock’s residence, Red Brick Cottages,West Lodge Quarters 36. Victoria Bridge Lodge and North Lodge) 37. Cambridge Gate Lodge 12. Fire station in the Mews 38. Mausoleum Cottage 13. 5 and IO Chantry Close 39. Frogmore House Cottages1 and 2 14. 3 and 9 St Mark’s Place 40. Frogmore Stable Flats I to 6 15. The Home Park: GateLodges -Town Gate,Frogmore Garden Gate and Longwalk Gate 41. FrogmoreCottage Flats 1 to 5
16. Sports Pavilions -Golf, cricket, bowls. 42. Frogmore Garden Cottage
17. Cavalry exercise ground 43. Mulberry Cottageand range of buildings adjoining
1 18. Frogmore House [The House including the Flats 44. Aviary Cottages1 to 4, Queen’s Tea Room Cottage within it] and RoseCottage
19. The Gothick ruin and Victorian Tea House 45. Windsor Hall Flats 1 to 6
20. Frogmore Mausolea 46. Fain&w Cottage
21. The Royal Farm (Prince Consort Farm including the 47. Windsor Great Park (Studio Cottage and Royal Dairy and the official and Grace and Favour Cumberland House Mews l-10 inclusive) accommodation1
39 PROPERTYSERVICES IN THEENGLISH OCCUPIED ROYAL PALACES
48. St Albans Street (CoachMuseum) and Royal Mews G Hampton Court Mews and Paddocks Ghatieurs’ and Horse Box Drivers’ Flats 1. Mews-First floor flats, 1 to 8 49. The California GardensStore 2. Apartment 50 50. Temporary Building occupied by the Royal Archives 3. Flats S-12and The Cottage I 51. Waterworks 4. Faraday Cottage ! 52. Cranborne Reservoir 5. The Royal Paddocks (including Ivy Cottage and .’ Laurel Cottage) 53. SewagePumping Station 6. Bushy Lodge,Rose Cottage, Paddock Cottages1 and 54. Ice Caves 2, Hawthorne Lodge Barton’s Cottage and Clock Tower House in Bushy Park 55. 3 External Clocks H AIIY new construction within the boundaries of 56. Bridges within the Home Park, (approx. 201 the estate as agreed between the Royal Household and DOE (now Department of 57. Hard paths and steps within the Home Park National Heritage] /i
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40 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Appendix 2 External Auditors’ letter of appointment - extracts 12 March 1991
[For Department of the Environment now read Department of National Heritage]
Dear Sir
The Royal Palaces Grant-in-aid Account
Introduction
1 I write to ask KPMG Peat Mawick McLintock to accept appointment as auditors of the above account for the year to 31st March 1992. Reappointment will be confirmed at the end of each year’s audit, subject to satisfactory performance.Before changing either the engagementpartner or managerI should be grateful if you would obtain the Royal Household’s approval, who will consult with the Department of the Environment before giving it.
Audit report
2 The primary reporting requirement will be to report, to the Lord Chamberlain, whether in your opinion the annual accounts (as referred to in paragraph 14 of the Financial Memorandum) show a true and fair view of the state of financial affairs of the Grant-in-aid Account as at the accounting referencedate and of its income, expenditure and cash movementsfor the year then ended. The accounts will be prepared in accordance with the accruals concept; however, reporting to the Department of the Environment must be in terms of cashreceived and expended and the accounts will therefore include a more detailed funds statementthan would normally be required, together with a specific reconciliation of the information in the funds statementto the income and expenditure account and balance sheet. The audit should be carried out in accordancewith Auditing Standards and having regard to relevant Audit Guidelines. In order to assist with the execution of your work I will be responsible for making available to you, as and when required, all accounting records and relevant information.
3 Your audit should also be planned to enable you to confirm in your annual report that, in all material respects,in your opinion:
a) proper books and records have been maintained during the year under review by the Royal Household in respect of Grant-in-aid income, expenditure and net assets;
b) the requirements of Government Accounting as notified to the Royal Household by the Department ofthe Environment, including any directions and notifications concerning the form or substance of the accounts, have been complied with:
c) the Grant-in-aid has been expended only for the purpose approved by the Secretary of state;
d) all information and explanations which you think necessary for the purpose of you audit have been obtained:
41 PROPERTY SERVICES IN THE ENGLISH OCCUI’IED ROYAL PALACES
e) the Royal Household has observed the conditions of the Financial Memorandum, and any other relevant Royal Household administrative rules, during the year under review; and
fJ the accounts, including the balance sheet and revenue account, are in agreement with the books of account and other relevant records.
4 If you are unable to provide any of the specific confirmations referred to above or can only do so subject to qualification please explain the circumstances in your audit report.
5 A draft of the proposed annual report for the Grant-in-aid will be prepared during the course of the year to 31stMarch 1992 and submitted to the Departmentofthe Environment for approval. I will request a draft of the proposed form of your audit report for inclusion in the draft accoun& in due COUISB.
Report on management information sent to the Department of the Environment
6 As referred to in the attached we are required to report to the Department of the Environment quarterly in respectof our forecastcash needs for the next quarter and in respectof actual income and expenditure during the previous quarter. We should be grateful if you would cm&m, in a separatereport, that nothing has come to your attention during your audit work to suggestthat these quarterly reports are materially inaccurate or made other than on the basis of information recorded in the books and records.It is not expectedthat any significant additional workshould be undertaken for the purpose of this report, which should be provided at the conclusion of your annual audit.
Fraud or other irregularities
7 Ultimate responsibility under the Financial Memorandum for the prevention and detection of irregularities rests with myself as Director of Finance and Property Services.However, I should be grateful if you would provide a separatereport confirming that none of the following have come to your attention during the course of your audit work:
a] any significant losses due to misconduct, fraud or other irregularities which were either disclosed during the course of your audit work or discovered by management;
b) any occasion revealed by your audit when, in your opinion, Members or Officials of the Royal Household fell short of the high standards of financial integrity expected of those responsible for the management of public funds: and
c) any occasion identified during the cowse of your audit when, in your opinion, expenditure of a wasteful or extravagant nature was charged to the Grant-in-aid.
8 If you are unable to provide any of thcl confirmations requested in 7 above please explain the circumstances in your report. The report should be provided at the conclusion of your annual audit. While recognising that we can not expect your work to disclose all irregularities that may exist, some substantive tests to check whether there has been material error or fraud, serious defalcation or other major irregularity should be undertaken (to the extent that these tests are not required as part of the normal audit work).
Accounting system and internal conixols
9 The Financial Memorandum requires the Royal Household to maintain a system of financial and other managementcontrols which is appropriate and sufficient to safeguardpublic funds and to give reasonable assurance that the requirements of propriety and good financial managementare complied with and that the terms of the Financial Memorandum are observed.
42 PROPERTYSERVICES IN THEENGLISH OCCUPIED ROYAL PALACES
I should be grateful if you would prepare an initial report during the courseof our first financial year expressing your view asto whether the accounting and managementsystem is appropriate and sufficient and gives the reasonable assurance required. The report should include recommendations for enhancement as required. Your managementletter should also include a review of the scope,nature and effectivenessof the work carried out by the Household’s internal audit function and consider whether it is in accordancewith best practice, having regard to and in the context of the resources which it has been decided to commit to the internal audit function. Your review should also include an assessmentof the independence of the internal audit function.
Management letters
10 Considerable emphasis will be placed cmconstructive and timely managementletters, which should not only include suggestionsfor any improvements to the accounting system which you believe may be appropriate, but also any commentswhich you may have regarding management structure and procedures,operating efficiency, value for money, the performance of individual membersof staff and so forth, so far as matters come to your attention during the course of your financial audit. Pleasealso confirm formally in the annual managementletter whether, in your opinion, the system of financial and other management controls continues to meet the requirements referred to in paragraph 9 above.
11 The procedures undertaken in order to give this annual report on the financial control system should include:
a] an overall assessment of the effectiveness of the controls to minimise the risk of material fraud; and
b) scametesting of project appraisal, tendering and authorisation procedures for work undertaken by contractors, again to the extent that these tests are not undertaken as part of your normal audit work.
12 The emphasis on the annual management letter and reports referred to above is in no way intended to suggestthat you should feel constrained to an annual reporting cycle or to reporting in writing only. All suggestions and input will be gratefully received at any time and early contact to discuss actual or potential problem areaswill be much appreciated. You should also report on anything which you believe should, as a matter of public interest, be brought to the attention of the Royal Household and the Department of the Environment. The extension of work beyond the financial audit requirements referred to above into, for example, the areasof ecanomy, efficiency and effectivenesswill be by agreementwith me and subject to a separate fee proposal.
Liaison with the Department of the Environment
13 The auditors of the Grant-in-aid Account are appointed by the Royal Household and should report to the Director of Finance and Property Services and to the Lord Chamberlain. However, the Department of the Environment is consulted concerning the terms of appointment and any change in the appointment.
14 I should be grateful if you would send copies of all reports to the Royal Household concerning the Grant-in-aid and of your annual management letter directly to the Department of the Environment, marked for the attention ofthe Director ofHeritage and Royal Estate.It is probable that he would also like to have an opportunity to meet the senior membersof the engagement team before the audit starts and may also wish to discuss managementletters when issued. In accordance with paragraph 44 of the Financial Memorandum the Department of the
43 PROPERTYSERVICES IN THEENGLISH OCCUPIED ROYAL PALACES
Environment may, by arrangementwith the Lord Chamberlain, require you to undertake special investigations and, after examination of such books and records as proves necessary,to send any report of the investigation to the Department of the Environment.
1.5 The accounting referencedate for the Grant-in-aid Account is 31st March and the annual report, including the audited accounts, must be submitted to the Department of the Environment by the end of June each year. It is envisagedthat accounts will be available for audit by the end of April and that all audit work will have been completed, including the additional reports and the management letter. by the middle of June. It may be that you will wish to undertake a separate interim audit, which will be quite acceptable to us. A detailed timetable will be prepared and agreedwith yourselves before each financial year end. It is envisaged that the initial report on the accounting system will be prepared sometime after the end of the first .I quarter of the first financial year.
Yours faithfully I. Director of Finance and Property Services / Senior Partner KPMG Peat Marwick McLintock I 1 Puddle Dock London EC4V 3PD I
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44 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Appendix 3 Suggested framework for monitoring projects and works tasks
ASPECT CRlTERlA 1. Are the purposesfor which Grant-In The Royal Householdobjectives relating to key .I Generalobjectives for the Royal Householdare set Aid is available stipulated? considerationssuch as economy,efficiency and out in the Memorandumof Understanding. effectiveness,appropriate standards of Five-yearCorporate plans include performance maintenancetaking into accountthe royal. historic targets agreedannually with the Department. and architecturalstatus of the Estate.health and Targetsset objectivesfor cost reductionand safetyand fire protectionshould be set out. efficientcontracting procedures.
Suchobjectives should be agreedwith the Departmentof NationalHeritage and reviewed from time to time. 2. Are the roles of the Departmentof The relationshipbetween the Depaltmentof .I The FinancialMemorandum sets nut clearly the NationalHeritage and the Royal NationalHeritage and the Royal Householdshould delegationsmade to the Royal Hnusehnldand their Householdadequately defined? be set nut and be clear as tn: reporting and approval requirements.
l What is delegatedto the Royal Household - Informationto be suppliedto the Department of NationalHeritage
l Accessto be affordedto the Departmentof NationalHeritage The items on which the Royal Householdmay and .2 The Memorandumof Understandingoutlines the may not spendthe Departmentof National items for which grant is available.In May 1993the Heritagegrant should be specifiedin sufficient Royal Householdproduced a more detailed detail to prevent materialmisunderstanding. The statementdescribing their understandingof the Royal Householdshould be requiredto refer all rules on allocationof expenditure. doubtful mattersto the Departmentof National Heritagefor a decision. 3. Havethe Depaltmentof National The Departmentof NationalHeritage should be .I 1. The head of branch (Deputy Director)was Heritageparticipated in seledinn of consultedprior to appointmentof: appointedin conjunctinnwith the Depallment Royal Householdpersonnel and (then DOE)who approvedthe terms of subsequentaccount of stewardshipi 1. The Headof Proper?!Services Branch. employment,sholtlist and appointment;a senior representativeof the Departmentwas on the interview panel. 2. The person responsiblefor stewardshipof the 2. DOEand Treasuryagreed the Directorof Property grant-in-aid. Services’remuneration for his responsibilities with respectto the grant-in-aid.DOE approved his appointmentin 1990and the Department and Treasuryapproved his reappointmentin Februaly 1993. 3. ExternalAuditors. 3. Externalauditors (KPMGPeat Marwick McLintock)were chosenand appointedby the Royal Householdin March 1991 with the Department’sagreement, as they were already the auditorsof other Royal Household expenditure. The Departmentof NationalHeritage should receive ,2 The Department’sprocedures include ensuring that an AnnualReport accounting for Royal Household annual reportsare receivedand are in the correct stewardshipof the Grant-in-Aidand checkthat: format. a Reportsare receivedin due time. a Reportsare in an acceptableformat.
45 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
ASPECT CRITERIA 3 The Departmentshould reviewthe terms of 3 The Departmentwere not involved in the referencefar and receiveon requestreports of appointmentof internal audit but commentedan InternalAuditors. their proposediob description.They have reviewed internalaudit reports and forward programmes. 4. Are the Departmentof National 1 Budgets/plansshould providesufficient detail for 1 Thefive-year and annualplans show proposed Heritageable to form judgementsor the Depaltmentof NationalHeritage to be able to expenditureby categoly and are supportedby the propriety of Royal Household determinethat plannedexpenditure is properto completelists of projects in the works expenditure? the grant. programme.The Departmentuse this to assess whether projectsare proper to grant. Expenditure within a project is checkedby the auditors 2 The Royal Householdshould be requiredto notify 2 Quarterlyand annualreports are usedto notify the Departmentof NationalHeritage of any significantchanges to works programmesafta materialchanges in spendingplans from approved approval. budget/plans. 3 The Departmentof NationalHeritage should be abl 3 Projectsare uniquely referencedbut not reported to check outturnagainst budgetlplanto ensure consistentlybetween works programmes, that expenditureis as authorised.Therefore qualterly and annual repotis. projectsand tasks should be uniquely referenced from inceptionto completion. 4 The Departmentof NationalHeritage should obtain 4 The Depatment has receivedaudit reports on the reportsfrom external auditorsconfirming that annualaccounts for the grant-in-aid. Royal Householdexpenditure has beenproperly stated in the accountsand expendedin accardanct with conditionsof Grant-in-Aidand due propriety 5 The Depaltmentof NationalHeritage should obtain 5 Internaland externalauditors have reviewed evidence(from internal or external audit) that contractsprocedures and this has been Royal Householdcontract procedures are proper supplementedby a Departmentalreview of desk and that these and financialsystems are such as B instructions. minimisethe risk of fraud and corruptionas indicatedbelow. 5.1 Tenderingprocedures should be set out in a desk 5.1 Procedurescover: manualdetailing inter alia proceduresfor: 1. Selectionof tenderersincluding assessment of 1. Companiesinvited to tender are discussedby competenceand checkingof financial managementmeetings. There are lists of soundnesswhere appropriate. approvedcontractors but they are not applied rigidly; it is the Royal Household’spolicy to vary the contractorsfrom whom tenders are sought to ensuregenuine competition. English Heritage are consultedon conservation.Financial soundnesschecks are not considered necessary,unless the bankruptcyof a cnntractnrwn,,ld havea material impa& 2. Separationof tender invitationand adjudication 2. Yes functions. 3. Declarationof relevantinterests in other 3. Yes companiesby in-housestaff and exiemal companies/employees. 4. Financialand other considerationsrestricting u! 4. Yes of dayworkand measuredterm contracts, directly employedstaff and single tenderaction and periodic retenderingof same. 5. In-housefinancial delegations. 5. Yes
46 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
ASPECT CRITERIA FINDINGS 5.2 Contractadministration procedures should be set 4.5.2 out in a desk manualdetailing procedures for: 1. Authorisationand valuationof emerging 1. Yes additionalworks/variations 2. Separationof certificationand paymentfuncdor IS 2. Yes 3. Preparationof FinalAccounts linking all cost 3. Yes variationsto authorisation 4. Documentationof each paymentagainst 4. Yes authorisationof expenditure
5. Checkingthat the work has beencompleted in a 5. Yes timely way and in accordancewith specification and anticipatedcost (either by samplingor inspection). 5.3 Works and professionalservices contracts should 4.:5.3 The Royal Householdtold the NationalAudit Office be basedon recognisedcommercial and/or that major contractsare basedan amendedPSA Governmentmodels. models.
5. Are the Departmentof National f The Departmentof NationalHeritage should have Heritageable to form judgementsor confidencein the adequacyand quality of Royal the adequacyof Royal Household Householdin-house resources: proceduresfor achievingvalue for money? 1. Key start should have experienceat an 5.1.1/Z The Departmentare aware of the identities appropriatelevel in managementor and backgroundsof the Household’skey staff pariicipation in substantialworks programmeto (Grade7 and above).They were involved in the an Estateof high prestige of significant appointmentof the two most senior (see q 3.1). commercialor Governmentimportance. Architectsare professionallyqualified. Other staff had beentaken over from PSA or DOEand 2. Senior Executiveand professionalstaff should have considerablerelevant experience. There have recognisedand appropriateformal have been no other senior appointmentssince qualificationsor a minimum of 10 years the presentarrangements were established. appropriateexperience. 3. Staffinglevels should be sufficientto cover worlk 3. The Royal Householdhave a strong in-house which hasto be carried out in-house. capability having brought the former District Works Officesin-house. 2 The Departmentof NationalHeritage should be 5.:2 The Departmentare only involved in major projects confidentin the quality of the Royal Household but their monitoringinforms them of the bought-in “clientfunction” resources bought in from outside. resowxs usedfor these projects:they know Suchorganisations should be able to demonstrate: which firms are consideredfor each project and are able to determinethat they are appropriate. 1. Corporateor individual membershipof an EnglishHeritage advise the Royal Householdon appropriateprofessional organisation (eg RIGS, the conservationexueltise of contractors. RIGA.CIDB, ICE, ISE etc). 2. Satisfactorypast involvementat an appropriate level in activity comparableto the type for whictI appointmentis proposed. 3. Sufficientconservation expertise where appropriate. rms of appointmentshould be recordedin writing and Thbe Department have assurance from internal audit that sed on recognisedGovernmentlcommercial models te,‘ms of appointmentfollow good practice. d practice. oceduresshould exist for monitoringprogress in Thme Royal Householdhave told the Departmentthat they ‘ms of programmeand cost. nl Dnitorprogress against time and cost using monthly UP#dated forecasts for projects in the annual programme a” d tenderedcosts and quantity surveyors’forecasts.
47 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
ASPECT CRITERIA FINDINGS 1 The Departmentof NationalHeritage should have confidencethat the Royal Householdoperates an appropriatesystem documentedas necessary covering: 3.1 Policiesfor the care. corwvation and maintenance? 5.3.1 Accommodationstandards exist for residential of the Estateand each part of it. Theseshould accommodationwhich coversa large part of the recognisethe particularcontext of the Royal Estate.Policies and standardsfor other work are HouseholdEstate and take accountof the determinedby operationalrequirements and recommendationsof British Standard8210: 1986 definedin the CorporatePlan. Conservation “BuildingMaintenance ManagemenV. Standards of standardsare definedby EnglishHeriiage’s Royal accommodationshould be specifiedto the extent Estatedivision. The Royal Householdtold the that this is practicableand worthwhile. NationalAudit Ofticethat their staff review compliancewith British Standards.including 8210. Building Regulationsand quality requirements, and periodicindependent audits are undertakenin this respect. 3.2 Otherrelevant policy matters. 5.3.2 The Royal Householdtold the NationalAudit Office that policy matterswere coveredby their AccountingManual. 3.3 Systematicaccumulation and review of work 5.3.3 The Royal Householdhave separatelydescribed to requirements.In particular.procedures should the Departmenttheir proceduresfor compiling the take due accountof: work programme.They take accountof the requirementslisted. 1. Recommendationsand castingsfrom inspectior, reports and users requests. 2. Identifiedpriorities and any significantfinancial and/or operationalconsequences if an item of work is postponed. 3. Groupingof works from diiterent yearslprioritie! to achieveeconomies of scale/organisation. 4. The needto amendhistoric costs as necessaryin line with changedcircumstances in assessing financialallowances for bulk responsiveand cyclical maintenance. 3.4 Guidelinesexist for amendmentof initial 5.3.4 As above programmeto take accountof user and conservationrequirements. 3.5 Preparationof works programmes. 5.3.5 As above 3.6 Purchasing. 53.6 Purchasingprocedures are fully documentedin the Royal Household’sdesk instructionswhich have beenreviewed by the Department. 3.7 Authorisationand Paymentprocedures. The Royal 5.3.7 As above Householdstaff should be fully awareof these procedures. 4 The Royal Householdshould obtain the authority (If 5.4 Plansand audit reports confirmthat no projectswere the Departmentof NationalHeritage prior to novel or contentious. commitmentto any project of a novel or contentiouscharacter or exceedingstipulated financialdelegations and should,in any event, appraiseexpenditure options.
48
., .~ PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
FINDINGS 5 The Departmentof NationalHeritage should have 5 The Departmentsaw only one report of the Royal seen reliable evidencethat the Royal Household’s Household’sinternal auditor beforeApril 1993 but system is functioningeffectively by way of periodic now reviewall repo*s. internal or externalaudit or managementaudit (es BS 5750) reports or other reviews. 6 The Departmentshould review at appropriate 6 The Royal Householdrepolt final costs of completed intervalsthe following summarisedinformation to projects over f25.000, maintenanceoutturn and be supplied by the Household: the prapollion of projectscompleted to cost in the annual report Duarterly reports give further 1. The final cost of individuallyidentified summarisedoutturn information.The repolts do programmedworks completedcompared with not cover all projects but give explanationsfar the target more materialvariations from budget. 2. The total cost of minor and maintenance (‘bulked”)works comparedwith programme. 3. The proportionof programmedworks completet within programme. 7 The Depaltmentshould review performanceagains 7 Informationshould be provided and examinedin the the above indicatorsand should seeka meaningful quarterly and annual reports-see above 5.6. explanationon a project by project basis where Howeverthe Depaltmenthad not identifiedor (a) projectsexceed f25,OOO in value and (b) followed up discrepanciesbetween budgets and variancein cost exceedsE20.000 or 10% reports in 1992-93.partly becauseof pressureof whicheveris the greater. work on the WindsorCastle restoration. 6. Thereare particularrisks involvedin 1 The Departmentshould seekevidence that directly 1 The Royal Household’speltormance indicators far the use of directly employedlabour employedlabour and professionalstaff represent 1992-93show supervisoryand professionalstaff and professionalstaff. Are the value for moneywhen comparedwith the costs against project costs for in-houseprovision Departmentof NationalHeritage able alternativeoption of contractingout. Thesecould and consultants.However performance indicators to gaugethe comparativeeconomy, be assessedby performanceindicators. do not permit any comparisonof the cost of efficiencyand effectivenessof such Alternatively,these issuescould be addressedby in-housemaintenance with outside resources.The arrangementsin the Royal meansof periodicstati inspection. Royal Householdhave written to the Department Household,the cost of which are me indicatingthat they believethey havecontracted by the Grant-in-Aid? out all activities where it is practicableand cost-effectiveto da so. The Departmenthave powers under the FinancialMemorandum to requestthe Royal Householdto commissionan external staff inspectionfor posts paid for out of grant-in-aid,but havenot yet done so. 7. Are the Departmentof National 1 The Estateshould be independentlysurveyed at 1 The first swveys were carried out between1965 and Heritageable to ensurethat the fabrk least every five years with survey reports produced 1990 by PSAwho were still running the works of the Estateis being properly to a commonformat, including: programme.There was no external input. The next maintainedin relationto good round will start in 1993with a survey of 1. A standardorder of contents. conservationpractice? St James’s Palace.The first surveys had a 2. Prioritisationof works recommendationsusing a standardorder of contents but did not otherwise standardscale. comply with the criteria. The new survey complies in all respects. 3. Referencingof works recommendationsin a form suitablefor future use to completionand audit. 4. Commenton effect (financial/operational)if recommendationdeferred eg % cost increase pa, priority shift. 5. Requirementsto estimatethe costs of recommendations. 6. Definitionof cost base and methodof estimation 7. A managementovelview to establishtrends in the standardof upkeepof componentsof the Estatewith specific referenceto the policy objectives referredto at Aspect 1.
49 PROPERTY SERVICES IN THE ENGLISH OCCUPTPIEDROYAL PALACES
ASPECT CRITERIA 7.2 The Departmentof NationalHeritage should satisfy Seecctmments on contractorselection. 4.5.1.1 themselvesthat surveysare undertakenby person(s)with sufficientconservation expertise to identify particularconservation problems and make suitable recommendations. 7.3 The Departmentof NationalHeritage should satisfy The first surveys informedplans and the Royal themselvesthat the results of surveysare Householdhave since reviewedthem to identify translatedinto realisticand properly prioritised work outstanding.but their form does not allow action plans. the Departmentto comparethem with plans and programmesbeing preparednow. 7.4 Budgets/plansshould reflect maintenance/conservationpriorities so identified such that the Departmentof NationalHeritage are able to verify that appropriateaction is intended. 7.5 The Departmentof NationalHeritage should ensure The Royal Householdproduce monthly internal that the Royal Householdmaintain an adequate reports recordingprojects removed from the recordof works removedfrom or not includedin programme;these are reportedquaterly to the programmes. Department. 7.6 The Departmentof NationalHeritage should verify The level of detail providedto the Departmentdoes that expenditureo~tt~rns do not indicatea not allow them to determinewhether work materialfailure to undertakework identifiedas identifiedby surveys has been carried out. necessaiyby the survey process. Howeverthe Royal Householdmark up the PSA surveysto show whether01 not the work recommendedhas been carriedout. 7.7 The Departmentof NationalHeritage should satisfy The Royal Householdconsult EnglishHeritage an themselvesthat the Royal Householdtake conservationmatters and EnglishHeritage review conservationadvice as appropriatein planning their annualworks programmeto identify projects works. with conservationimplications. 7.8 The Departmentof NationalHeritage should ensure The Royal Householdemploy consultantsto review a that Royal Householdprocedures include a sample of works projectsfor compliancewith Building Regulations‘audit’ and referenceto technicalstandards including building regulation EnglishHeritage on conservationmatters wherever matters.English Heritage are satisfiedthat all appropriate. significantconservation matters have been referredto them. 8. Do the Departmentof National 8.1 The Departmentof NationalHeritage should have, The Royal EstateDivision has accessto financial Heritagehave the capabilityto and makeappropriate use of works/conservation/ expertisewithin the Departmentand conservation dischargeall thesefunctions financialexpeltise in underiakingfunctions, as expeltise through EnglishHeritage. but do not effectively? definedabove, requiring such expertise. haveaccess to professionalexpertise on works expenditure. 8.2 The Departmentof NationalHeritage should have The Departmenthave producedpapers documenting laid down and disseminatedprocedures for their monitoringtasks as fully as requiredgiven undertakingthe abovefunctions. the small numberof staff involved. 8.3 The Departmentof NationalHeritage should have Four staff in the Departmentare normally responsible sufficientstaff to undertakethese functions for the grant-in-aid.However they are also effectively. responsiblefor directly managingexpenditure of f7 million on a number of other historic buildings and monumentson behalf of the Government,as well as a numberof policy matters. In normal circumstancesgrant-related responsibilities would accountfor around one full-timeequivalent.
50 PROPERTY SERVICES IN THE ENGLISH OCCUPIED ROYAL PALACES
Appendix 4 Government policy on insurance
The Government’s policy on insurance was r-stated by the Chief Secretary to the Treasury as follows (Hansard 14 July 1992, column 526 -paragraph 4.29 refers):
“The Government have reviewed the question whether Departments and non-departmental public bodies should insure commercially. They have decided to retain the existing general rule that decisions whether to insure with commercial insurance companies should normally be decided on value for money grounds. Across the Government as a whole, the cost of paying premiums could be expected to exceed the value of claims met by insurance companies. Use of commercial insurance companies is, therefore, likely to be confined to cases where there are special reasons; for example where insurance in respect of equipment such as boilers is part of an inspection/maintenance services agreement, where large volumes of claims handling work are involved, where evidence of insurance may be needed to obtain prompt medical treatment for employees abroad and, in the case of non-departmental public bodies, where there is a legal requirement to insure”.
51