The Firm: The Troubled Life of the House of Windsor. Penny Junor

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СКАЧАТЬ agreed in principle; the difficulty was agreeing a figure, which, even if inflation continued to rise, would not leave the household short of funds. The Treasury’s refusal to acknowledge the existence of inflation made life difficult, but they found another way. They calculated the average rate of inflation during the past ten years, which was 7.5 per cent – acceptable to the Treasury – and settled on a figure for the ten-year period from 1 January 1991 of £7.9 million. If they had taken too much money, there was a deal that the surplus would roll over into the next ten years’ allowance. The Earl of Airlie took a punt. At the time, inflation was running at 9 per cent. If it had continued to rise the household would have run out of funds before the ten years were up and caused untold damage to the monarchy. As it was, inflation went down during the nineties and David Airlie was roundly praised for having struck such a good deal. Little did anyone know how very concerned he was that it might so easily have gone the other way.

      Having stayed at the Palace on secondment from his own family firm for three years to implement the first round of changes and to work on the Civil List negotiations, Peat was persuaded to join the household for another three years to see in those changes which were announced by Margaret Thatcher in the House of Commons in 1990. For the first three years he had been called Administrative Adviser; but for the next three years, as a member of the household, he was called director of Finances and Property Services, a new title Airlie created to oversee a whole new business that was another calculated gamble.

      Having established that the household had a ten-year Civil List to manage, it seemed sensible to bring the maintenance of the occupied palaces, run by yet another government department, under Palace control. And so they created a department called Property Services which covered not just the maintenance but everything involved in running the occupied royal palaces, from heating and cleaning them to mowing the lawns, training personnel and meeting fire, health and safety regulations. All of this had been farmed out many years before to the Department of the Environment (which became and is now the Department for Culture, Media and Sport) and they were spending over £20 million on the palaces. Peat and Airlie reckoned they could do it more cost-effectively themselves. It was yet another cry to be masters of their own destiny. They knew the buildings, knew what they wanted and knew whether a tap worked or not; why not take it over? And so once again they stuck their necks out. It was a mammoth undertaking, and, as they are the first to acknowledge in retrospect, quite brave. They had no expertise and, apart from the odd plumber on the books, no manpower; and there are a lot of occupied palaces – Buckingham Palace, St James’s Palace, Clarence House and Marlborough House Mews, the residential and office areas of Kensington Palace, the Royal Mews and Royal Paddocks at Hampton Court and Windsor Castle and buildings in the Home and Great Parks at Windsor. But they pulled it off. They effectively started up a brand-new business, contracted out some of the services such as cleaning, took on staff for other jobs, employed specialists and, while reducing the amount that was spent on the palaces, nevertheless carried out a huge number of improvements and came in well under budget. It was, and still is, paid for by the Department for Culture, Media and Sport by way of Grant-in-Aid, but the savings and improved efficiency have continued. For the last five years funding has remained at £15 million – savings of around £50 million since Peat took it over in March 1991.

      By the time Michael Peat was due to return to Peat Marwick McLintock (by now renamed KPMG), in 1993, there was a great deal going on in which he was heavily involved. Fire had devastated Windsor Castle; another new department – Royal Enterprises, the trading arm of the Royal Collection – was just coming on-stream; there were plans for Royal Travel, Communications and the Historic Royal Palaces – all changes that he had recommended in his report – and he was far too busy to leave. KPMG, who had been paying him a very generous partnership share all the while, began to get restless and Peat had to make a choice: to stay at the Palace and see through what he had begun, or go back to a very lucrative number in the City and amass a fortune for his declining years. To his family’s chagrin he opted to stay, becoming Keeper of the Privy Purse, and has so far resisted all enticements to return. Indeed, in 2003 he took on the ultimate challenge and became Private Secretary to the Prince of Wales, just in time to field the fallout from the Burrell trial.

      Peat is not universally liked; he is frequently described as lacking charisma, being a faceless accountant, a cold fish; but new brooms are seldom liked and it’s too easy to attach damning labels. He was effecting radical change in a cosy, hierarchical environment and interfering with working practices that no one has questioned for decades. He disturbed some well-feathered nests. No wonder he upset a few people along the way. As he has been heard to say, ‘We changed a huge amount in terms of the head; whether we changed the heart I don’t know.’ The heart was easier to change in those areas where staff were better educated, among those who come into the Palace in administrative posts – finance, press, property, private secretaries – but it was more difficult to change the heart in the domestic areas, the Mews, the Master of the Household’s department, areas where there was a very strong military background.

      Educated at Eton and Oxford, Peat is tall and slim, a year younger than the Prince of Wales and two years younger than Robin Janvrin. I first met him in April 2003, shortly after his move to St James’s Palace. He was impeccably mannered, charm itself and as cool as a glacier; I was happy then to believe what people said about him. But I have changed my view; I had known and liked Mark Bolland – and Peat was making a break with the past and the methods of the past. I was probably seen as part of that and I think he was expecting hostility. He was in a new job, he had the reputation of being a ruthless accountant, and the Prince’s staff, members of which had always enjoyed a more luxurious life than their counterparts across the Mall, were extremely wary. First impressions were misleading. Peat is far from glacial and far from grand; he makes his own calls and answers his own telephone (as opposed to routing calls through his secretary, as many at his level do); he gets around London on a bicycle; and he has a real life outside the Palace with a wife, three children and a farm in Berkshire. Given what he has achieved over nearly twenty years, he is remarkably self-effacing.

      During the period of his secondment, in 1991, Peat began working on new tax arrangements for the Queen. He had decided not to mention tax in his report, but, having looked at her finances from top to bottom during its preparation, he felt strongly that the Queen could and should be paying income tax. He knew it was a matter that needed careful handling; the Queen had never paid tax, but that was not a tradition that went back generations. Queen Victoria and Edward VII had both paid tax, George V and George VI had paid tax on investment revenue, and complete exemption only began at the start of the present Queen’s reign in 1952. However, the feeling in the household had always been that the Queen could not afford to pay tax and maintain her current lifestyle, given her outgoings: she was paying for her children and other members of the Royal Family, paying for the upkeep of Balmoral and there was the small matter of horseracing. There was also a fear that any change would involve time-consuming legislation.

      But the tax issue was inflicting grave damage and David Airlie was in full agreement with Peat. The monarchy was coming under heavy fire from the media on a number of counts, but the underlying malaise was its expense. The Waleses were at war with one another, Prince Andrew had married Sarah Ferguson, who was proving to be too much the girl next door and had an appetite for parties and holidays, and Prince Edward had shown himself to be arrogant and petulant. People were beginning to question why the taxpayer should be paying for the Royal Family to live the life of Reilly when they were patently no better than anyone else. The Palace had always been very coy about how much the Queen was worth, and in the absence of hard information journalists speculated. She was consistently reported to be worth billions; in 1989 the American business magazine Fortune placed it at £7 billion, making her the world’s richest woman and the world’s fourth richest individual. It was wildly inaccurate, but in PR terms it didn’t matter. While the rest of the country paid tax on their comparatively meagre incomes, she was exempt; and the Prime Minister’s announcement in 1990 that her income from the Civil List was to be increased by more than 50 per cent as part of the ten-year deal simply added insult to injury.

      Peat’s first challenge was to convince the household СКАЧАТЬ