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public desire for a slimmed-down monarchy. It has been spearheaded by Michael Peat,
educated at Eton and Trinity College, Oxford, with an MBA from the top European
business school, INSEAD, and a background in accountancy as a partner from 1972 to
1993 in KPMG Peat Marwick, the firm originally founded by his family. In 1990 he
became Director of Finance and Property Services (an entirely new household title
created specifically for him) and was later promoted to Keeper of the Privy Purse. He
began his scrutiny of the royal household in 1986 when he was called in by the then
Lord Chamberlain, the 13th Earl of Airlie, who had been appointed to the top Palace job
in 1984.
Lord Airlie’s connection with Mr Peat began while Airlie was chairman of the
merchant bankers Schroders working on an overall review of the organization
worldwide. Peat’s firm was also acting as auditors at Buckingham Palace and was
therefore familiar with the financial set-up there. Having spent six months ‘looking and
listening’ after taking up his appointment as Lord Chamberlain, Airlie decided on a
similar review of the household operations to bring the Palace into line with ‘the best
business practices’ as operated in the outside world. Elizabeth, apparently, agreed that
‘perhaps it would be a useful exercise’. As a result of Lord Airlie’s administration, the
royal household has more control over its affairs than it did before. The Civil List
agreement, substituting a ten-year timescale for an annual review, has made longerterm
planning possible. The unoccupied palaces, such as Hampton Court and the public
part of Kensington Palace, are now no longer under the direct control of the
Department of National Heritage but the Historic Royal Palaces Trust, while the
occupied palaces – Buckingham Palace, Windsor Castle and the properties in the Home
and Great Parks, St Jarries’s Palace, Clarence House and Stable House Yard, Clarence
House and Marlborough House Mews – are no longer maintained by the Property
Services Agency but are directly under the control of Michael Peat and financed by an
annual grant-in-aid of around £15 million from the DCMS (Department of Culture,
Media and Sport) and maintained by property services within the royal household.
The latter arrangement has not been an unmixed blessing as far as the royal
household is concerned. MPs campaigning to have royal finances opened up further to
public scrutiny have targeted the numerous grace-and-favour residences which are in the
Queen’s gift and are occupied by present and former employees, or their widows. This
has been the subject of an investigation by the parliamentary Public Accounts
Committee, which is in essence another episode in the long-running battle by
Parliament to gain more control over the Palace. The grace-and-favour residences are a
means by which senior and junior members of the royal household are compensated for
their far from lavish salaries, enabling them to live, often in very desirable properties in
Central London, at below-market rents. And if your employer is also your landlord, it is
an additional guarantee of your loyalty. The death in 1985 of the elderly Lady Gale in a
fire which started in her grace-and-favour apartment at Hampton Court and badly
damaged the palace first brought the system to public attention. This was followed in
1994–5 by reports of large sums spent on redecorating a six-bedroom apartment at