Costs of Royal Household drop as Queen raids cash reserves

The total cost of keeping the monarchy decreased by 3.3m (7.9 per cent) to 38.2m during the 2009-10 financial year – 7p less per person.

A spokesman said the fall equated to a drop in real terms of 12.2 per cent and was mainly down to a reduction in commercial charter flights and a refund of lease rentals from the Queen's helicopter, which was replaced last year.

Palace accounts also showed that the Queen dipped into a reserve fund to boost her Civil List by 6.5m in 2009.

This is the highest amount ever drawn from the reserve, which comes from surplus Civil List money accumulated in the 1990s.

If the Queen continues drawing on the reserve at the current rate, she is expected to run out of funds by the start of 2012 – the year of her Diamond Jubilee.

The Keeper of the Privy Purse, Sir Alan Reid, said: "The Royal Household is acutely aware of the difficult economic climate and took early action to reduce its Civil List expenditure by 2.5 per cent in real terms in 2009.

"We are implementing a headcount freeze and reviewing every vacancy to see if we can avoid replacement.

"Property services funding will be reduced by 500,000 this year.

"Work will continue on assessing the condition of the estate, but it is acknowledged that the necessary cuts in public expenditure will have an impact on the backlog of essential maintenance which it is hoped can be addressed in the longer term.

"In the meantime, the Household is continuing to pursue opportunities to reduce costs and generate income from the estate's assets, including commercial lettings and management charges."

The total cost of the Queen's Civil List – which pays for the running of the Royal Household including staff salaries – was 14.2m in 2009, up 300,000. It was made up of 7.9m from the Government and 6.5m from the reserve.

The current deal for the Civil List – which gives the Queen 7.9m a year – was agreed by then Prime Minister Sir John Major in 1990.

It had been thought the Queen would request an increase but Chancellor George Osborne announced as part of his Budget last month that it would remain frozen at 7.9m for the coming year.

Mr Osborne said the Queen had given her full agreement to the decision to freeze the sum.

He added that "a new means of consolidated support" would be proposed at a later date.

Buckingham Palace accountants are hoping the "consolidated support" suggested by Mr Osborne will amount to a sum equivalent to the Civil List, grant-in-aid and travel grants-in-aid which the Queen currently receives and will be in place by the start of 2012 when the reserve fund will be low, if not empty.

The pot, which held 35m just over a decade ago, had fallen to 15.2m at the start of this year.

A senior Palace aide said it is planned to maintain the Civil List at a similar level during this financial year.

It is understood the pay of senior Buckingham Palace staff has been frozen to enable junior staff to have rises.

Compulsory redundancies are thought to be unlikely, although vacant jobs may not be filled if the responsibilities can be shared among existing staff.

The number of staff is thought to have increased by 15 in the past decade, mainly to fill new roles dealing with Freedom of Information requests, data protection and health and safety.

Despite her cost-cutting, the Queen still faces a worry about a growing backlog of work needed at Royal buildings, which is still expected to reach an estimated 40m by 2019.