Campaigners have renewed calls for the monarchy to be abolished after it was revealed that taxpayer funding of the royal family is set to soar by up to 66 per cent to enable the Queen to renovate Buckingham Palace.

The Government has agreed to increase the royal grant to cover the £396 million cost of the refurbishment.

The funding was agreed by the Prime Minister, the Chancellor and the Keeper of the Privy Purse, who together act as the Royal Trustees who determine how much public money is given to the royal family.

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In a report they said Buckingham Palace was “in urgent need of a major overhaul to avoid the very real danger of catastrophic failure leading to fire or flood".

This would result in “incalculable damage”, they added.

But republican campaigners said the decision was an "absolute disgrace” and called for the public grant given to the Queen to be “stripped right back”.

Graham Smith, chief executive of anti-monarchy group Republic, said: “This is an absolute disgrace. An indictment on the Queen’s scandalous mismanagement of royal finances over six decades.

“MPs have repeatedly called on the palace to fund repairs by opening up to tourists all year round and they’ve refused. If the royals can't look after the buildings and raise their own revenue to fund maintenance, it’s time to give them up.

“The royals cost the taxpayer over £334m a year and that keeps going up. We need independent inquiry and full disclosure into their spending. The monarchy's costs need to be stripped right back, put the institution on a proper budgetary footing and allow parliament to approve the budget each year.”

The Queen is reported to have around £300m in personal wealth, while land owned by the monarchy is thought to be worth more than £7bn. The royals also receive hundreds of millions of pounds from taxpayers each year.

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The renovation of Buckingham Palace will see 100 miles of electric cables being replaced, along with 6,500 electrical sockets, 5,000 light fittings and 2,500 radiators. Some 30,000 square miles of floorboards will be taken up.

Parts of the Palace’s plumbing, electric cabling and heating have not been updated since just after the Second World War.

The Queen will remain in residence while the renovation work is carried out and official functions will continue as usual.

A spokesperson for Buckingham Palace said: "The 10-year phased refit will address the essential building services on which the Palace depends.

"Miles of ageing cables, lead piping, electrical wiring and boilers will be replaced, many for the first time in 60 years.

"An independent specialist report concluded that without urgent work there is a risk of serious damage to the Palace and the precious Royal Collection items it houses from, amongst other scenarios, fire and water damage."