Queen wants a pay rise as Palace goes £6million over budget

The Queen is demanding her first pay rise in 20 years to plug a looming £6million deficit in the royal household's finances.

Palace officials have warned the Treasury they need a dramatic rise in the £7.9million annual civil list to maintain spending on state duties.

The request is politically explosive at a time when the new coalition is imposing draconian £6billion public sector cuts to bring down Britain's record deficit.

Caught short: The Queen has asked for a pay rise for the first time in 20 years to plug the £6m funding gap

The £7.9million grant covers the cost of the official royal household, from banquets and furnishings to housemaids and footmen.

The Queen's treasurer Sir Alan Reid has told Government officials that the monarch's expenditure is running at £6million more than the annual allowance. The shortfall is being met by an emergency reserve which is due to run out in 2012 - the Queen's Diamond Jubilee year.

The civil list is negotiated every ten years and the Government has to report to Parliament on the grant by July 3 at the latest.

Courtiers say the Queen should, at least, expect an increase to her annual funding which takes account of inflation over the past two decades. Prices have soared by 80 per cent in that time.

The current level of the civil list was agreed by former prime minister John Major when he was chancellor of the exchequer in 1990, and frozen by Tony Blair in 2000.

Palace officials have since been dipping into a surplus accumulated in the 1990s, which peaked with a cash reserve of £35million. However, this is down to £14million and due to run out in 2012. One royal courtier said: 'The Queen has only been able to manage by very prudent financial management and by drawing on reserves.'



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The monarchy costs more than £41.5million a year in public funds, equivalent to 69p a year for each taxpayer - excluding the cost of security. About 70 per cent of the £7.9million civil list expenditure goes on staff salaries. It also pays for official functions such as garden parties, receptions and entertainment.

Graham Smith, of Republic, which campaigns for an elected head of state, said the request was a 'national disgrace'. He said: 'The palace is demanding more money because it has been wasteful, secretive and incompetent.'

But Tory MP Edward Leigh, chairman of the Public Accounts Committee which monitors the royal finances, said: 'The Queen needs substantially more money to carry out her duties and responsibilities. The Queen and the Royal Family do a fantastic job considering their very small resources.'