Ten-year programme of works to come from 66% increase in sovereign grant but Queen will remain in residence throughout.
The work on Buckingham Palace is to be finished in 2027. Friday 18 November 2016 13.31 GMT Last modified on Friday 18 November 2016 13.46 GMT
Theresa May, Philip Hammond and the Queen’s keeper of the privy purse, Sir Alan Reid, who are the royal trustees, agreed that the temporary pay increase was the best way to pay for urgent repairs.
The major refit, which has been described as essential, will see miles of ageing cables, lead pipes, electrical wiring and boilers replaced, some for the first time in 60 years.
Officials said an independent, specialist report had 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.
The money will come from a 66% increase in the sovereign grant – the funding formula under which the Queen normally receives 15% of the annual profit from the crown estate. She will now receive 25% for the 10 years the work is taking place. When it is finished in 2027, the grant should be returned to 15%, the royal trustees said.
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The Queen, whose officials have long complained about the state of the palace, will remain in residence. The most urgent and critical work is to begin in April. Functions, such as the annual garden parties, investitures and trooping the colour, will continue as normal.
Once the most urgent work has been completed, further work will be undertaken on a wing-by-wing basis, beginning with the familiar east wing, which faces the Mall.
Tony Johnstone-Burt, master of the Queen’s household, said: Buckingham Palace is one of the most iconic buildings in the world, and this programme is designed to extend its working life by a further50 years. On completion of the work, we’ll have a palace fit for purpose until 2067.
“The programme addresses parts of the structure you can’t see from the outside: the plumbing, electrics and other essential building services which have gone six decades without a comprehensive upgrade.
“We take the responsibility that comes with receiving these public funds extremely seriously indeed. Equally, we are convinced that by making this investment in Buckingham Palace now we can avert a much more costly and potentially catastrophic building failure in the years to come.”
The Treasury said parliament would hold the royal household to account throughout the process to ensure maximum value for taxpayers’ money.
The chief secretary to the Treasury, David Gauke, said: We must ensure that the special architectural and historic nature of some of our greatest buildings are protected for future generations. Therefore it is only right we ensure Buckingham Palace is fit for purpose.
These urgent works have been properly costed and will ensure the palace can continue its centuries-long tradition of being the working house of our monarch. We will ensure every penny spent achieves the greatest value for money.
It was decided the 10-year phased refit would provide the best value for money and minimum disruption to normal business. Officials claimed the work would also reduce the palace’s carbon footprint by 40% over time.
The sovereign grant was introduced in 2012 to replace the civil list. It sees the Queen receive a percentage of the crown estate surplus, a figure decided by the royal trustees. The percentage is reviewed every five years.
Previously the Queen received a civil list payment agreed by parliament, and money for property maintenance was decided by parliament as grant-in-aid.
The Queen, the Duke of Edinburgh and the Prince of Wales were completely supportive of the refit, officials said.
The royal trustee’s report states that failure to carry out the works would come with significant risks.
A significant proportion of the wiring within the palace is in a high-risk category, and most of the mechanical and electrical services and systems are more than 40 years old.
The palace boilers are said to be more than 33 years old, making it difficult to find spare parts. Lead pipework buried in walls and floors also has the potential to damage the building fabric, it states.