Her Majesty (15 page)

Flawlessly connected and with a pair of Scottish castles, Lord Airlie might, on paper, resemble the ‘tweedy courtier’ of years gone by. But there was nothing sentimental about the Queen’s choice of Lord Chamberlain. For twenty-three years he had been a dynamic figure in
the City and commerce, spending the previous seven years as chairman of the investment house Schroders plc, before accepting the summons to the Palace. One of those pressing for Lord Airlie’s appointment was William Heseltine, soon to be the Queen’s Private Secretary. ‘It was because I knew of his very successful career in business and banking that I thought he would make a very good non-executive chairman,’ says Heseltine. Another member of the Royal Household still regards it as a watershed: ‘David Airlie came along and saw everything. He was just the person because he was a real insider.’

Lord Airlie was not joining the Royal Household for a quiet life. ‘I left Schroders on 30 November and came to Buckingham Palace on 1 December,’ he recalls. ‘Getting to know the set-up took a bit of time. It’s quite a complicated organisation. I spent a lot of time listening because I began to form the view fairly early on that changes needed to be made.’

A tall, genial man, he combines a donnish eye for detail with an assured military bearing (a former Scots Guards officer, he later became Captain-General of the Queen’s Body Guard for Scotland, the Royal Company of Archers). He rarely gives interviews. When he does, he speaks frankly. Having inspected every level of the Palace soon after his arrival, he had much to say. The Palace, he feared, was in danger of running out of money.

‘The Royal Household were not adopting what might be called best practices. Civil List expenditure was outrunning revenue. It was quite alarming. Something had to be done and it couldn’t wait. Those two factors led me to suggest to the Queen that we ought to do an internal review from top to bottom.’

The Civil List was the annual fund to cover the Monarch’s duties as head of state. Most of it went on salaries and none of it went to the Queen herself. Nor did it include the Prince of Wales and his family who were funded by the Duchy of Cornwall, the ancient property portfolio which provides the heir to the throne with an independent income. What the new Lord Chamberlain had in mind was radical stuff, particularly so since, on the outside, the royal picture looked so rosy.

When Lord Airlie was appointed, the Prince and Princess of Wales were happily adjusting to life with two little boys while matrimony beckoned for the Duke of York. Today’s Lord Chamberlain, Earl Peel, remains in awe of what happened next. ‘Lord Airlie took it upon himself to call the heads of department together and read the riot act,’ says Lord Peel. ‘He said: “This is unacceptable. We’re not working to properly controlled budgets. There is not the proper level of cooperation between departments and I wish to see change.” And that didn’t half rattle a few cages, I can tell you.’

If the courtiers of the day thought they could see off this boisterous new arrival, they were wrong. Nothing of any importance happens at the Palace without the Queen’s say-so. Not only did she approve the plan but she decided to give Lord Airlie special authority to bring it about. For a monarch who had diligently sought to emulate her father and grandfather for more than thirty years, it must have been a painful moment. Some sovereigns cannot wait to stamp their own mark on the throne. Edward VIII was hiring, firing and redecorating within days. Not so the Queen. Sensitive to the memory of her father and to her mother’s bracing views on all forms of change, she liked the status quo. But, on this occasion, wise monarch outweighed dutiful daughter. ‘The Queen is obviously a natural conservative but she is very canny and she thought about it very carefully,’ says a senior official of the era. ‘When you’re monarch, you live in an ivory tower. You’re the boss. But if you’re a decent, thoughtful monarch, you want to hear what other people say.’ Future historians may look back on this as one of the most astute decisions of the reign. Lord Peel calls it a ‘defining moment’ in the one-thousand-year history of his job: ‘David Airlie went to the Queen and he said: “Your Majesty, I really need your permission, in effect, to act in an executive capacity.” And the Queen approved that. And so we saw the Lord Chamberlain really beginning to form policy within the Household in a way which had probably never happened before.’

The Palace of the mid-1980s was a computer-free zone and not exactly teeming with original thinkers. Indeed, some believe that the mindset had scarcely changed since the reign of Queen Victoria. ‘Prince Albert was a great force for change,’ says one who remembers the Royal Household of the 1980s, ‘but after Prince Albert had gone, it went to sleep until David Airlie became Lord Chamberlain.’

A new arrival recalls it as follows: ‘A nice Household in tweed jackets and grey flannel trousers enjoying delicious teas and nice, set programmes; drinking copiously; having a lovely time. What it needed was more professional people. It’s always been in the nature of royal courts that you hang around, you backbite, you look for the next event in the social calendar, you shoot and you fish. But what was needed was people who
did
things. We’re all like dogs. Some dogs are lapdogs and like sitting around. Some dogs like chasing rabbits and rats. We needed to recruit those that were good at chasing rabbits and rats and give them the money and the set-up to do it.’

Lord Airlie and some of the Queen’s most senior officials had a plan. If the monarchy could become more efficient, the government would give it greater control over its own financial affairs. ‘We wanted to become
masters of our own destiny,’ explains Lord Airlie. Sir William Heseltine says that relations with the government paymasters were becoming more and more strained. ‘It was always going to be a running sore and none of us liked being run by the Treasury,’ he remembers. ‘More and more, the Treasury had become the masters and they were controlling everything from the stable boys’ pensions to the salary of the Lord Chamberlain.’

Greater efficiency would also help counter the embarrassing annual headlines about royal ‘pay rises’ every time the Civil List was increased. Heseltine remembers his futile attempts to explain to the press that the Civil List was not ‘pay’ for the Queen: ‘Even from the very beginning, with all that romance about the “New Elizabethan Age”, there were always voices against the cost of monarchy and they were getting louder. Why did the Queen have to be “paid” so much? The press were always insisting that the Civil List was the Queen’s pay. As Press Secretary, I tried for years to disabuse them of the idea but it was to no avail.’

The Civil List arrangement went back to 1760 and George III. He struck a deal whereby the government would fund the monarchy in exchange for all the profits from the Crown Estate. And back in 1984, Lord Airlie could see potential disaster. The Civil List was providing £5 million a year and it was not enough. Inflation was rampant, and if the monarchy did not get more money, it could become insolvent. But why should the government give more money to an Edwardian organisation which was still employing an army of footmen, handing out a ‘soap allowance’ and serving a sovereign routinely described as ‘the richest woman in the world’?

‘I didn’t want to go to the Treasury for more money until we were a tight ship because who knows what they might have said?’ says Lord Airlie. ‘So that was the catalyst for bringing in Michael Peat.’

If Lord Airlie was the conductor, Michael Peat was the orchestra. Educated at Eton and Oxford, he came from chartered accounting aristocracy – a son of the eminently respectable firm of KPMG Peat Marwick, auditors to the Royal Household. He was no stranger to the quirks of the Palace. When Peat’s father was called in to audit the royal accounts, officials would arrange for a tablecloth and silver to be laid out in the Privy Purse Office. In those days, it was not appropriate to ask an accountant to lunch in the Household dining room. A generation later, his son was consigning that way of thinking – and eating – to the royal dustbin. At the same time, he was producing ideas which would cause apoplexy all the way from the pantry to the ballroom.

Lord Airlie remembers the speed with which Michael Peat and his
small team worked their way through the entire Royal Household – and the tension as they produced their recommendations. ‘Michael did this, believe it or not, in six months and I worked very closely with him. We’d just done the same thing at Schroders and I was very conscious that it stirs the pot. Human beings just don’t like change very much. It upsets people personally because they think they’re being got at.’

Michael Peat duly presented a 1,383-page report containing 188 recommendations. ‘Individually, they weren’t very significant. Collectively, they were very important,’ says Lord Airlie. Within the Royal Household, they were not merely viewed as important. Some caused uproar. Most proposals were hard to argue with – the introduction of combination boilers at Buckingham Palace or the use of hydroelectricity from the Thames at Windsor. The proverbial institutional joke ‘How many people does it take to change a light bulb?’ was no laughing matter. The Palace was spending £92,000 a year on changing light bulbs. In due course, the proposals would lead to one of the most important single innovations of the entire reign: the transformation of the Royal Collection from a dusty curatorship into a self-financing, world-class assembly of great treasures employing hundreds and viewed by millions. Some plans, however, caused tension, not least the idea of portion control – fixed helpings – in the five rigorously segregated staff dining rooms. Worse still was the suggestion that those five dining rooms should merge into one. As with any big change, it’s the small details which cause the greatest pain. For many years, the Ascot Office, which had the less than onerous task of vetting those admitted to the Royal Enclosure during one week’s racing each June, had been located at St James’s Palace rather than Ascot Racecourse. Michael Peat’s conclusion that the office should vacate St James’s led to almost comic levels of resistance, much of it led by the Queen Mother.

‘I remember thinking “What’s all this fuss about the Ascot Office? Ascot is only one week once a year,”’ recalls a member of the Household. ‘Then I looked into it and it was a hornet’s nest. I didn’t want to go near it. These were just the sort of neuralgic issues which very traditional institutions can go nuts about. The Belgians have a saying: “Put a pebble in a man’s shoe and he ceases to ask questions about the meaning of life.” It was like that with the dining rooms and the Ascot Office. It could enter the bloodstream and no one could talk about anything else for days.’

Another source of institutional angst was a proposal to open up the use of the Royal Box at the Royal Albert Hall. On those nights when it had no royal occupant, the box could be used by senior members of staff. Michael Peat’s recommendation that the privilege should extend to all ranks generated months of heat and fury.

‘If you were a footman or a clerk, that was a big difference in perks,’ says one of the modernisers. ‘But it was an open sore for years.’

Whatever the Queen thought – and many imagine that she was entirely happy with the status quo – she could see the need for change. At the end of 1986, the Lord Chamberlain presented her with the Peat Report. ‘The Queen saw it, gave it her approval and just said: “Get on with it,”’ says Lord Airlie. ‘She was hugely supportive and I should say that Prince Philip also played an important part. He came up with all sorts of ideas and you had quite a job arguing him out of it if you didn’t think they were good ones. He challenges you!’

Lord Airlie was adamant that there should be no job cuts, merely natural wastage. Even so, parts of the institution were appalled that their routines might have to change for the first time since Queen Victoria. In the Royal Mews, they were still wearing Victorian state livery. In the kitchens, they were still cooking with Victoria’s pans. Despite the opposition, Lord Airlie won the day. ‘He was a spectacularly good commanding officer if I could put it like that,’ says one senior official from those days. Lord Airlie admits that it was not easy. ‘They were a great bunch of people,’ he says. ‘But, on the whole, they reacted uncomfortably. I had meetings and if you want to make a criticism of me, it is that I should have held even more.’ He accepts that, even today, there are some who still resent the modernisation which he and Michael Peat brought about. ‘The important thing,’ he points out, ‘is that it changed attitudes.’ The report certainly changed one crucial attitude: that of the government.

As the costs started to come down, the Treasury was impressed. These courtiers, it seemed, weren’t so bad at running their own finances after all. During the early seventies, things had got so bad that a House of Commons Select Committee had recommended the nationalisation of the Duchy of Lancaster and the Duchy of Cornwall (which, respectively, provide the private income of the Queen and the Prince of Wales) and putting the most senior members of the Royal Family on state salaries. The rest would be ‘sacked’.

Nearly twenty years later, at the tail end of Margaret Thatcher’s tenure as Prime Minister, the Royal Household had now shown that it could be trusted to take greater control of its own money. But the Palace was still dependent on an annual Civil List handout. ‘It was pretty unsatisfactory,’ says Lord Airlie. ‘It was a period of high inflation and every year, when it was reviewed, it was “The Queen’s getting another pay increase.” We wanted to be in a position to manage the Household affairs on a much longer-term basis. You can’t plan for one year. You want to plan for much longer.’
So he went to the Treasury with a plan: if the monarchy was given a ten-year deal then, for better or worse, it would get on with it.

It was a big risk. By 1989, the Monarchy’s Civil List allowance had crept up to more than £6 million. In 1990, Lord Airlie wanted to fix a single figure for the next decade. If inflation surged, then that fixed sum might be hopelessly inadequate in a few years’ time. If so, the Queen would have to go begging to the Treasury. The Palace’s financial credibility would be shot to pieces and the monarchy really might end up with Whitehall civil servants running the Household.