Peat is not universally liked; he is frequently described as lacking charisma, being a faceless accountant, a cold fish; but new brooms are seldom liked and it’s too easy to attach damning labels. He was effecting radical change in a cosy, hierarchical environment and interfering with working practices that no one has questioned for decades. He disturbed some well-feathered nests. No wonder he upset a few people along the way. As he has been heard to say, ‘We changed a huge amount in terms of the head; whether we changed the heart I don’t know.’ The heart was easier to change in those areas where staff were better educated, among those who come into the Palace in administrative posts – finance, press, property, private secretaries – but it was more difficult to change the heart in the domestic areas, the Mews, the Master of the Household’s department, areas where there was a very strong military background.
Educated at Eton and Oxford, Peat is tall and slim, a year younger than the Prince of Wales and two years younger than Robin Janvrin. I first met him in April 2003, shortly after his move to St James’s Palace. He was impeccably mannered, charm itself and as cool as a glacier; I was happy then to believe what people said about him. But I have changed my view; I had known and liked Mark Bolland – and Peat was making a break with the past and the methods of the past. I was probably seen as part of that and I think he was expecting hostility. He was in a new job, he had the reputation of being a ruthless accountant, and the Prince’s staff, members of which had always enjoyed a more luxurious life than their counterparts across the Mall, were extremely wary. First impressions were misleading. Peat is far from glacial and far from grand; he makes his own calls and answers his own telephone (as opposed to routing calls through his secretary, as many at his level do); he gets around London on a bicycle; and he has a real life outside the Palace with a wife, three children and a farm in Berkshire. Given what he has achieved over nearly twenty years, he is remarkably self-effacing.
During the period of his secondment, in 1991, Peat began working on new tax arrangements for the Queen. He had decided not to mention tax in his report, but, having looked at her finances from top to bottom during its preparation, he felt strongly that the Queen could and should be paying income tax. He knew it was a matter that needed careful handling; the Queen had never paid tax, but that was not a tradition that went back generations. Queen Victoria and Edward VII had both paid tax, George V and George VI had paid tax on investment revenue, and complete exemption only began at the start of the present Queen’s reign in 1952. However, the feeling in the household had always been that the Queen could not afford to pay tax and maintain her current lifestyle, given her outgoings: she was paying for her children and other members of the Royal Family, paying for the upkeep of Balmoral and there was the small matter of horseracing. There was also a fear that any change would involve time-consuming legislation.
But the tax issue was inflicting grave damage and David Airlie was in full agreement with Peat. The monarchy was coming under heavy fire from the media on a number of counts, but the underlying malaise was its expense. The Waleses were at war with one another, Prince Andrew had married Sarah Ferguson, who was proving to be too much the girl next door and had an appetite for parties and holidays, and Prince Edward had shown himself to be arrogant and petulant. People were beginning to question why the taxpayer should be paying for the Royal Family to live the life of Reilly when they were patently no better than anyone else. The Palace had always been very coy about how much the Queen was worth, and in the absence of hard information journalists speculated. She was consistently reported to be worth billions; in 1989 the American business magazine Fortune placed it at £7 billion, making her the world’s richest woman and the world’s fourth richest individual. It was wildly inaccurate, but in PR terms it didn’t matter. While the rest of the country paid tax on their comparatively meagre incomes, she was exempt; and the Prime Minister’s announcement in 1990 that her income from the Civil List was to be increased by more than 50 per cent as part of the ten-year deal simply added insult to injury.
Peat’s first challenge was to convince the household that the Queen could in fact afford to pay tax and still maintain a lifestyle commensurate with her position as sovereign, and then to convince the Treasury and the Inland Revenue that this could be done without a change in the law. Once he had Airlie’s support, neither challenge proved insurmountable; and in February 1992 he set up a small working group with representatives from both the Treasury and the Inland Revenue to work out the detail. The plan was to announce the scheme in April 1993.
On 20 November 1992, however, five months before the proposed announcement, catastrophe struck. Fire broke out at Windsor Castle, the oldest of all the royal residences and the only one that has been in continuous use since William the Conqueror selected the site for a fortress after his conquest of England in 1066. The fire began in the Private Chapel when a curtain that had accidentally been touching a spotlight for a prolonged period burst into flames. By the time the alarm was raised fire had taken a firm hold of the north-east wing and smoke was billowing from the roof. It took fifteen hours and a million and a half gallons of water to put out the blaze. Mercifully no one was injured, and thanks to the Duke of York, who hastily organized a rescue operation, most of the artwork was moved to safety, but the fire caused millions of pounds’ worth of damage to a glorious and historic building that was uninsured. Nine principal rooms and more than a hundred others over an area of nine thousand square metres were damaged or destroyed by the fire – approximately one-fifth of the castle area.
The Duke of Edinburgh was in Argentina at the time and spent hours on the telephone trying to console the Queen. She had stood watching her childhood home burn, a small, sad figure in a mackintosh with the hood pulled over her head. She was clearly distraught and the nation felt huge sympathy. But that sympathy quickly evaporated when the Heritage Secretary, Peter Brooke, announced that since the castle had been uninsured the government would foot the bill for the repairs, estimated at between £20 and £40 million. ‘When the castle stands, it is theirs,’ wrote Janet Daley in The Times. ‘But when it burns down, it is ours.’
And so, when John Major rose in the House of Commons six days after the fire and announced that from 1993 the Queen and the Prince of Wales would pay tax on their private income and that Civil List payments of £900,000 to five other members of the Royal Family would cease, it looked as though the Palace had been bounced into paying tax as a placatory measure. How the tabloids crowed.
It was very bad luck, because all they had actually been bounced into was making the announcement earlier than they had intended – and instead of gaining brownie points for having volunteered the idea, the Palace was once again caught on the back foot apparently reacting to bad publicity. In fact Airlie and Peat had not yet talked to the Queen about the detail of their proposals. She knew that they had undertaken a study into the feasibility of her paying tax but the whole business had been enormously complex and, although they had almost completed it, it was not yet entirely ready when the flames took hold.
In the end the restoration work at Windsor Castle was completed at no extra cost to the taxpayer – and in a round-about way at considerable pleasure to visiting tourists. The irony was that, having worked so hard to become masters of their own destiny, the newly formed Property Services department was landed with the awesome task of repairing the damage. It took five years to complete and turned out to be the biggest and most ambitious historic-building project to have been undertaken in this country in the twentieth century. Privately it was a nightmare. First, all the debris had to be cleared and the salvaged pieces sorted, dried out and numbered. Next the building had to be stabilized, then re-roofed. Some of the rooms were restored and reinstated as they had been before the fire to accommodate the original furnishings and works of art that had been rescued. Other areas, such as the Private Chapel where the fire had started, were so badly damaged they had to be built from scratch. Miraculously, it was completed six months ahead of schedule and came in £3 million below budget. The final cost was £37 million. To help pay for it, Michael Peat suggested opening the state rooms at Buckingham Palace