It would have been instructive to have been a fly on the wall in Buckingham Palace last Thursday morning. On the day of their golden wedding anniversary, the Queen and the Duke of Edinburgh found their loyalties divided. On the one hand there was the "People's Lunch" in their honour, hosted by the Government in Whitehall, to look forward to. On the other, there was a lunch for their children and grandchildren and assembled distant relations drawn from royal families across Europe, along the Thames at Greenwich. For Tony Blair and his spin-doctors, who appear increasingly to believe that nothing matters any more unless it has the prefix "people's" attached to it, there was no doubting which was the event to attend. But for Her Majesty and her consort there must have been a familiar sense of divided loyalty, between a private family celebration and a public occasion. Duty came first and they joined Mr and Mrs Blair, government ministers, other dignitaries and, of course, those selected ordinary people about whom so much was written the following day.

A hint of what the Queen and her husband thought may be gleaned from the startling piece of information that she asked the Prime Minister, in anticipation of his intended speech, not to be "too effusive". Presumably Mr Blair heeded this request, although in what he actually said he could hardly have been more fulsome. The Royal Family was integral to his vision of a "new Britain".

True to form, when Mr Blair talked about "new Britain" he did not offer any detail. We now know that one of the items under discussion for reforming the monarchy is to move the Queen and Prince Philip out of Buckingham Palace and turn its vast rooms over to the extensive Royal Art Collection. This dramatic gesture is being considered in the aftermath of Diana's death and the realisation that the institution has to change, to be seen to be more caring and responsive to public expectation.

Much more has to give than a change of address. Moving house is one thing - they still have plenty of palaces to choose from - altering a lifestyle, to accommodate and reflect a more demanding national mood, is quite another. It is to be hoped that when Mr Blair meets the Queen in private he ceases to be effusive - although judging from her request to him, this would appear not to be the case - and is not afraid of dispensing harsher words. Prince Philip said last week how proud he was of his children. For what? Apart from the Princess Royal's equestrianism and the Duke of York's foray as a helicopter pilot in the Falklands war, their achievements have been minimal. The children's lives and those of their other close relatives have been an uninterrupted round of pampered luxury, never needing to find, let alone hold down, a proper job, rarely experiencing the realities of the state health and education systems.

It is hard to see how any family could be less modern, less representative of Britain today. Perhaps Mr Blair knows something we do not, that he has spotted a magic formula for bringing the Queen and her relatives into the modern age. He is, after all, a reforming leader who modernised his own party from top to bottom. For Mr Blair, and before him John Smith, there were symbolic Old Labour targets, notably one member one vote and Clause IV. So, too, there are focal points for an assault on the institution that is the Royal Family. Buckingham Palace, a reminder of a different age with its imposing gates and railings, is one. The court, full of advisers who take their lead from the past rather than the present, is another.

Abolishing the palace should be the first step in a scaled-down monarchy. Surely it cannot escape public attention that no less than 850 people work inside Buckingham Palace as it is presently established. This is an astonishingly high figure and suggests that if the royals are, as they like to call themselves, a "firm", they are hopelessly over-manned. It is difficult to conceive of a worse example of so many serving so few. After the palace, scrapping this adulatory court, with its hankering for titles and initials and asphyxiating protocol, should be next. Do not be too effusive, said the Queen to the Prime Minister. Sound advice.