Calls for a full review of Queen's accounts

The Queen's accounts must be opened up to a full review after secret papers revealed deals had been done behind closed doors to shore up the Royal Household's finances, campaigners said yesterday.

Documents disclosed to The Independent under the Freedom of Information Act show Royal aides signed a confidential financial memorandum which ceded ultimate control of the Queen's finances to the Government. The deal came after years of disagreement over the Royal budget, with the Queen's office citing the difficulties of maintaining Buckingham Palace, Windsor Castle and other historic buildings.

The pact, agreed between the Queen and the previous Labour administration, only became public under freedom of information laws following a three-year campaign by this newspaper. Hundreds of letters between the Queen and her Government obtained by The Independent show the extent of the Royal Family's appeals for financial help.

Republic, the anti-monarchy group, said the time had come for an independent review of Royal finances. Graham Smith, Republic's campaign manager, said: "We have now found out that the Government is handing over millions of pounds to sort out Royal cash-flow problems, and even our MPs aren't fully in the picture as to what's going on." He added: "With estimates for the total cost of the monarchy running at more than £180m a year, we cannot afford to keep the details in the dark."

The disclosed documents show that in 2006 the Lord Chamberlain signed a financial memorandum which set out strict conditions with which the monarch must comply in return for the £15m paid by Parliament for the upkeep of the occupied palaces.

Under this agreement the Government reserves a right of access to carry out independent reviews of internal audits of the money paid to the Royal Household. It adds: "This report will include their opinion on the adequacy and effectiveness of the Royal Household's risk management, control and governance processes. Once this report has been passed to the Audit Committee, the Royal Household should forward a copy to the Internal Audit Unit at the Department and to the sponsoring team."