Where do the royals fit into our vision of modern Britain?

The role of the Royal Family has become almost a taboo subject again. Republican commentators compete with each other to apologise for misreading the public mood after the death of the Queen Mother.

But the investigation in today's Independent points to an underlying and persistent ambiguity: Britain seems to want the costly grandeur of traditional royalty, but is increasingly reluctant to pay for it.

The ambiguity is hidden away most of the time. Even after the death of Diana Princess of Wales in 1997 the debate about the monarchy's future was much more limited than it seemed. For some reason the outbreak of irrational hysteria after her death was perceived as a threat to the Royal Family. "The people are angry with the Queen!", some republicans proclaimed with a flourish, arguing that the mourners around Buckingham Palace were the equivalent of the insurrectionists who occasionally besieged the Tsar's Winter Palace. In reality the British anger was ardently royalist. "Why isn't our Queen amongst us?" the protesting mourners asked. The mourners and their tabloids were angry because the Queen was not being Royal enough.

The public mood towards the monarchy oscillates, but within limits. In the early months of this year there were reports that the jubilee would be a damp squib. It did not take very much to change all that. The jubilee will go with a triumphant swing because of the overblown media coverage of the Queen Mother's death. The newspapers mourned for days. The confused and timid BBC, terrified of the tabloids, mourned with them. The public was brainwashed by the never-ending coverage of the choreography around a single coffin, in the same ways as they are mesmerised by the latest Big Brother series.

Personally I am a republican, but I have never sensed for one moment that the abolition of the monarchy was close to even being on the agenda. The current Government is stuffed full of republicans – some are at a very high level – and yet none of them would dare to admit it.

Instead it is more constructive to explore that underlying ambiguity highlighted in The Independent's investigation. There are broader questions arising from the schizophrenic appetite for royalty combined with a reluctance to pay for it. Where does the Royal Family fit in to the Government's vision of a "modern" Britain? How does it function in a country where, across the political spectrum, the emphasis in different ways is on equality of opportunity and a thriving meritocracy?

"Modernisation" was one the buzz words when the Government was elected in 1997. Ministers promised to "modernise" the welfare state, "modernise" the constitution and "modernise" Britain's relations with Europe. Admittedly this is a conveniently evasive verb, which is one of the reasons New Labour used it so often in the early days.

But the Government has introduced policies that at least challenge the monarchy's status. To take one example, the abolition of hereditary peers means that the monarch alone wields theoretical power on the basis of the hereditary principle. This is not a trivial matter. When Gladstone was contemplating the abolition of hereditary peers in the 1880s an alarmed Queen Victoria warned him that it would be her who would be abolished next. Gladstone did not proceed.

Probably there are members of the Royal Family who would welcome a less inflated role, within the constitution and as far as their own unreal lifestyles are concerned. Prince William looks uneasy when he is filmed cooking a stir fry at Eton. He would prefer to cook his stir fry in peace. Prince Charles must privately curse the monarch's role as a head of the Church of England. Surely all of them would prefer some clarity rather than the current messy situation, where royal grandeur is expected without the resources. Better to have an affordable monarchy than one that is going broke.

There is still too big a gap between modern Britain and the lives of a single privileged family. The image of cycling monarchs from northern Europe has become something of a cliché. It does however provide a guide of sort. Britain's next King should be able to cook his stir fry in peace, in the context of a written constitution in which he wields no theoretical powers. That would be a "modern" solution – and a cheap one as well.