The Queen is broke, says Buckingham Palace

Is it worth millions of pounds a year in taxpayer money to maintain a largely symbolic monarchy? This old debate in the UK has gathered fresh momentum after Buckingham Palace accounts published today showed that the Queen has been dipping into her cash reserves to maintain herself and her palace.

The reserve, built up during the earlier good years, is set to run out by 2012 – the year of her diamond jubilee. This has prompted 'Buck Palace' to start lobbying for an increase in the civil list, which pays for the running of the royal household.

The current deal – in which the Queen gets 7.9 million pounds a year – was agreed by the then chancellor of the exchequer John Major in 1990. The arrangement expires in 2010. Under the system used for negotiating the public funding, the level for the next 10 years is due to be finalised next year.

The Queen faces a financial showdown with the treasury after the palace signalled it intends to continue spending at current levels. If she continues drawing on the reserve at the current rate, she will run out of funds by 2012. The fund has gone down from 35 million pounds to 21 million pounds over the last decade.

Palace officials have complained that they lack funds to properly maintain some royal residences. They once claimed that part of the facade of Buckingham Palace was in such bad repair that a chunk fell off, narrowly missing Princess Anne.

The Palace's call for an increase in the civil list, will mean it will also in turn face demands on itself to cut back on its expenses. The civil list covers the Queen's staff costs and the running of the royal household – including banquets and furniture - but not palace maintenance, travel or security.