The Queen’s finances were at a “historic low” with just £1-million left in reserve, MPs said.
Her courtiers were advised to take money-saving tips from the Treasury.
A report by the Public Accounts Committee found that the Queen’s advisors were failing to control her finances while the royal palaces were “crumbling”.
MPs said her advisors had overspent to such an extent that her reserve fund had fallen from £35-million in 2001 to just £1-million today.
The royal household had made efficiency savings of just 5% over the past five years compared with government departments, that are cutting their budgets by up to a third.
MPs on the committee said the Treasury must “get a grip” and help to protect the royal palaces from “further damage and deterioration”.
As the wealthy and powerful gather in Davos, Switzerland this week, a new report reveals some shocking statistics about the world’s growing gap between rich and poor. Read on
Margaret Hodge, the Labour chairman of the committee, said: “We believe that the Treasury has a duty to be actively involved in reviewing the Household’s financial planning and management — and it has failed to do so.”
Buckingham Palace and Windsor Castle are reported to be in urgent need of repair. Staff must catch rain in buckets to protect art and antiquities, while the Queen’s old boilers were contributing to bills of £774,000 a year.
Mrs Hodge said: “The Household must get a much firmer grip on how it plans to address its maintenance backlog. It has not even costed the repair works needed to bring the estate back to an acceptable condition. Again, the Treasury has an oversight role here.”
In April 2012 the Sovereign Grant replaced the old way of funding the Royal family through the Civil List and various Government grants.
The Sovereign Grant represents 15% of the net surplus income of the Crown Estate, land holdings that generate money for the Treasury.
A Buckingham Palace spokesman said the sovereign grant had made the Queen’s funding “more transparent and scrutinized” and was resulting in a “more efficient use of public funds”.
He said that repairing the royal palaces was a “significant financial priority”, and that the royal household had almost doubled its income to pounds £11.6-million since 2007.
The spokesman said: “The move to the Sovereign Grant has created a more transparent and scrutinized system, which enables the royal household to allocate funding according to priorities. This has resulted in a more efficient use of public funds.”
A Treasury spokesman said: “The new arrangements established by the Sovereign Grant Act have made the royal finances more transparent than ever while providing the long term stability necessary for good planning.”