The Times of London reports that Buckingham Palace plans on continuing to spend at its current levels despite news that its cost to taxpayers has increased this year, causing a potential "financial showdown" with the Treasury.
It reports that the amount of public money given to the Royal Household is decided once every 10 years. And this year, for the first time in decades, the Palace is asking for an increase.
The current level was agreed by John Major when he was Chancellor of the Exchequer in 1990. It was a deliberately generous settlement that enabled the Queen to put money aside. In the event she was able to build up bigger than expected reserves of £35 million by 2000. With the agreement of the Palace Tony Blair announced that year that the payment would be frozen at £7.9 million.
The Queen has since been drawing on the reserves built up in the 1990s to pay for ongoing costs and last year spent £6 million from them. At current spending levels these reserves are likely to have been exhausted by the time of the Queen's Diamond Jubilee in 2012.
The Palace will have no reserves left and will therefore need an increase in public spending to cover its expenses, the Times reports.
The Press Association reports that the Queen and her household cost the British tax payers 69 pence per person last year - an increase of 3 pence.
The total cost of keeping the monarchy increased by 1.5 million pounds to 41.5 million pounds during the 2008-09 financial year.