Let the Royals join the queue for 'Britannia II'

The way a new Labour government can justify what might appear a gross extravagance is to make it pay for itself - to make the asset sweat

Labour says it will review it, but it rather looks as though we are going to have to pay for a new royal yacht. There are two possible responses to this. One is to argue the merits of the case - whether or not this is a fine statement of commitment to a valuable British institution or an absurd transfer of wealth from poor to rich. That is what we have had to date. The other response is to say: "OK, if that is the decision, how do we make it pay for itself?" That is what this column is about.

My own acquaintance with royal yachts is limited, to say the least. But one of the supposed purposes of Britannia, much trumpeted during the past 36 hours, is promotion of trade, and I did once spend a day on it, cast as a spear-carrier in the service of British exports.

It was an interesting day at a number of levels. It was interesting in a Hello!-ish sort of way to see the Queen's and the Duke of Edinburgh's studies: the one Mrs Tiggywinkle, with its flowery print sofas, the other Man of Action, all wood panels and leather. It was interesting to talk to the crew, serving Royal Navy personnel whose next ship might be a minesweeper, and catch their perception of its value. I recall a young officer explaining that he felt the attraction to the Royal Family was that it was one place where they were not surrounded by people who fawned on them and could therefore feel at home - though I suspect that the naval officers selected for the job would be pretty good in the deference stakes.

But my overriding impression was that it seemed dreadful value for money, our money, both on the cost and the revenue side of the equation. The ship was absurdly lavish in its use of labour, treating the naval crew of 250 as though they were a free resource, hired to polish the thing till you could see your face in the engine-room pipes. It was almost as though jobs were thought up to keep people occupied, rather than the other way round.

And on the "revenue" side? Well, there is no direct revenue, and that's fine, because not every aspect of public endeavour needs to raise hard cash. But we as taxpayers could reasonably expect careful cost-benefit analysis of whether the ship actually does help to generate business for the country, and a clear focus to its export promotion efforts. I fear neither exists.

Above all, there seems to have been no effort to make full use of the property. If you are going to have an expensive asset, it must earn its keep. I am not suggesting that it should endlessly steam round the world - rather the reverse. A royal yacht needs to be used, aggressively and energetically, at the function at which it is best: a floating entertainment centre, the reward for people who have really earned it.

The basis on which the new royal yacht is to be run has to learn from these failings. The way a new Labour government (and I guess that is where the final decision will be taken) can justify what might appear a gross extravagance is to make it pay for itself - to make the asset sweat. But how?

There is a model, and it is not the sponsorship pattern that has now conquered sport. That is tacky. So we can't have a Carling Britannia, though I'm sure the firms that sponsor sport would queue to sponsor this one. (And, sorry, we can't have a Carling Diana either, despite the sporting ring of that.)

No, the clever way of exploiting the brand is to keep control of the new royal yacht firmly in the public sector, and then to allow three things to happen. One is to give ordinary people a sense of ownership: they have paid for it, so let them have a look around it. The next is to use it as reward for people who have performed useful services for the country. And the third is to allow it to be used very, very carefully by the private sector, in return for a contribution towards its upkeep.

The best model for the first two uses is the way the US administration uses the White House. A certain amount of time is set aside for anyone to see it. You queue up and you can have a look around. I would suggest that when the new yacht is in Britain there should be open days, maybe with some pre-booking to cope with the flow. But most of the time invitations should be used as a reward for people who have helped the country, or might help it in the future - pretty much as invitations to the White House are used in the United States, but without the political spin.

And for the third role? I have been trying to work out how much money is needed for a new yacht to pay for itself. If the capital cost were pounds 60m, about pounds 10m a year would be needed to cover interest and pay off principal over a life of 30 years. Add in running costs of, say, pounds 2m a year (against pounds 5m at present), so you would be looking for pounds 12m a year.

What is it worth in the market? A friendly yacht broker tells me that the largest private yacht normally available for hire, Leander, costs $50,000 (pounds 31,000) a day, plus expenses of about $10,000. But Leander is a mere 245ft long, compared with the present Britannia at 412ft. A new royal yacht would be smaller, but must be worth double Leander: say pounds 100,000 a day. Make it available, very discreetly, for favoured events deemed to be in the national interest for only 20 days a year and you've covered the running costs; make it 60 days a year and that is half the full costs. The rest of the time it goes around promoting British business in a structured, measured way. And the Queen can still have the thing for her summer hols for whatever fee Parliament decides is appropriate. Problem solved.