The Queen and the royal family cost taxpayers 40 million pounds in 2007-08, a rise of two million pounds from the previous year, Buckingham Palace said on Friday.

The annual report into the royal finances showed that the Queen was not immune to the rising costs that have hit millions of her subjects in the last year.

It warned that cuts to the royal property budget have created a backlog of urgent works that will cost 32 million pounds within 10 years.

Outstanding projects include:

* Replacing the lead and slate roofs at Buckingham Palace and Windsor Castle. (Cost: 16 million pounds)

* Updating the heating and electrical systems at Buckingham Palace. (2.4 million pounds)

* Replacing the 19th century iron and lead water pipes at Windsor. (Three million pounds)

Palace officials said a drive to conserve energy at palaces and other royal buildings had helped to cut costs and reduce environmental pollution.

Electricity usage fell 7.3 percent in 2007-08, helped by the introduction of low-energy light bulbs. Water from a borehole in Buckingham Palace was used to cool the wine cellars and water the gardens.

Travel costs rose to 6.2 million pounds in the year to March 31 from 5.6 million pounds in the previous 12 months.

During the year, there were state visits to the United States, Uganda, Belgium, France and the Netherlands.

The Queen had 440 engagements across Britain and entertained 38,000 guests at garden parties in Buckingham Palace and the Palace of Holyroodhouse in Edinburgh.

The money, which also paid for royal staff wages, amounts to 66 pence per taxpayer each year, according to Sir Alan Reid, keeper of the privy purse.

He said the royal household placed "a strong emphasis on value for money and accountability in the use of public funds".

Anti-monarchy campaign group Republic said the true bill to the taxpayer would be nearer 150 million pounds a year if the cost of police and army security were included.

Spokesman Graham Smith said the Queen should receive a fixed salary managed by the government and that parliament should set an annual budget for the monarchy.

"There is a clear need to reform the royal finances, so we can all be sure they are entirely transparent and accountable," he said. "It is high time the monarchy abided by the same standards of accountability as the rest of government."