Ministers hope royal announcement will speed up reforms

The Duke and Duchess of Sussex have announced they will "step back" as senior royals

A delicate, diplomatic dance has been at play today at the twin peaks of Britain's constitutional architecture.

At one end of The Mall, Downing Street was studiously avoiding any comment about the Royal Family feuding.

But at the other end of The Mall, officials were keeping a beady eye on the Palace as they tried to avert a full blown crisis.

It was announced this evening that the Queen wanted an accommodation to be reached within days with the Duke and Duchess of Sussex.

That followed their decision to "step back" as senior royals.

No formal recommendations will have been passed from the elected end of The Mall to the hereditary end but ministers were feverishly considering the implications.

One cabinet minister told Newsnight: "The execution of the announcement by the Duke and Duchess of Sussex has been piss poor."

The front pages of UK newspapers following the couple's announcement

Another minister said that the announcement by the Duke and Duchess had highlighted - and compounded - two major problems for the Palace.

These were described as a "simple HR problem" and the "Andrew problem".

Of the HR problem, the minister told Newsnight: "The Queen is in transition. Charles is not a spring chicken. The Duke of Cambridge fills the part but he can't do everything. And his children are too young.

"So there should be a space for Harry and Meghan but they want to step back."

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Of the "Andrew problem", a reference to the downgrading of the Duke of York after his Newsnight interview, the minister said: "That is a very serious problem for the Palace. That means that any other problem is massively amplified."

But a cabinet minister suggested that the Royal Family could "end up in a good place" if it can move to the "1937 model".

The minister said that after Edward VIII abdicated in December 1936 the crown went down to a "slimline model" of King George VI, his wife Queen Elizabeth and, as they grew up, their daughters Princess Elizabeth (the current Queen) and Princess Margaret.

They were helped by the King's younger brother, the Duke of Kent, until his death in a military air crash in 1942.

For today's royal family, the minister told me: "You need the core - the immediate line of succession as the pictures behind the Queen in the Christmas broadcast showed.

And then you have other royals who are really committed like the Earl and Countess of Wessex and the Princess Royal.

The BBC understands Prince Harry and Meghan did not consult any other royal about making their personal statement

"If Harry and Meghan don't want to be part of that then that is fine. But there is a contract between the British people and the Royal Family.

"If they break that contract there are consequences."

The minister said that the Sussexes should not have any access to public funds.

The couple indicated in their statement that they would forfeit funds from the civil list, the public grant to fund public royal duties.

The minister said the Prince of Wales should be able to fund them through his Duchy of Cornwall income.

But there should be questions about their housing at Frogmore Cottage which was refurbished at the taxpayer's expense.

The minister said: "I am not sure they can benefit from tax-payer funded housing. So there will be questions about Frogmore Cottage because the tax-payer funded the refurbishment."

But the minister said the Duke and Duchess should not lose their titles and there should be no interference in decisions about police protection.

"That is based on a threat assessment," the minister said. "So decisions should be made solely on that basis."

In Whitehall there were intense discussions about the future of royal family.

But one key figure will not be in the slightest bit bothered.

"If you asked [the prime minister's strategist] Dom Cummings about this he would look at you blankly and ask how the recruitment of data scientists is going," a minister said.

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