The government has given the go-ahead for essential works that include replacing electrical wiring, water pipes and the heating system, which were installed in the aftermath of the Second World War.

These works will be funded through a temporary increase in the Sovereign Grant from 15% to 25% of the Crown Estate’s profits for the duration of the 10-year works, the Royal Trustees said in a report. They are expected to cost an estimated £369m over the period.

The increase in resources is only required temporarily, for the duration of the works themselves, therefore it is the intention of the government to bring forward legislation to reset the level of the Sovereign Grant to appropriate levels (15% of the Crown Estate revenues) once they have been completed (expected to be in 2026-27).

In 2015-16, the total Sovereign Grant was £39.8m, up from £33.3m in 2012-13. Treasury will be engaged throughout the project, and will attend meetings of the Sovereign Grant Audit Committee and Programme Scrutiny Board.

The Royal Trustees report clearly sets out the increased grant is for the repair works, and the Government will have a representative on the programme board as part of the scrutiny arrangements. In addition, the National Audit Office (NAO) and the Public Accounts Committee (PAC) will also hold them to account.

The Sovereign Grant is calculated as a percentage of the Crown Estate’s profits, which are paid to the Treasury every year. In 2015-16, £304.1m was paid to the Treasury.

The justification for the works is that the current utilities are a serious fire risk. The project seeks to prevent a serious risk of fire, flood and damage to both the building and the priceless Royal Collection of art belonging to the nation.

Windsor Castle suffered a fire in 1992, which raged for nine hours and caused devastation to large parts of the building. That restoration took more than five years, and it is estimated that similar damage to Buckingham Palace could cost up to £250m for a single wing.

More than half a million people visit Buckingham Palace during its summer opening period and millions of tourists flock to its gates every year to see the Changing of the Guard. This is estimated to deliver a multi-billion pound boost to the economy.

Built in the 17th century, Buckingham Palace is a working building where the Queen carries out most of her official ceremonial, diplomatic and representational duties as Head of State and the Commonwealth.

During the building works, significant national events, such as the Changing of the Guard, Trooping of the Colour and Garden Parties will continue throughout this period and the Palace will remain open to visitors.

Chief secretary to the Treasury, David Gauke, said: ‘Tourists are drawn to this country because of our culture, heritage and royal legacy, and when they visit they spend billions of pounds and support thousands of jobs.

‘We must ensure that the special architectural and historic nature of some of our greatest buildings are protected for future generations, therefore it is only right we ensure Buckingham Palace is fit for purpose.

‘These urgent works have been properly costed and will ensure the Palace can continue its centuries-long tradition of being the working house of our Monarch. We will ensure every penny spent achieves the greatest value for money.’

The announcement comes ahead of confirmation of the costs and timetable for the refurbishment of the Houses of Parliament , which are equally run down and out-dated, but is likely to cost around £5bn to renovate.

The Sovereign Grant Act 2011: Report of the Royal Trustees on the Sovereign Grant Review 2016 report is available here