Conclusions and recommendations
The Duchies play an historic and important role in
supporting the Households of The Queen and The Prince of Wales.
They have both enjoyed substantial financial growth in both capital
and revenue in recent years but there are ways in which they might
work more effectively and be brought up to date.
- The direct involvement of The Prince of Wales
in the management of the Duchy of Cornwall creates a potential
conflict between the interests of the current beneficiary and
those of future beneficiaries. The Duchy
should:
- modify the governance arrangements
so that, as with the Duchy of Lancaster, the beneficiary has no
direct role in the management of the Duchy.
- introduce openness into the
appointment of Members to the Prince's Council, which oversees
the management of the Duchy. A process in line with the principles
for public appointments would help to ensure that appointments
are made on merit and command public confidence.
- The role of the Treasury
should be made clear in the Duchy of Cornwall's accounts.
The Treasury approves proposals for major capital transactions,
but its criteria for doing so could be clearer and more transparent,
as could the extent to which the Treasury exercises any general
oversight to ensure the Duchy is being managed well.
- The role of the Chancellor of the Duchy of
Lancaster should be made clearer. The Chancellor
has revocably delegated certain functions relating to the management
of the Duchy to the Council. The Duchy's accounts should say what
functions the Chancellor has delegated and what functions he retains.
- To assist Parliament in its scrutiny, the
Comptroller and Auditor General should have full access to the
accounts of the Duchies. The Duchies'
accounts are required to be presented to Parliament, and it is
anomalous that they are not audited by the Comptroller and Auditor
General. Parliamentary scrutiny and accountability would be more
effective if the Comptroller and Auditor General were to be the
auditor of the Duchies, or at least to have access to their books
and records.
- The Treasury should amend its Accounts Directions
so that the Duchies have to follow public sector good practice
and thereby comply with the same disclosure requirements as most
other accounts presented to Parliament.
For example the Duchies should be required to provide more information
on their investment portfolios and the remuneration of individual
senior managers and Council members.
- The Duchies' accounts should be made clearer
and more transparent. It would assist
readers of the accounts, including Parliament, for the Duchies
to provide more information and explanation. For example:
- the Duchies should set out
their accounting policies in areas which directly affect the level
of the surpluses payable to The Queen and The Prince of Wales,
such as the recharging of costs from revenue to capital. Disclosing
their accounting policies in this area would provide assurance
that the Duchies are treating costs appropriately and consistently
from year to year.
- the Duchies should say who
conducts the valuations of their properties (both the external
and internal valuers), and their qualifications.
- where there is borrowing from
the capital account for revenue purposes, the Duchies' accounts
should set out the terms of the loan and the purpose for which
it is required, and provide assurance that the money is not being
used to inflate the revenue surplus payable.
- in the case of the Duchy of
Cornwall there should also be clarity about which assets belong
to the Duchy and which belong to The Prince of Wales. The need
for this clarity is illustrated by the Duchy's purchase of timber
from The Prince. The timber had previously appeared as an asset
on the Duchy's balance sheet.
- the Duchy of Cornwall should
provide a reconciliation between the figures shown in its accounts
for the profit on disposal of investment properties, the proceeds
received and the book value of the assets sold.
- The Duchies should include
in their accounts details of the targets they have set and performance
against them. Such information
would help Parliament and other readers of the accounts assess
how the Duchies are performing. In addition to benchmarking their
performance against other organisations, there is the opportunity
for the Duchies to share good practice and learn lessons from
each other.
- The Duchies should report more information
on their charitable and other activities, and the principles that
underlie them. The narrative section of
the Duchy of Cornwall's accounts is a helpful supplement to the
financial information and it would be useful for the Duchy of
Lancaster to provide something similar.
- The Duchies do not pay corporation tax or
capital gains tax. As the Duchies are
trading entities, it would be useful for the Treasury to provide
justification for the tax position of the Duchies, as distinct
from that of The Queen and The Prince of Wales, and explain the
impact of this favourable tax position on the Duchies' competitive
position in the property and other markets in which they operate.
- There should be an assessment of how well
the surpluses of the two Duchies correspond to the respective
needs of the Households of The Queen and The Prince of Wales.
The current arrangements stem from the fourteenth century, and
the resulting income is to that extent an accident of history.
After more than six hundred years, it would seem sensible for
the Treasury to review whether these arrangements remain appropriate
to present-day circumstances.
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