Examination of Witnesses (Questions 80-99)
THE ACCOUNTS
OF THE
DUCHIES OF
CORNWALL AND
LANCASTER
7 FEBRUARY 2005
Q80 Chairman: Just summing that up.
We have got a situation where you are increasing the revenue surplus,
are you not, by charging the staff development cost to capital,
you accept that?
Mr Ross: Yes.
Q81 Chairman: What is being suggested
to you is you have not got a clear policy and there is scope—I
am sure it does not happen—for these costs to be treated
inappropriately. Would you accept that?
Mr Ross: I do not think so. If
you can tell me more?
Q82 Chairman: There is scope. Why
do you not set out your accounting policies more clearly and in
more detail so you can convince committees like this, indeed,
that is not happening because you are a highly reputable organisation?
Mr Ross: We go a long way. We
think the information we provide is good. This is in line with
corporate account publication. We have an auditor of national
reputation. It is then submitted to our own audit committee and
after that it goes through the Treasury who have the right to
direct any way in terms in which our accounts are presented.
Q83 Jim Sheridan: Can I ask either
or both representatives has either or both estates received any
funding whatsoever from EU farm subsidies?
Mr Clarke: As far as Lancaster
is concerned, we do not farm any land in hand. All our farms are
let, therefore any new subsidies are a matter between the tenant
and the authorities. We do not receive any of the subsidies direct.
Q84 Jim Sheridan: Neither estate
receives any subsidies?
Mr Clarke: I am speaking for Lancaster.
Mr Ross: In the same way, the
single farm payments are received by our tenants.
Q85 Jim Sheridan: Just to clarify.
Neither estate receives any money whatsoever from the EU in terms
of farm subsidies?
Mr Clarke: In terms of the single
farm payment, no.
Q86 Jim Sheridan: I have asked a
perfectly straightforward question.
Mr Ross: It is a matter of how
you express it.
Q87 Jim Sheridan: I tell you how
I express it. We have people in the Third World dying of starvation,
we have the richest land owner in this country receiving EU farm
subsidies and I am asking a perfectly straightforward question,
how much?
Mr Ross: We let these businesses.
We let all the farms to tenants. The tenants are individual farmers
who have the right to run their business. This is the terms of
the Agricultural Holdings Act. Those tenants are the people who
are drawing down these single farm payments.
Q88 Jim Sheridan: It seems to me
you are refusing to answer my question, if either or both estates
are receiving farm subsidies?
Mr Ross: It does indirectly go
to the tenant. You are right in the sense that it is on Duchy
land, but it goes to the tenants.
Q89 Jim Sheridan: You do get EU farm
subsidies?
Mr Ross: Not directly.
Q90 Jim Sheridan: Indirectly?
Mr Ross: If the tenant is carrying
out business on our land and they receive a rent, and that is
deemed to be indirect, the answer would be yes.
Q91 Jim Sheridan: Have you any idea
how much that is?
Mr Ross: I am afraid we do not
know because we do not know the details of all the farmers' profit
and loss accounts.
Q92 Jim Sheridan: On the question
of Clarence House, which has just been refurbished at a cost,
I estimate something like £9 million. Did the Duchy meet
any of the costs of this refurbishment?
Mr Ross: This is outside our area
of remit completely. We hand over the surplus to the Prince of
Wales and his office. The matter of how the money is spent and
accounted for is not Duchy business.
Q93 Jim Sheridan: Going back to the
point which Mr Steinberg raised about the pension fund, £1.1
million deficit in the pension fund. Would it not be right and
proper to ask Her Majesty to fund this deficit from the surplus?
Mr Clarke: At the present time
we are paying money into the pension scheme and that does come
out of the surplus.
Q94 Jim Sheridan: How much is that?
Mr Clarke: At the moment we are
paying £143,000 a year. We have increased the contribution
to 16.3% for all members of staff within the scheme. On the deficit,
on an MFR basis, we are now at 93% which is over the 90% threshold
we have to achieve in 10 years and we have achieved that in three
years.
Q95 Jim Sheridan: Mr Ross, can I
ask the question about this £300,000 of development work
which was written off during 2002 and 2003. Can you account for
why that happened?
Mr Ross: This was a project we
were taking forward with the costs being incurred on professional
advice, legal advice and those sorts of issues. We decided the
prospect of this particular scheme progressing in the reasonably
near future was not sufficiently good for it to be held in our
books, so we have written it off against the revenue account.
It has been deducted from the surplus.
Q96 Jim Sheridan: I am glad that
is within your remit. Again, can I say, there was a significant
difference in terms of staff costs. According to this report,
one of the estates has paid something like £57,000, and the
other one, something like £32,000. What kind of people do
you employ that deserve these kinds of wages? Why is there such
a difference in the gap?
Mr Adcock: Can I pick up on that
question. I think the £57,000 you mentioned is the Duchy
of Lancaster. That £57,000 is inclusive of pension contributions,
which, as Paul Clarke stated, have been inflated in 2004 because
we were making additional payments, totalling £60,000, to
catch up the deficits. In addition to that, the way we calculate
the average salary is fairly crude, which is taken at the beginning
of closing balances, which can be misleading in the timing of
people beginning and starting within the year. I can say that
average salary is not £57,000, it is £33,600 over the
14 people within the Duchy of Lancaster.
Q97 Jim Sheridan: What are the skills
required for these people?
Mr Adcock: The people are split
into three main areas: head office staff, survey staff and other
costs, which are magistracy, shrievalty and other special
costs. The head office staff is mainly finance: myself, two others,
the chief executive and his secretary. Our skills are ultimately
dependent on the roles we are carrying out. The survey staff skills
obviously are dependent on their skills, but they are mainly surveyors.
Mr Clarke: Because we are a small
team we have a high proportion of qualified professional people.
Within that survey office and survey staff, you have got two qualified
chartered surveyors and two secretaries in support, plus estate
workers. Whereas, at head office, I am a chartered surveyor, Mr
Adcock is a chartered accountant and we have a bookkeeper accountant.
There is a fairly high degree of qualified people within that
group.
Q98 Jim Sheridan: Mr Ross, I see
that certain Duchy properties are used by the Prince of Wales
Office and for staff living accommodation. Can you tell me how
these properties are allocated and how the rents are determined?
Mr Ross: They are occupied and
rented out under the appropriate legislation with the full open
market rent being paid.
Q99 Jim Sheridan: What does that
mean?
Mr Ross: The Duchy of Cornwall
owns the properties and we let them to the staff.
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