Examination of Witnesses (Questions 100-119)
THE ACCOUNTS
OF THE
DUCHIES OF
CORNWALL AND
LANCASTER
7 FEBRUARY 2005
Q100 Jim Sheridan: What criteria
do you use to let them?
Mr Ross: The open market rent.
Q101 Jim Sheridan: Anyone can apply?
Mr Ross: Those particular houses
are occupied, but as far as other properties we have are concerned,
they are advertised on a regular basis.
Q102 Jim Sheridan: Can anyone apply
to be allocated one of these properties?
Mr Ross: In fact, as these houses
become empty we will sell them.
Q103 Jim Sheridan: That is not the
question I asked you.
Mr Ross: Can anyone apply? There
is no opportunity to apply because they are not vacant.
Q104 Jim Sheridan: If they do become
vacant you will be selling them anyway?
Mr Ross: It is the rent which
is the determining factor that they should be let on the open
market. There are other houses on the same road which I am sure
would be available to rent.
Q105 Jim Sheridan: I asked you the
question about the criteria for those who wish to apply or be
allocated one of these properties. As I understand it, like you
say, when they become vacant they will be sold. You do not have
any vacant houses just now?
Mr Ross: I think the ones you
are particularly referring to are the ones which are occupied
by members of the staff. The other houses we have to let we do
let on the open market in almost every case, which are open to
anyone to apply to move into.
Q106 Jim Sheridan: How are the rents
determined?
Mr Ross: By the open market.
Q107 Jim Sheridan: Again, your accounts
refer to three substantial property acquisitions in 2003-04. Can
you give us some details about that?
Mr Ross: Our strategy has been
to invest in commercial property. We think it is our responsibility
to produce a suitable return on the assets we have. However, a
number of the assets are very low producing either because they
are long leases, residential properties, or whatever. These ones
we bought were three commercial properties: one in Leeds, one
in Dover, and, I think, one in Lancashire.
Q108 Jim Sheridan: Given that there
is a significant amount of taxpayers' money which goes towards
both estates, and given the fact that in recent years many industries
who did not receive the same kind of subsidies were then subsequently
privatised, do you think either or both estates would survive
as PLCs?
Mr Clarke: As far as Lancaster
is concerned, we never really considered or have done any figures
on what effect tax would have on it, but I am quite convinced
that as a business it would survive.
Mr Ross: The business is extremely
well run.
Q109 Jim Sheridan: Would it survive
as a PLC with the taxpayers' money?
Mr Ross: At the moment we operate
within the terms which are defined to us. That is speculation,
but we are a good business.
Q110 Jim Sheridan: Both estates would
survive as PLCs?
Mr Ross: I regard that as an academic
question, we are not even a company, we would not be able to comment.
Q111 Mr Simon: Mr Ross, you said
earlier, in a phrase which I thought strikingly melded the personal
and corporate in a way which does not happen often when dealing
with royalty, "He is the biggest multipurpose charitable
enterprise in the country". A cynic would say: "Give
any of us £12 million a year tax-free with no responsibilities
except buying big cars and fretting about the environment and
we could all be a significant multipurpose charitable institution".
However, being no such cynic, my reaction was quite the opposite.
I thought, "The biggest multipurpose charitable enterprise
in the country, hell of a guy, I want a piece of that". I
thought, "I want to do my bit". I decided, like Mr Steinburg,
although more seriously in my case and at the other end of my
career, I would also like to be on the Prince's Council.
I would like to know how to go about it, please?
Mr Ross: We are in different areas.
The charity side of his business is run by his office, not by
the Duchy of Cornwall.
Q112 Mr Simon: Sorry, the Prince's
Council, which is the non-executive board of 11, of which you
are the one executive member, advises the Duchy on all its activities,
is that not the case?
Mr Ross: Indeed, yes. We are not
a company. The Prince's Council is purely advisory and at the
moment these appointments are made by the Prince of Wales because
he goes to senior members of industry to give him advice on the
areas that he regards as particularly relevant to the Duchy of
Cornwall. They cover finance, law, environment, Cornwall in particular,
the tenant farmer and other such issues relating to our business.
Q113 Mr Simon: It is not akin to
the non-executive board of a plc?
Mr Ross: It is not.
Q114 Mr Simon: It is more like a
few of his mates?
Mr Ross: It is by appointment
to the Prince of Wales. In every other respect we conform with
the relevant requirements about appointing people. We advertise,
we select people through a process of short list and interviews
and so forth.
Q115 Mr Simon: In terms of governance,
what does that mean? Where does the buck stop? Does it stop with
you? Obviously it does not stop with his mates? Does it stop with
you or with him?
Mr Ross: We are extremely positive
about our governance. It is something we think is done well and
structured in an effective way. The governance starts with our
own internal committee procedures which meet regularly. It has
members of the Prince's Council on it to ensure there is a suitable,
if you like, non-executive input. We have an auditor. We have
an audit committee. Eventually the control of the Treasury is
very significant, it has complete power of veto over capital transactions
if it feels they are not being done either for good commercial
interests or in the best interest of the management of the estate.
Q116 Mr Simon: Given that you are
so keen on governance—although it seems to me like a pretty
rum kind of governance I have to say—and indeed pleased
with your governance, why not introduce the same kind of voluntarism
into your attitude to governance that has been so admirably displayed
by the Prince in his attitude to tax? Was it 1994 when he took
the enviable step of opting to pay income tax; not that he had
to but he chose to, enviable and admirable? Why does the Duchy—not
that you have to—not opt to be scrutinised by the National
Audit Office because if you do not opt to show the NAO your books,
like everybody else gets to show their books, people will naturally
conclude that you have something to hide?
Mr Ross: The Duchy of Cornwall's
income is private to the Prince of Wales. I think that any estate
or business that is private should be able to choose its own auditors.
I am very satisfied that we have a balance of a nationally recognised
good auditors looking after the private side and then we have
the Treasury looking after the public side.
Q117 Mr Simon: Would you mind if
I stop you there, just to go back to that bit where you say his
income is private to the Prince of Wales. We accept that, well
we do not accept that but, for the sake of this forum today, we
will accept that once you hand over the £12 million cash
which you have arbitrarily decided, with no scrutiny from anybody
at all, is to be this year's tranche, once you hand it over then
what he does with it is private, although we can see a certain
amount of it. To say that his income is private when his income
is derived from his capital is surely a rather meretricious not
to say sophistic distinction. Is his capital private?
Mr Ross: The estate is owned by
the Prince of Wales as a limited owner. It is a fine distinction
but effectively he does not have access to the capital or the
right to dispose of the capital. He has an absolute right to determine
the income, as to whether it is high or low, providing we operate
within the strict investment criteria that we have to satisfy
in dealing with the Treasury.
Q118 Mr Simon: Is his capital private?
Mr Ross: No. The capital is not
accessible to the Prince of Wales.
Q119 Mr Simon: It is not accessible
to the Prince of Wales. It is accessible in the sense that he
is able to determine how much of it is used and to generate what
levels of revenue but the capital is not accessible. If the capital
is not private then why can the National Audit Office of the United
Kingdom of Great Britain and Northern Ireland not investigate,
audit, assess, do that helpful and useful job that it does for
everybody else? If you are so pleased with your governance, what
have you got to hide? Why will you not let the NAO in to look
at your books?
Mr Ross: Every transaction that
we do is submitted to the Treasury. In a recent report which I
received it was pointed out that the detail into which we are
going has greatly increased. This is by agreement. We are very
happy to provide that information to the Treasury.
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