Examination of Witnesses (Questions 200-219)
THE ACCOUNTS
OF THE
DUCHIES OF
CORNWALL AND
LANCASTER
7 FEBRUARY 2005
Q200 Mr Allan: This took place according
to what we would call the Nolan principles; all the normal principles
which apply for public appointments?
Mr Clarke: They certainly did.
Q201 Mr Allan: Can I ask, Mr Clarke,
about the question of opening up your books to the National Audit
Office. From what you are saying, the Chancellor of the Duchy
of Lancaster is responsible and part of the additional freedom
you have, I guess, reflects the fact the Chancellor of the Duchy
of Lancaster is accessible to us. Could the Chancellor of the
Duchy of Lancaster then say, "I want to open our books to
the National Audit Office"? Is that in his power? Is he the
person who could decide?
Mr Clarke: He could make the suggestion
and the matter would be discussed by Council and would have to
be discussed with the life tenant. We take the view that it is
a private estate, as I have explained in the little history lesson
I gave, and as a private estate we have a firm of auditors who
undertake the work for us. We feel very satisfied with that, we
feel our accounts are open and have a number of items which give
the reader a very good idea of what is happening within our organisation.
We just do not see the need for the NAO to come in and deal with
the audit.
Q202 Mr Allan: We want to understand
the key people who are making those decisions. I think we understood
from the Duchy of Cornwall's side that is really in the hands
of the Prince of Wales, but from your point of view it is in the
hands of the Council effectively speaking to the life tenants
and speaking to the Chancellor of the Duchy of Lancaster.
Mr Clarke: I think it is something
that would come up within our audit committee which, hopefully,
will be set up very soon. That would be part of Council and the
audit committee would review in the normal way the fact that auditors
and their appointment should be reviewed now and again.
The Committee suspended from 6.06 pm to
6.28 pm for a division in the House
Q203 Mr Allan: I think I was talking
about your Council, Mr Clarke, in the Duchy of Lancaster and I
put a very specific question which is to know how many times your
Council met last year. We know from the Duchy of Cornwall that
the Council met all of twice. How often does your Council meet?
Mr Clarke: Six times.
Q204 Mr Allan: So every two months
they have a meeting?
Mr Clarke: Yes.
Q205 Mr Allan: Do you have sub-committees
and so on like the Duchy of Cornwall?
Mr Clarke: No, we do not. We are
not big enough really to justify having sub-committees. When we
go through the corporate governance exercise there is every possibility
that there will be an audit committee.
Q206 Mr Allan: Thank you. In comparing
the two reports of the two Duchies, I was very interested in the
Duchy of Lancaster because most of your land is in the County
of Yorkshire, the correct side of the Pennines, but you do not
have a statement like the Duchy of Cornwall, which of course has
most of its land in Devon, where they have a nice, cuddly statement
saying that they try and balance up a series of objectives, which
I liked, and one of them said in the interests "of those
people who will live in, earn their living from or simply enjoy
Duchy property given due weighting". That is in their report
on page two. The Duchy does have this very sort of people-friendly
reputation. The Duchy of Lancaster report did not have anything
like that. Do you have a similar ethos that you are also acting
in the interests of tenants in Yorkshire and you are not a hard-nosed,
wicked business trying to extract the last penny from them?
Mr Clarke: No, we have a very
similar philosophy. In fact, we do not have a formal statement
within our accounts but if you go to the website there are some
statements on that regarding our commitment to continuity and
we do try to work with our tenants. It is a partnership and the
only way that we can have a sustainable income is to ensure that
our tenants have sustainable businesses.
Q207 Mr Allan: Do you feel that leads
to different forms of decision making from a purely commercial
landlord point of view?
Mr Clarke: We have a fiduciary
duty to ensure that we are achieving the correct rents and we
are trying to maximise our returns, but against that there is
always the balance that one wishes to ensure you do not price
a tenant out of the market otherwise that negates the benefit
of having a successful business.
Q208 Mr Allan: That kind of policy
will be set by your Council?
Mr Clarke: Yes.
Q209 Mr Allan: In the case of the
Duchy of Cornwall it seems to be very much more hands-on that
the policy is set by the Prince of Wales himself. Is that correct,
Mr Ross?
Mr Ross: Yes, I think that is
correct. It is the way that our Duchy is structured more that
the Prince of Wales does have a direct hands-on approach. Our
involvement in all these things is enormous. It is something that
I would love to take up a lot of your time on, but things like
Poundbury and the built environment, the home farm, we have over
100 visitors a year to those. We have an infinite number of meetings
with different organisations.
Q210 Mr Allan: Something like Poundbury
is a big capital investment. Is that a decision effectively made
by the Prince of Wales personally or is it the Council that makes
that kind of decision?
Mr Ross: Sorry, I did not quite
catch the question.
Q211 Mr Allan: The decision to invest
in Poundbury, which everybody is aware of, was that decision to
go ahead and put that money in there, a big chunk of the capital
of the estate, made by the Prince of Wales?
Mr Ross: The real value was generated
when it was land that was allocated for development. What the
Prince of Wales decided to do was to depart from conventional
types of development so that he could make his architectural—
Q212 Mr Allan: I think I understand
that, but there was clearly an investment decision and I am just
trying to ascertain whether that was a personal decision, that
the Prince of Wales would look at a business plan and say "Let's
go for it".
Mr Ross: I was not around at the
time. There was a very strong influence by the Prince of Wales
on this and it was a matter that we did go into in a great deal
of detail with the Treasury.
Q213 Mr Allan: In the case of the
Duchy of Lancaster it would not be Alan Milburn who made that
kind of decision, it would be the Council sitting down and making
that sort of decision?
Mr Clarke: Absolutely. The Council
sets criteria by which we are to undertake any form of investment.
We have set returns that we wish to try to achieve.
Q214 Mr Allan: Bona vacantia—I
just love the word—I think was the same principle we used
to use to plant flags on entire countries and claim them and now
it only applies to unclaimed estates in certain parts of the UK
in this context. Can I just check, in terms of the Duchy of Lancaster,
it says that you use this money to pay for the costs of administration
of the magistrates' service there.
Mr Clarke: Yes. We are responsible
at the present time. Up until 1 April this year we appoint magistrates
and we have advisory committees that assist and make recommendations
that we then put to the Chancellor.
Q215 Mr Allan: In other parts of
the country that would be the Department for Constitutional Affairs'
expenditure?
Mr Clarke: Absolutely. As from
1 April it will be in our area as well.
Q216 Mr Allan: Can you explain this
lovely Anglo-Saxon word "escheats". I just wanted to
get that on to the record.
Mr Clarke: That is much the same.
That is a company that has ceased to trade.
Q217 Mr Allan: Escheated Properties.
Mr Clarke: We are the owner of
last resort.
Mr Allan: Thank you.
Q218 Mrs Browning: Could I just clarify,
Mr Clarke, you outlined the procedure for people being interviewed
and appointed to the Council of the Duchy of Lancaster but I read
in my notes that it is on the advice of the Chancellor of the
Duchy of Lancaster. Is that purely a rubber-stamping exercise?
Mr Clarke: What happens is the
Council will undertake the interviews. They will make a recommendation
to the Chancellor who will then make a recommendation to the Queen,
who will make the appointments, and it comes back down the line
again.
Q219 Mrs Browning: Is that a rubber-stamping
exercise?
Mr Clarke: The Chancellor will
look to ensure that we have done all the things that we should
have done in relation to that appointment, so he is aware and
knows the procedures we have gone through.
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