Examination of Witnesses (Questions 320-333)
THE ACCOUNTS
OF THE
DUCHIES OF
CORNWALL AND
LANCASTER
7 FEBRUARY 2005
Q320 Mr Davidson: So the existing
capital figure plus inflation is sufficient, in your view?
Mr Ross: We regard that as an
absolute minimum, but that is a legal requirement, yes.
Q321 Mr Davidson: Can I ask Mr Clarke
whether or not there is anything in the running of the Duchy of
Cornwall from which you think you can learn?
Mr Clarke: I think in all fairness
I have learnt more about the Duchy of Cornwall this afternoon
than I knew before.
Q322 Mr Davidson: That applies to
all of us really!
Mr Clarke: I have not been following
the Duchy of Cornwall and what they do with a great degree of
detail, so really I think it is an unfair question; I could not
tell you.
Q323 Mr Davidson: Would it be reasonable
for us to draw the conclusion there is a distinction between the
way in which Lancaster and Cornwall are run, and that is the difference
between a professional and amateur, with you being a much more
professional outfit?
Mr Clarke: That is very flattering
but I do not think I can comment one way or the other. We are
different, we do operate in different ways, our governance is
different, but that has really evolved over the years and over
the centuries.
Q324 Mr Davidson: Mr Ross, do you
think that is a fair comparison?
Mr Ross: No, we are very different
operations but I think you have to look at the results. You will
see there is nothing very amateur about the way we do our business.
Q325 Mr Davidson: Remind me again,
can you give us a list of the properties and can you estimate
the value of the capital gains you have made, which I would have
thought was standard?
Mr Ross: We were talking about
a list of properties from the environmental and sustainability
point of view.
Q326 Mr Davidson: No, just give us
a list. It is a question of competence here. Are you able to give
us a list of the properties?
Mr Ross: It is a private estate.
Under the terminology, it is a private estate.
Q327 Mr Davidson: Is it not in trust
for the nation?
Mr Ross: The Prince of Wales and
the Duchy of Cornwall are entitled to some privacy about this.
Q328 Mr Davidson: Is it not held
in trust for the nation?
Mr Ross: It is a private estate.
There are areas of considerable public interest, very considerable
public interest, and I think those are accounted for, as I have
said during the afternoon, by the procedures we have in place.
Mr Davidson: Thank you, Chairman.
Q329 Mr Williams: Explain to me as
a non-accountant, this item which appears every year, "total
recognised capital gains". For example, in 1993 it was £11,474,000.
I have totalled up from 1995 to today in each of the accounts
and make it £225 million, but I do not know what "recognised
capital gains" are since you seem to be implying to Mr Davidson
that you did not notch up capital gains.
Mr Ross: I am beginning to see
where Mr Davidson's figure comes from. The point is, the vast
majority of our gains which you are identifying are not realised.
Q330 Mr Williams: As you are identifying.
Mr Ross: No, the ones you are
talking to me about. They are not realised, and you do not pay
any tax on a gain which is not sold.
Q331 Mr Williams: Again it comes
back to this issue of clarity. I look at this, full of goodwill
towards you, and I see these "recognised capital gains"
but you tell me they are not recognised and they are not capital
gains, otherwise it is a perfectly correct description.
Mr Willis: They are recognised
gains. Any other company would produce a statement of total recognised
gains and losses. We are following best practice.
Q332 Mr Williams: One final point
which I raised previously, and I promise you this is my last question,
this £2.3 million which was distributed from undistributable
reserves—and I do not know how it can be undistributable
and then distributed but there we are—Prince Charles had
£833,000 at one stage in 1993 and £2.3 million in 1999
from you for purchasing his timber rights. I would have thought
the timber rights were the Duchy's timber rights. Did he plant
an apple tree in his back garden or something? What were his timber
rights? Then, strangely enough, in 1999, you finally got rid of
the whole of that, dispersed it in various ways on which I would
like a fuller note, if I may. Then in a footnote you point out
that from the end of that financial year now timber rights and
grown timber will be treated as capital, therefore non-distributable.
Why until you got rid of all the money, a lot of it to the Prince,
was it non-distributable and revenue, and now, suddenly, you have
changed your position and it has become capital. I do not understand
how intellectually you get where you are?
Mr Ross: Timber is a crop and
the crop, unlike most crops, takes 50 to 150 years to grow. It
is harvestable when it is mature. The asset, the timber, belonged
to the Prince of Wales. He could either have sold it to somebody
else—
Q333 Mr Williams: It belongs to the
Duchy.
Mr Ross: Technically I have used
the wrong language, I am sorry. It was on the revenue account
and therefore it was on the revenue account when the timber was
felled or that asset was sold, because it had been paid for all
the way through by His Royal Highness was something which was
distributable through the normal account. The Prince of Wales
chose a point of time when this timber should be sold and it was
a commercial decision made by him. The commercial decision by
the Duchy of Cornwall was that it was right for us to buy. It
was valued independently and it is now entirely on the capital
account.
Mr Williams: I would like to look at
that answer. I may come back then with some written questions.
Thank you.
Chairman: Right, gentlemen, that concludes
our hearing. It has been a very long afternoon but we have waited
since 1337 to have this inquiry so I think it is right that it
should be done properly. I hope you feel, from the questions which
have been asked and the answers you have been able to give, that
there is absolutely nothing for the Treasury or the Duchies to
fear about parliamentary scrutiny. To sum up, we believe the two
Duchies may be private estates, in a special sense, as you have
described them several times today but it is true, also, to say
that their accounts are presented to Parliament, as you reminded
us; certainly it is the case with Cornwall that the Treasury is
closely involved. This makes them, we believe, quite different
from other private estates, such as the Grovesnor Estate, and
we believe it would assist Parliament, gentlemen, in examination
of your accounts for the Comptroller and Auditor General who helps
in these matters, preferably to be your external auditor, certainly
to have access to the Duchies books and records. We have made
considerable progress this afternoon and we are very grateful
to you for coming here this afternoon. Thank you.
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