Committee of Public Accounts

Press Notice No. 19 of Session 2004-05, dated 28 July 2005


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today:

"The Treasury should review the working of the arrangements whereby surpluses from the two Duchies provide an annual income for the Households of The Queen and The Prince of Wales. As these arrangements have been in place for over six hundred years, such a review would hardly be over-hasty.

"Our work has revealed obscurities and potential conflicts of interest in the management and governance of the Duchies accounts. I cannot understand why these accounts are not subject to the same disclosure requirements as other accounts presented to Parliament. More information and explanation need to be given to readers of the accounts, not the least of which is Parliament. And the best way for Parliament to get that information and explanation is for the Comptroller and Auditor General to be given the power to audit the Duchies' accounts."

Mr Leigh was speaking as the Committee published its 19th Report of Session 2004-05, which examined the accounts of the Duchies of Cornwall and Lancaster.

The Duchy of Lancaster and the Duchy of Cornwall are landed estates whose annual surpluses provide an income for Her Majesty The Queen and His Royal Highness The Prince of Wales respectively. The capital assets of the Duchies are held in trust and The Prince of Wales and The Queen do not have access to them, though The Prince of Wales plays an active role in the management of the Duchy of Cornwall. The Duchies are not responsible for the use made of the surpluses by The Royal Household and the Prince of Wales's Household.

The Committee found that 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.

•   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 or capital gains tax. 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.

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.


1. Under the Duchy of Cornwall and Duchy of Lancaster Act 1838, the accounts of both Duchies are required to be presented to Parliament and they are therefore available for scrutiny by the Committee of Public Accounts. The Treasury has a statutory responsibility to direct the form of the Duchies' accounts and, in respect of the Duchy of Cornwall, its approval is required for major capital transactions.

2. The Committee's examination was not based on a Report from the Comptroller and Auditor General, as the Comptroller and Auditor General does not audit the accounts of the Duchies and does not have access to the underlying books and records. The Committee therefore based its examination on the accounts presented to Parliament by the Duchies and an exchange of correspondence during 2004 between the Chairman of the Committee and the Duchies, focusing on matters relating to management and governance, and the clarity of the accounts.

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