A model Prince
The Prince of Wales, it is said, employs a manservant for the task of squeezing toothpaste on to the royal toothbrush. The servant cannot have the most demanding of careers, but he is almost certainly providing greater public utility than are many of the state’s bean-counters. Saving money, or rather the attempt to do so, is one of the fastest-growing areas of the public sector. Our national army of audit commissioners, value-for-money officers and best-practice co-ordinators is truly impressive. It is just a shame that in spite of them — or perhaps even partly because of them — taxpayers face an almost certain £10 billion worth of tax rises following the election. The whole exercise is typified by the NHS ‘Efficiency Unit’, which spent thousands of pounds booking hotel rooms for a conference which it later cancelled.
It is little wonder, given the government’s miserable failure to rein in its spending, that Labour’s minions should be busying themselves deflecting attention on to the housekeeping of the Prince of Wales and the accounts of the Duchy of Cornwall, which sustains him. Last week members of the House of Commons public accounts committee worked themselves into a high old state over Prince Charles’s rise in income from £3 million in 1993 to £12 million in 2004, accusing the Duchy of transferring money from its capital account to its revenue account. ‘This looks like jiggery-pokery to me,’ Gerry Steinberg complained to Bertie Ross, the Duchy’s secretary. ‘It looks as if you have been doing a bit of fiddling.’ Egged on by the committee, Sir John Bourn, head of the National Audit Office, has demanded to see the Duchy’s books.
The Prince of Wales, needless to say, cannot win. Had his income failed to rise over the past 11 years, the public accounts committee would be demanding to know why the Duchy of Cornwall had made such lousy investment decisions. It shouldn’t come as any surprise that the Prince of Wales has done well over the past decade: as with all other businesses and trusts which are heavily weighted towards property investments, the Duchy has benefited from an unprecedented property boom. Moreover, the Duchy has earned some of its returns by doing exactly what the government wants property developers to do: building lots of high-density housing in the south of England, notably at Poundbury, Dorset.
Labour MPs on the Commons public accounts committee have protested bitterly that the Duchy of Cornwall does not pay capital gains tax or corporation tax. Maybe not, although the Prince voluntarily pays income tax at 40 per cent on his income from the Duchy. To argue that the Prince enjoys a certain amount of tax relief misses the point. Were it not for the Duchy of Cornwall, taxpayers would face the full burden of funding the heir to the throne and his offices. Would that some of the government’s departments and quangos, with the aid of a little tax relief, were able to pay their own way rather than live entirely off grants from the Exchequer. Far from moaning about the Prince of Wales’s income, the public accounts committee should be asking itself whether the Duchy of Cornwall might be employed as a model for the financing of other arms of the state. Why can’t, say, the Food Commission build up a portfolio of farms in order to pay its staff their wages, or the Foreign Office obtain its income from a string of Caribbean holiday resorts and so save taxpayers having to shell out for its ambassadors’ sherry bill? The government is very proud of its private finance initiatives (PFIs), but none works as well as the Duchy of Cornwall, the original PFI devised by Edward III in 1337 to fund the Black Prince.
As for the charge that the Duchy is guilty of ‘jiggery-pokery’ by transferring funds from its capital account to its revenue account, it sounds considerably less of a fiddle than the Chancellor’s move to keep the cost of new schools and hospitals off the government’s balance sheet through PFIs. The government’s concept of private finance is simply a means of transferring the burden of new investment from current taxpayers to future taxpayers. Yet before nationalisation, schools and hospitals operated as charities, obtaining much of their income from generous endowments from local benefactors. It is regrettable, and highly inefficient, that these services should have fallen mostly under the control of state planners. Which is the stronger institution: one which obtains its income from a portfolio of investments or one which has to grovel each year to some state functionary?
Last week Lord Patten, chancellor of Oxford University, warned that the university will be unable to sustain its international reputation for research if it does not move to a system of greater private finance. Thanks to the government’s refusal to allow it to charge higher fees, it has already announced its decision to cut back on the number of British students and to increase the number of students from outside the EU, who are not subject to the government’s cap on tuition fees.
Oxford’s predicament is that of other public services. Starved of private income they will continue to falter. Encourage each, with the aid of private donations, to build up a mini Duchy of Cornwall on the other hand and they will prosper like the Prince of Wales and his toothpaste-squeezer.
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