WHAT WERE THE QUEEN’S MONEY MEN THINKING?
Everything considered, today is probably not the best time for Mark hudson to be receiving his knighthood from the Queen at a Buckingham Palace investiture. For amid all the embarrassment over the disclosures of the Paradise Papers which revealed that £10million of the Queen’s private money had been invested in offshore tax havens, the reddest face surely must belong to Sir Mark.
As chairman of the Duchy of Lancaster council, he’s the senior figure who handles her Majesty’s private finances and it is on his watch that for the first time details of the labyrinthine mystery of the Queen’s private wealth have been exposed.
the Duchy, which has provided income for every monarch since henry iv in 1399 and is passed on to each successive generation, held funds in the Cayman islands and Bermuda.
And it emerged that a small amount ended up in the company behind Brighthouse, the retail chain that has been accused of irresponsible lending, and threshers the offlicence chain that went bust owing £17.5million to the UK taxman.
Many will view such investments as questionable and inappropriate choices for the monarch – or, more correctly, her financial advisers should have chosen better. Although officially exempt from British tax laws, the Queen voluntarily pays her share of income tax on her Duchy estate, which currently controls £519million of assets.
the private income the Queen receives from the Duchy is separate from the Sovereign grant she gets for her official duties and the royals’ working travel costs.
As well as providing her with private income, Duchy money is used to support Prince Andrew, Prince edward and Princess Anne, and to pay for the upkeep of Balmoral and Sandringham.
She doesn’t pay for the offices or private expenditure of the Prince of Wales, the Duchess of Cornwall, the Duke and Duchess of Cambridge or Prince harry. this is met by the Duchy of Cornwall.
the Queen voluntarily pays tax on income from the Duchy, which, in 2016/17 totalled £19.2million. it covers more than 45,000 acres of land in england and Wales, comprising farmland, commercial and residential properties.
Chiefly, these are across Lancashire, yorkshire, Cheshire, Staffordshire and Lincolnshire – with limestone and sandstone quarries – and the lucrative Savoy estate in central London. the Duchy also includes Pontefract Castle, a pub called the Blacksmith’s Arms and harrogate Ladies’ College.
And it has a portfolio of financial investments, mainly equities and bonds, currently with a capital valuation of £70.5million – just 10 per cent of which are currently at the centre of debate. the investments are managed by newton investment Management Limited (whose other clients include local authorities, charities and trade unions), while another firm, Stanhope Capital, acts as a consultant to maintain an independent watch over the financial portfolio.
BUt the astonishing fact is that any official responsible for her finances could have felt it was appropriate for a woman whose reputation is based so much on setting a good example to invest in those offshore funds. One long-serving courtier says the revelations and the subsequent criticism will be keenly felt by the Queen who plays no part in choosing funds to invest her fortune in. ‘even if her close advisers don’t make the investments themselves, it is a question of oversight. there should surely be a mechanism to ensure that the ethical dimension to all the Queen’s finances are strictly observed,’ he said.
the Duchy is run by a council comprising seven men and one woman. it includes Sir Alan reid, the Queen’s treasurer and Keeper of the Privy Purse; Sir Mark hudson, the chairman who is a former head of the game and Wildlife Conservation trust; nathan thompson, the chief executive; and fund manager Kathryn Matthews who’s worked for numerous firms including JP Morgan. Sir Alan, who’s due to retire at the end of the year, is the only executive member of the council who was serving when the Duchy put £5.7million in 2005 in the Dover Street vi Cayman Fund, which invested in medical and technology companies.
this week’s leaked documents show that in 2004 the Duchy invested £5million in the Jubilee Absolute return fund, which was based in Bermuda. the investment came to an end in 2010.
the connection with Brighthouse began in 2007 when the US company running the fund asked the Duchy to contribute £344,000 to several projects including the purchase of two UK high Street retailers – Brighthouse and threshers. the Brighthouse holding now equates to just £3,208 and the Duchy said it had been unaware the stores featured in its investments. the Duchy council meets five times a year and makes an annual visit to Buckingham Palace to report on the finances.
they last met in July when all was well. in view of Jeremy Corbyn’s crass demand for the Queen to apologise, however, it is worth pointing out that the investments spotlighted in the Paradise Papers were made when the Duchy of Lancaster was overseen by the then Labour government and the minister in charge was Blairite minister John hutton.
One possible explanation, i have learned, is that at the time of the investments, the value of the Queen’s portfolio had slumped by more than a quarter in four years, wiping more than £20million from her personal fortune. indeed, this had led to a change of fund managers by the Queen’s advisers.
‘Money was tight at the time,’ says a source. nonetheless, critics are many. Senior Labour MP Frank Field called for the resignation of the entire board of the Duchy Council for its ‘political ineptness’. With such withering criticism being directed at the Duchy Council, Sir Mark hudson may wish today that he was anywhere else than kneeling before the Queen as she dubs him with a ceremonial sword.