After the Paradise Papers revelation, the simplest answer would be to ban the Queen from expending overseas, writes David McClure, writer of Royal Legacy
If you take your investments offshore, don’t be surprised if eventually you sail into some choppy water. A growing swell of criticism threatens to inundated the Queen’s fiscal vessel after the Paradise Papers revelation that the Duchy of Lancaster- her private estate- had invested more than PS10m in the tax havens of Bermuda and the Cayman Islands.
The MP Margaret Hodge, the former chair of the public accounts committee, said she was ” fairly furious “ with the Queen’s investment consultants for sullying her reputation, while John McDonnell, the darknes chancellor, has demanded that they give evidence to a public inquiry into offshore taxation havens.
I have expended months investigating the duchy for a new book on the Queen’s wealth, and believe the public would expect the monarch to act to the highest standards over her financial investments. The head of state must be beyond reproach.
Given that the Queen is permitted by convention only an arm’s-length role in the management of the duchy, it seems highly unlikely she would have known of any individual investments in offshore equity monies. Day-to-day running of the private estate is being managed by around 18 full-time personnel( including a specialist fiscal investments manager ), and their actions are scrutinised every 2 to three months by the duchy council, which acts like a board of directors.
So why did no one on the council kick up a fuss about PS10m being invested in offshore taxation havens? Wouldn’t it have been prudent to ask whether any of the investments were- to set it politely- in” controversial companies”, and demand a full list of the names?
The council member seem rich in fiscal experience but poor in political judgement. What would happen, they should have asked, if the Queen’s investments in the tax havens became known to the public? Maybe after decades of duchy privacy they presumed this would never come out, but they should have been alive to the reputational damage to the autocracy if it did.
In some routes the duchy appears to be acting like a commercial machine rather than a quaint ancestral estate. Things were simpler when the Queen came to the throne in the early 1950 s. For a start, gains were modest( PS100, 000 in 1952, compared with PS19. 2m in 2017) and the order of video games clearer. The duchy was allowed to invest its financial portfolio only in gilts- UK government securities. Then in the late 1950 s the duchy began to lobby the government to relax the rules, and after some prevarication the Treasury agreed. We now know where this led- offshore.
A simple style to avoid a repetition of the present shame might be to reimpose the old the regulation and ban all overseas investment. The duchy would no doubt argue that this would weaken profitability, since most other fiscal funds invest abroad; but given that last year 95% of its earnings came from land rentals( and a few mineral rights) in the United Kingdom, it might just survive by staying in Blighty.
If the duchy is not prepared to accept this friendly sort of internal exile, then parliament should insist it open up its books to proper public scrutiny. Since the National Audit Office now oversees the spending of the Queen’s royal household, perhaps its remit could be extended to her ancestral estate?
The duchy would probably respond that the NAO monitors only public fund, and estate funds are clearly private. But this forgets that in the past duchy money was sometimes used to supplement public fund from the civil list( for instance, to the tune of PS70, 000 in 1970 and 1971) and today private estate cash is regularly used to fund the public duties of junior royals such as the princess Anne and Alexandra.
In truth, the duchy is not as private as it likes to make out. After all, there can’t be too many private estates that have as estate director a senior member of the government( the chancellor of the Duchy of Lancaster has in recent years sat in cabinet ); and how many private estates are by law required to submit their annual accounts to parliament?
Something positive might come out of the present cyclone over the murky manoeuvrings of the duchy in Bermuda and the Cayman Islands if it ended in greater transparency all round. When it comes to offshore taxation havens in the Caribbean, sunlight is the best disinfectant.
* David McClure is the author of Royal Legacy
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