letter from clarence house to dispatches (channel 4) 5th march 2007

8/14/2019 Letter from Clarence House to Dispatches (Channel 4) 5th March 2007

1/26

CLARENCE HOUSE

LONDON SW1A 1BA

From: The Principal Private Secretary to TRH The Prince of Wales and The Duchess of Cornwall

5th March 2007

Dear Mr Henshaw,

Thank you for your letters of 22nd and 28th February. The points that you

have raised, noted in bold, and my responses are given below.

22nd FEBRUARY

1. Political interference

(i) The Prince of Wales makes his views known on political issues and

matters of public policy

You have not provided any examples of The Prince of Wales expressing

publicly views on political issues and failing to be politically neutral and I

do not believe that there are any. Most people, including most politicians,

do not regard the views expressed by The Prince of Wales as political or as

an attack on government policy. The National Gallery extension and

modern farming methods would not be regarded by most people as

political issues.

The misunderstanding may derive, in part, from your use of the phrasematters of public policy, which is not synonymous with political

issues. It is generally accepted that Members of the Royal Family should

be politically neutral. There is also a strong convention that Members of

the Royal Family may be involved with charitable activities. Many if not

most charitable activities are addressing matters of public policy;

however, this involvement by Members of the Royal Family has never

been a concern, and indeed has been welcomed, provided, of course, that

the charities are not political and that the Members of the Royal Family

involved remain politically neutral.


2/26

It may be helpful in this respect if I explain The Prince of Waless

approach, which is that of someone who cares deeply about the well-being

of the United Kingdom and everyone in it, and who wants to add value to

his position by helping people and making a difference for the better.

Part of this is helping charities (he raised directly or indirectly over 100million for charity last year) and ensuring that views held by many people

which otherwise might not be heard receive some exposure; however, His

Royal Highness is always very careful to ensure that he is not politically

contentious or party political, and as far as I am aware even his most ardent

critic has never suggested that he is. For example, a previous Deputy

Private Secretary in this Office in his evidence as a witness for Associated

Newspapers against The Prince of Wales said that The Prince was never

party-political. If an issue becomes party political or politically

contentious after His Royal Highness has raised it, for example GM crops,

he will not do so in public again.

When His Royal Highness Office is in any doubt as to whether comments

to be made by The Prince might be regarded as political we are always

careful to show a draft to the relevant Government Department.

Our extensive correspondence from members of the public suggests that

the vast majority of people are grateful that The Prince of Wales raises

matters in this way and works so hard for charity.

I should add, in case the matter arises, that The Prince of Wales never said

that McDonalds should be banned, as confirmed by the lady to whom he

had been speaking.

(ii) The Prince uses his position to meddle in public life and to lobby

behind the scenes to try to influence Government policy

With respect to views expressed privately to Ministers and others, rather

than being abuse it is generally accepted that the Heir to the Throne

should be aware of the business of Government and that correspondence

between Government Ministers should be treated as private and

confidential on all sides. It is also The Prince of Waless right as a PrivyCouncillor to consult and advise his Privy Council colleagues on a private

and confidential basis. Furthermore, Parliament confirmed in Section 37 of

the Freedom of Information Act that communications between Members of

the Royal Family and Ministers should generally remain confidential.

In other words, neither constitutional convention nor recent legislation

supports the contention that because the Princes interference is secret and

beyond scrutiny, The Prince is abusing his unique position as The Prince of

Wales.

The Prime Minister summed it up well in an answer at a press briefing on

23rd February last year.


3/26

I find that what Prince Charles certainly has talked to me about and

written about is exactly what you would expect. I think that it is completely

unreasonable not to expect that he has views or that he transmits them to

Government Ministers; but they are not views that I have ever, ever

regarded, I have to say, as party-political in that sense at all. You know, forexample, he will raise issues sometimes to do with the rural community, or

issues to do with, say, voluntary organizations in the UK, which I actually

find perfectly helpful and I think you know you can get a very exaggerated

view of how much this happens. I personally dont think it has ever caused

difficulties for Ministers.

Similarly Lord Falconer said on the Today programme on the same day:

I think that it is perfectly appropriate for somebody in The Prince of

Wales position to have views about the countryside, about climate change,about big environmental issues, about the Armed ForcesYou cannot

have views without some people disagreeing with them. That does not

seem to me necessarily to involve straying into politics.

The examples you give of The Prince interceding in political issues, the

design of the National Gallery, modern farming methods, Atlantic salmon,

foot and mouth disease, badgers and alternative health, are not, I believe,

regarded as political by the vast majority of people and my strong

experience is that his comments in these areas have generally been

welcomed; having said this, His Royal Highness has never spoken in public

about badgers or the policy of managing foot and mouth disease.

It would also, in my view, be more damaging to the Monarchy if The

Prince of Wales did not take advantage of his position to help with issues

which matter to ordinary people, but which have not found their way onto

political agendas. For example, The Princes Trust, which has helped well

over half a million young people, would not have been possible if youth

disadvantage were deemed to be a matter of public policy and a political

issue.

As His Royal Highness put it when interviewed by Sir Trevor McDonald tomark the 30th anniversary of The Princes Trust:

I think it would be criminally negligent of me to go round this country andelsewhere in the world, and not to want to try and do something about what I

find there; and if I can bring people together in order to try and tackle the gaps

that exist, and perhaps to remind people of areas that need attention ..

then I think that it is my duty to do so.


4/26

(iii) The Princes views are emotional and unscientific, and involve weird

reactionary causes which he has not understood very well and have at

times been driven by self-interest

With respect to His Royal Highness views being emotional rather than

scientific, in most areas he has been proved right, very much includingfarming, young people, climate change and the built environment. Most

people would, in addition, not describe these as weird reactionary causes,

and the results which he has achieved and the support he has received do

not suggest that he has failed to understand the issues.

His Royal Highness always consults widely before expressing a view on an

issue and uses a wide range of expert advisers.

Furthermore, the purpose of The Princes Foundation for Integrated Health

is not to promote the use of alternative treatments but to explain andencourage an integrated approach to healthcare. A brochure explaining

the charitys approach and activities is enclosed. The Foundation has

received funding from the Department of Health to support its work and

has independent trustees.

It is a grossly misleading to suggest that The Princes actions have been

driven by self-interest. His whole working life is devoted to charitable

activities and to supporting others, and the one example that you give - that

he advocated ways to prevent the spread of Bovine TB just to protect his

own small herd at Highgrove is entirely incorrect.

(iv) The Prince has a secretary specifically to deal with letters to influential

people

His Royal Highness does not have a secretary to deal with letters to

influential people (his Office is organised on a portfolio basis, please see

the enclosed copy of our Annual Review in which details of staff are

provided) and he does not write letters to influential people on a daily

basis.

(v) The Princes interference in policy matters could lead to aconstitutional crisis when he becomes King

It hardly needs saying that The Prince of Wales, of all people, knows that

the role and duties of the Heir to the Throne are different to those of the

Sovereign and that his role and the way he contributes to national life will

change when he becomes King. In other words it is misconceived and

entirely hypothetical to suggest that problems will result if The Prince of

Wales fulfils his role in the same way when King. He will not.

This misconception may underlie a number of the points raised in this firstpart of your letter. The roles of the Sovereign and the Heir to the Throne

are different, and while The Queen as Head of State has a clearly defined


5/26

role The Prince of Wales as Heir to the Throne does not. Some people to

whom you have spoken seem to suggest that His Royal Highness should

not seek to participate in and make an active contribution to national life,

but just wait to become King; however, most people feel that in a value

added age this would represent a failure to take advantage of His Royal

Highness position to help people and make a difference for the better. Allagree that The Prince of Wales should be politically neutral and it has been

a remarkable achievement by The Prince during the past thirty-five years or

so to contribute so much in so many areas, particularly through his

charitable activities, without any suggestion at any time that he has been

anything other than politically neutral.

2. The Princes Foundation for Integrated Health

(i) The Princes Foundation for Integrated Health encourages the NHS tospend money on alternative medicine

With respectto the assertions about The Prince of Waless interests in

health, he devotes a great deal of time and effort to trying to help those who

are suffering through illness or disease, from his patronage of some of the

major cancer charities and a number of hospice organisations for the

terminally ill, to numerous hospital visits across the country. He

established The Prince of Waless Foundation for Integrated Medicine,

which later became The Princes Foundation for Integrated Health, to

explain and support an integrated approach to healthcare, i.e. one which:

emphasises prevention and self-care, looks at the person in the round, taking into account the effects on

health of lifestyle, environment and emotional wellbeing, and

brings together the safest and most effective aspects of mainstreammedical science and complementary healthcare.

As explained in the enclosed booklet, the Foundation seeks to inspire,

engage and support health practitioners to work together to provide the

widest possible patient choice. It also works with health policy makers to

help create a health service where the best of all healthcare is the norm.

There was some correspondence between The Prince and the then

Secretary of State for Health, Frank Dobson, between 1997-98 on the

provision of integrated healthcare, but we are unable to find any mention of

a request for 10 million funding from NHS (or any other) funds for

research into alternative health treatments. We should be grateful if you

would provide us with your evidence for this.

You say that the Foundation has an agenda to encourage the National

Health Service to spend more money on alternative medicine, which isimproper for a charity established and so publicly supported by The

Prince.


6/26

As is clear from the enclosed booklet the Foundation has no such agenda

and it does not support or promote alternative medicine. Integrated

health is the use of the best of all healthcare for the whole person. The

Foundation for Integrated Health does not encourage anyone, directly or

indirectly, to refuse conventional treatment in favour of alternativemethods. The Foundation believes that safe and effective complementary

therapies can play a useful part in promoting health and wellbeing, but it

specifically encourages anybody considering the use of complementary

therapies to consult his or her GP before doing so.

(ii) The NHS paid for a publication which runs contrary to the official

NHS view

Following the Foundation's application for a 20,000 grant to produce The

Patients Guide on Complementary Medicine (sic), the Department ofHealth remained involved throughout the process and at no time expressed

any concern about the contents of the Guide. In the Foundations view, the

Departments officials were entirely satisfied that the Guide had delivered

properly on the basis of the original proposal. Please may we see your

evidence that this was not the case?

Also, you say that when it was published, all evidence on safety and

effectiveness was omitted; however, under the heading What information

is there? (pages 9-12), the Guide points readers to many sources of

information describing research and evidence about safety and

effectiveness of therapies. This allows the reader to check the latest

information online, as well as to seek information from more than one

source.

Furthermore, you say that critics believe the Guide is dangerous in that

the advice it gives may encourage patients reading it to discontinue

conventional treatment in favour of alternative therapies; however, the

Guide goes to great lengths to encourage patients to discuss treatment with

their GPs before starting or ceasing any treatment:

o under Important points to be aware of before having treatmentthere is a section called Have you seen your doctor first? (p8); it

says, among other things, It is important that your doctor has the

chance to rule out any dangerous or life-threatening illness and to

discuss treatment options with you; and

o another section (on the same page), Keep everyone informed,states This is very important for your safety and includes telling

your doctor what complementary treatments you are taking and

letting your complementary practitioner know about any medicines

your doctor has prescribed for you and any other complementarytreatments you are havingDifferent treatments can sometimes

have an effect on each other, which could make them work less


7/26

well, cause unpleasant side effects or be dangerous for

youAlways try to discuss your decisions about using

complementary medicine with your GP, practice nurse or hospital

doctor (including your midwife or obstetrician, if you are

pregnant)Ideally, you should keep all healthcare professionals

involved in what you are doing so they can work together to helpyou get the best healthcare.

Five strong endorsements of the Patients Guide, from the GMC, BMA, the

British Pharmacological Society, the Royal Pharmaceutical Society of

Great Britain and the Wellcome Trust are referred to in the separate letter

on this subject which has been sent to you by the Chief Executive of The

Princes Foundation for Integrated Health.

(iii) The Prince and his Foundation for Integrated Health tried to influence

the MHRA behind the scenes in relation to homeopathic treatments

Contrary to your assertion, we have no record of The Prince of Wales

writing to the Medicines and Healthcare Products Regulatory Agency in

relation to homeopathic treatments, nor has he met the Agencys Chairman,

Professor Sir Alasdair Breckenridge clandestinely as you allege. His

Royal Highness has met Sir Alasdair on two occasions. Once at a meeting

in 2003 at St Jamess Palace also attended by several others, an official

engagement which appeared in the Court Circular, and once when he

conferred Sir Alasdairs knighthood at an Investiture ceremony with

several hundred people present.

More recently, there was a meeting which took place in July 2005 at

Highgrove, chaired by The Prince and attended by MHRA representatives

(but not including Sir Alasdair), but it was to discuss herbal medicines

rather than homeopathy. This meeting was also recorded in the Court

Circular.

Given that your two central suggestions are incorrect, there was no

clandestine meeting and The Prince of Wales did not correspond with the

MHRA on homeopathy, your conclusion that he may have influenced the

policy and announcement by the MHRA on 1st September 2006 of a newscheme to improve and strengthen the regulation of homeopathic medicines

in the UK (MHRA press release 01/09/2006) is clearly erroneous.

Furthermore, the new scheme announced by the MHRA in September 2006

had its origins in the Directive on Homeopathic Medicinal Products,

92/73/EC (later incorporated into Directive 20011/83/EC, the main EU

Directive governing medicinal products) ratified by the European Union in

1992.

The Directive brought into European law a mechanism for registeringhomeopathic medicines. Clause 14 of the Directive allowed for what is

referred to as Simplified Homeopathic Registration whereby


8/26

homeopathic medicines without indications for use could be freely sold on

the European market. All EU Member States were required to implement

this Clause within a specified time period. Clause 16 permitted, but did not

make mandatory, the drawing up of national rules to allow homeopathic

medicines with limited indications for use to be sold within individual

Member States. Several Member States implemented this latter clause quitequickly last year it was implemented into UK law, 14 years after the

original Directive was ratified.

The Prince did not influence this process, nor the MHRAs announcement

last year.

(iv) The Smallwood report was a political document and an attempt by

The Prince to shape public health policy

Please find at A a detailed response to the various points you make aboutthe Smallwood Report written by Christopher Smallwood himself. In

addition, I provide some comments below.

You say that this document, which was aimed at Ministers, was a

political document There was never any suggestion that this report was

aimed at Ministers and this was not the case.

You state that : it was overseen by an accountant with no medical

background. The report did not purport to be a medical document. It was

specifically aimed at examining the costs and benefits of complementary

medicine, i.e. it was an economic analysis written by an economist (not an

accountant).

(v) The Prince, through his Principal Private Secretary, wrote to Exeter

University to put Professor Edzard Ernsts career in jeopardy

You say that as a result of Professor Ernst expressing his reservations

about the Report to the media, the Prince, through his Principal Private

Secretary, wrote a letter of complaint about the Professor to the Vice

Chancellor of Exeter University, alleging a breach of confidence. This

letter was not prompted by His Royal Highness and he was not even awarethat it had been written. The letter was sent at the express request of the

Trustees of the Foundation for Integrated Health and it was made clear in

the letter that I was writing as the Foundations Chairman, as well as The

Princes Principal Private Secretary. A copy is attached at B. The Trustees

were extremely concerned two Professors in particular at the apparent

breach of confidence by Edzard Ernst who had commented in detail to a

newspaper about early drafts he had been shown, in confidence, by the

reports author, Christopher Smallwood. The view was expressed by

eminent practitioners and academics at a meeting of the Foundations

Board that it was highly unethical to comment publicly on draft reports inthis way. The Foundations trustees would be pleased to confirm this. In

other words it is entirely incorrect to suggest that the letter was an attempt


9/26

by The Prince to silence the Professor and potentially put the Professors

career in jeopardy. The fact that The Princes Foundation for Integrated

Health has a number of eminent medical practitioners and academics as

trustees, who are responsible for the charitys operations and policy, is a

point which I am sure you will make in your programme.

You may also want to take note of the enclosed (at A) copy of a letter from

the editor of The Lancet to The Times newspaper in which he says:

Professor Ernst seems to have broken every professional code of

scientific behaviour by disclosing correspondence referring to a document

that is in the process of being reviewed and revised prior to publication.

This breach of confidence is to be deplored.

3. Financial arrangements

(i) The Duchy paid no Capital Gains and Corporation Tax

An organisation cannot pay corporation tax and income tax. Companies

alone pay corporation tax, while partnerships, sole traders and individuals

pay income tax. Most large estates, and indeed large legal, accountancy and

other professional partnerships, are not companies and pay income tax

rather than corporation tax. The Duchy of Cornwall falls into this category

with income tax paid in full on its revenue profits. Details are given in the

enclosed copy of our Annual Review.

The Prince of Wales pays capital gains tax on all capital gains which he

receives. Like everyone else he does not pay capital gains tax on capital

gains which he does not receive and which do not belong to him. He has no

right to the capital gains made by the Duchy of Cornwall, or indeed to the

Duchys capital in any way, and therefore does not pay tax on them.

Capital gains tax is not paid on the capital gains made by the Duchy of

Cornwall because they are not distributed, indeed the gains can only be

reinvested within the business and cannot be withdrawn. As the Treasury

pointed out in its reply to the Public Accounts Committee, this does not putthe Duchy at an advantage compared with other property organisations

because other very significant organisations operating in the investment

property market face similar tax treatment to that of the Duchies.

Furthermore, when capital profits are not distributed the gains can often be

off-set for tax purposes by means of roll-over or hold-over relief. In other

words 11 million is far from the mark and while no calculations have been

made little capital gains tax may have been foregone.


10/26

(ii) The Prince of Wales paid rent of 336,000 to himself for Highgrove

The Prince of Wales is paying himself rent of 336,000 a year for

Highgrove because, if he did not, he would be avoiding tax of 134,400

(i.e. 40% of 336,000). If the management of the Duchy said dont bother

to pay the rent as we will only pay it back to you as part of the revenuesurplus it would mean that the Duchys surplus, which is subject to

income tax as mentioned above, would be understated for tax purposes. In

addition, the Duchy is required to charge all its tenants rent.

(iii) The Public Accounts Committee conducted the first ever investigation

into the Duchy of Cornwalls accounting practices

I hope that in addition to recording the Committees conclusions (rather

than personal comments made by one or two members) the programme

also refers to the Treasurys and the Duchys responses to thoseconclusions. The points put by the Committee to the Treasury were not

accepted. A copy of the Treasurys and the Duchys responses are attached

at C.

Answers to the specific points you raise are as follows.

The possible conflict as a result of The Prince of Wales being chairman ofthe Duchys Board and being entitled to the Duchys revenue but not to its

capital and capital profits was identified in the 19th century. The 1838

Management Act was introduced as a result. This requires the Treasury toact, in effect, as the Duchys independent trustee to safeguard future

beneficiaries interests. The Treasury does this, in particular, by being

required to approve all property transactions with a value of 200,000 or

more.

The Duchy of Cornwalls accounts are as transparent as those for a largepublic company which employs thousands of staff and in which peoples

pensions may be invested. Having said this the Duchy is always keen to

make its accounts clearer and improvements are made every year. The

Treasury reviews the accounting format which it requires the Duchy to

adopt for its accounts periodically, although it did not accept the PACs

specific suggestions.

The Committee was not fobbed off with evasive and meaninglessanswers and it has only asked a further two questions since the hearing

which were replied to by the Duchy in full (they concerned the role of the

NAO and the appointment of members of The Princes Council). While

there has been some disagreement of principle between, on the one hand,

the PAC and, on the other, the Treasury and the Duchy (e.g. should the

NAO audit the Duchys accounts?), the PACs report made no mention of

any incomplete or misleading information or of any failure to answerquestions.


11/26

Questions were asked about the trees during the PAC hearing but wereanswered fully and clearly and there was no reference to the trees in the

PACs report (i.e. the Committee did not express concern on this point).

The position was as follows. The trees were purchased and planted with

money taken from the revenue account (which belongs to The Prince ofWales) rather than from the capital account (which does not). The trees

therefore belonged to His Royal Highness personally. He decided to sell

them. They could have been sold to a third party, but the Duchys

management decided to buy them on behalf of the capital account. The

valuation of the timber was undertaken by an independent valuer and the

approval of the Treasury and the external auditor were obtained for the

transaction. In other words it was a closely checked and scrutinised

commercial transaction.

(iv) A list of the Duchys properties was not provided to the PAC

The list of the Duchys properties was requested by one member of the

Committee, but the request was not repeated in the Committees report on

the hearing. As already mentioned, the Duchy of Cornwall complies with

disclosure requirements which apply to much larger publicly owned

property companies in which peoples pensions may be invested and it is

not at all clear why the Duchy alone should be required to provide this

commercially sensitive detailed information when other organisations are

not required to do so.

The Duchy did not accept the PACs recommendation that the NAO should

audit its accounts. As it said in its reply to the PAC, the primary roles of the

NAO are to audit the financial statements of government departments and

to report on the economy, efficiency and effectiveness with which they

have used public money. The Duchy is a private estate and is not funded by

public money. In addition the audit regime which applies to the Duchy,

with scrutiny by the Treasury and an external audit by

PricewaterhouseCoopers, is already more extensive than that applied to

large companies with outside shareholders requiring protection.

The PACs suggestion that the NAO should audit the Duchys accountsseems to be based on a fundamental misunderstanding: because the Duchy

is subject to review by the Treasury and because its accounts are laid

before Parliament the assumption has been made by the PAC that the

Duchy is in some way a public or semi-public asset rather than a private

estate; however, the Treasury is only involved because of the importance of

the Duchys beneficiaries, present and future, and of the need (as

mentioned above) to ensure that no one beneficiary sells all the family

silver, so to speak, thereby depriving future Princes of Wales of income to

support their official and private activities. Similarly the Duchys accounts

are laid before Parliament, even though the Duchy is a private estate, toenable MPs to be sure that the Treasury is fulfilling its statutory duties in

this respect.


12/26

(v) The Prince has a unique and very privileged tax position

The Prince of Wales does not have a unique and very privileged tax

position and the rules that apply to him in terms of deducting expenditure

for tax purposes were drawn-up by the Inland Revenue to reflect those thatapply to other tax payers. They are set out in Appendix B of the Report of

the Royal Trustees dated 11th February 1993.

All companies and individuals are allowed to deduct expenditure incurred

for business or work purposes and in order to give a framework for how

this should be done in the case of The Prince of Wales the Inland Revenue

based its approach on Section 199 of the Income and Corporation Taxes

Act 1988. In other words, the difference between The Prince and other

taxpayers is that he pays tax voluntarily on his income from the Duchy of

Cornwall; however, the way in which the tax payable is calculated is thesame as for anyone else in that business or work expenditure is deductible

while personal expenditure is not. His Royal Highness charities are subject

to tax in exactly the same way as other charities.

4. Miscellaneous

(i) The Prince has an Audi RS6 Quattro

The Prince of Wales has never owned or leased an Audi RS6 Quattro,

although a member of staff who has now left leased one from Audi at one

stage. The Princes Jaguar and Range Rover are run on 100% biodiesel. He

only drives his Aston Martin for 100 miles or so a year.

(ii) The Prince who enjoys a lavish life-style should not lecture others

The Prince of Wales lives in a way appropriate for his role and position,

and uses the large majority of his money to finance his official and

charitable activities and to pay tax. Details are given in the enclosed

Annual Review. He and his Household are now carbon neutral and

extensive steps are being taken to reduce carbon emissions; for example,His Royal Highness has stopped playing polo in part to reduce carbon

emissions and has cancelled private trips overseas. Full details in this

respect will be given in this years Annual Review.

(iii) The fact that the support for The Prince and his family from public

funds costs each person in the Country 3.5p is questioned

How the three and a half pence has been calculated can be seen from the

enclosed copy of our latest Annual Review. As shown on page 3 total

expenditure (excluding security for which figures are not available) metfrom public funds amounted to 2.073 million in 2005-06. As you suggest

this figure includes 1.149 million in respect of air travel and the Royal


13/26

Train and 355,000 for the maintenance of Clarence House. 2.073 million

divided by the 60 million people in the Country gives 3.455p per person.

The flights and train journeys are undertaken to fulfil official duties as part

of The Prince of Waless role and are subject to review by the Government

Department responsible for the expenditure and to audit by the NAO, with

the largest part of the travel expenditure being in respect of overseas toursundertaken at the request of the Foreign Office.

(iv) 4.5 million was spent on the refurbishment of Clarence House

Clarence House is an important part of the national heritage and has around

1,900 official guests a year and 42,000 paying visitors, with approximately

100 staff working in it and adjoining offices. It had not been refurbished for

over 50 years and 4.5 million was considered a very reasonable amount.

The 4.5 million did not come from the taxpayer, but from the income

from the Crown Estate.

(v) Many engagements are a bit of a scam

I am not clear how you define an engagement. It may be that you believe

that something is only an engagement if the Member of the Royal Family

travels to an external event; however, all Members of the Royal Family

undertake important engagements at their residences, from receiving

foreign Heads of State to welcoming and thanking (on behalf of us all)

people who have made significant contributions to their local communities.

These non-travelling engagements take as much time and preparation, and

often achieve as much, as external visits. Please provide details of how

your figure of 212 engagements is calculated. As far as I am aware no

official engagement has ever taken as little as 10 minutes. Most last for an

hour or more, before taking into account preparation and, if applicable,

travel time.

The Prince of Wales tries to support all areas of British life and excellence

from the Armed Services (by, as you say, taking a Salute) to farmers (by,

as you say, viewing cattle). A feeling for the range and extent of

engagements undertaken is given in the enclosed copy of the Annual

Review. Some people will, no doubt, think that some engagements aremore important than others, but the intention is to cover a broad spectrum.

As well as contributors who regard royal engagements as a bit of a scam,

I hope that you will speak on the programme to some of the thousands and

thousands of people who request royal engagements and who say that they

enjoy and appreciate them enormously and that they make a real difference

for the better.

(vi) The Prince takes three months holiday

The Prince of Wales is exceptionally busy and works for at least part ofevery day in the year. Just because he travels to Scotland or to another

location does not mean that he is not working. He uses his time at Birkhall,


14/26

for example, to catch-up with official paperwork and meetings which he

has not had a moment to address when undertaking engagements in

London, round the Country and overseas.

(vii) The Duchy is extracting the last ounce out of the Isles of Scilly

The first general point to make is that the Duchy of Cornwall receives

minimal financial return from the Isles of Scilly and contributes, in effect, a

large financial subsidy to support the islanders, The Duchy is, for example,

currently investing over 2 million refurbishing the off-island quays on the

Isles of Scilly for no direct financial return.

The Duchy lets 153 residential properties on the Isles. Of these 85% (or

130) are let at between 50% and 75% of open market values, which

represents considerable support to local people. In the last four years the

Duchy has constructed seven new, locals only, dwellings and released landfor the provision of six Cornwall Rural Housing Association rental only

properties. In addition the Duchy is discussing with the Cornwall Rural

Housing Association the provision of land to construct a further 12

affordable homes.

In comparison, two refurbishments are on course for Duchy visitor lets

which will give a total of four Duchy visitor lets. For the Isles as a whole

25% of properties are holiday or second homes. Fewer than 3% of the

Duchys properties are holiday homes, which of course provide the best

financial return.

In other words it could not be further from the truth to say that the Duchy is

extracting the last ounce out of the Isles of Scilly.

(viii) The Duchys letting of the Little House to holiday-makers was blatant

profiteering and immoral

Little House on Bryher was leased to tenants who lived in Middlesex and

used the property as holiday accommodation for their own use. The lease

of Little House was due to expire on the 25th March 2003. The Duchy

made the tenants aware that as this property was holiday accommodationthey were not protected tenants and that the Duchy would not be granting a

new tenancy. The Duchy suggested that they surrender the property, which

they did three months before the expiry of the lease. The initial intention

had been to re-let the property for full-time local use; however, following

its surrender an inspection of the property revealed it to be in extremely

poor condition with 300,000 needed for a total rebuild. The tenants return

of the Little House to the Duchy was agreed without any charge for

dilapidations. These would have been likely to have run into tens of

thousands of pounds.

In view of the very high cost of the repairs needed to the property it was

decided to let it as a holiday let; however, this did not mean that there was


15/26

any reduction in the Duchy property available to local people on Bryher.

On the contrary, two semi-detached houses were built at Furze Lea on

Bryher and let to local people at the same time as the Little House was

reconstructed. The Little House had not been let to local people before and

therefore the number of properties let to local people increased by two.

Higher rents can be obtained by letting to people from the mainland. Thelocal islander who referred to this as blatant profiteering and immoral

cannot have been aware of the full facts.

28th FEBRUARY

1. The Prince of Wales has double standards because he has five homes

while the Duchys submission for planning permission in Cornwall

suggested that the number of people able to buy second homes should

be restricted

The Prince does not have five homes as explained in 3. below.

Second homes in Newquay are a matter of local concern that was raised in

the community consultation process carried out by the Duchy. In the

particular circumstances in Newquay, where it is hoped to build new shops

and schools and to create a community, rather than just put up houses, the

control of second homes is a particular concern, with a feeling that too

many second homes would be detrimental to the vitality and viability of the

development. This was explained in detail in the planning submission. If

you do not have a copy I should be pleased to send you one.

These factors do not apply in all circumstances, and The Prince of Wales is

not opposed to second homes as a matter principle. In some instances they

can invigorate and create employment.

2. The Prince of Wales travelled to the United States to collect the 10th

Anniversary Global Environmental Citizen award and was

accompanied by 20 staff

The Prince of Wales did not travel to the United States to collect the 10thAnniversary Global Environmental Citizen award and was not

accompanied by 20 staff. He was travelling to the United States to

undertake official engagements on behalf of the Foreign Office. After this

visit had been requested and agreed the Harvard Medical School asked

whether he would accept the environmental award. We replied that he

could not do so in person because he was not prepared to travel to the

United States to receive it. The School then asked whether there was an

occasion on which he was travelling to the United States in any event when

he could receive the award. We said that this would be possible but that the

only time he would have free when in the United States would be on theevening of Sunday 28th January. It was for this reason that the awards

dinner was held very unusually on a Sunday evening in late January!


16/26

The Prince of Wales and The Duchess of Cornwall were accompanied by

14 staff. The other members of the party were Police. 14 staff (including a

doctor and hairdresser) is normal for a tour of this complexity with two

senior Members of the Royal Family.

3. The Prince of Wales has five homes

I am not sure how you calculate that The Prince of Wales has five homes.

His home is Highgrove. Clarence House is his official office and residence

in London. Birkhall is lent to His Royal Highness by The Queen on the

Balmoral Estate. It is regarded as being appropriate that The Prince should

spend time in Scotland. For similar reasons the Duchy has bought a house

in Wales, but for the large majority of the time it will be let for conferences

and holidays. His Royal Highness only spends a few days a year at

Sandringham, which is owned by The Queen, and I can confirm that henever has more staff than when The Queen is there.

4. The Prince of Wales has a Royal Mail van and driver

The Prince does not have the use of a Royal Mail van and driver. The Post

Office organizes the transport of official papers for senior Members of the

Royal Family, the details of which are dealt with by The Queens

Household rather than by this Office.

5. The fact that The Duchess of Cornwall cost 2,000 from public funds

in 2005-06 is questioned

When it was said that The Duchess of Cornwall had herself only cost

around 2,000 from public funds during 2005-06 it was made entirely clear

that this figure excluded security costs, as the significant number of people

present at the time can confirm. Both this Household and The Queens are

always very careful to make it clear that the figures for the cost of the

Monarchy which we give do not include security.

I am not sure how you know how much the security for The Duchess costs

because as far as we are aware figures are not available. Neither TheDuchess nor this Household has any control over security or security costs

which are the responsibility of the Home Office.

It might be helpful if I add, as a postscript, that the costs of the Monarchy,

including those attributable to The Prince of Wales and The Duchess of

Cornwall, are not met by the taxpayer but from the income from the Crown

Estate which is surrendered by The Queen to the Exchequer. This income

amounts to around 200 million a year. This is confirmed on page 4,

paragraph 3, of the Report of the Royal Trustees published on 4th July

2000 and signed by the Prime Minister and the Chancellor of theExchequer. It may be helpful if you refer to this document.


17/26

Your questions and assertions suggest that you have sought to identify

issues detrimental to The Prince of Wales, rather than all the many excellent things

which he does to contribute to this Country and internationally, and that you have

mainly spoken to people who disagree with the approach he has taken rather than

to the, in my view, many, many more people who approve of and admire what HisRoyal Highness does. In view of this, I hope that you do not mind my referring to

Sections 5 and 7 of the Ofcom Broadcasting Code which require impartiality and

fairness in news and other programmes.

If any of the above is not clear please come back to me.

I have sent a copy of this letter to Luke Johnson, the Chairman of Channel

4 Television.

We may publish the letter on our website and I should be grateful for yourpermission to publish your letters to me as well so that people can see the

questions which I am answering. I should be grateful if you would give me your

response on this point by the end of the week.

Yours sincerely,

Sir Michael Peat

David Henshaw Esq.,

Executive Producer,

Hardcash Productions Limited,

35 Waterside,

44-48 Wharf,

Islington,

London, N1 7UX.


18/26

CLARENCE HOUSELONDON SW 1 A IBA

PRIVATE AND CONFIDENTIALFrom: The Principal Private Secretary to TRH The Prince of W ales and The Duchess of Cornwall

/" p4tio,^ I.... ^^- I22nd September, 200 5

I am writing both as The Prince of Wales' Principal Private Secretary and asActing Chairman of His Royal Highness' Foundation for Integrated Health.

There has been a breach of confidence by Professor Edzard Ernst in respect ofa draft report on the efficacy of certain complementary therapies sent to him by Mr.Christopher Smallwood. The report was commissioned by The Prince of Wales.

Mr. Smallwood sent Professor Ernst an early and, at that stage, incompletedraft of the report for comment. The accompanying e-mail requested and stressed theneed for confidentiality. Professor Ernst implicitly agreed to comment on the reporton this basis but then, as you probably saw, gave his views about the report to thenational press. I attach a copy of a letter from the Editor of the Lancet published byThe Times which summarises the issues well. I also attach a copy of the e-mail sentto Professor Ernst by Mr. Smallwood.

I apologise for troubling you, but I felt that you should have this matter drawn4 1o your attention.Sir Michael Peat

Professor Steve Smith AcSS,Vice-Chancellor,University of Exeter,Northcote House,The Queen's Drive,Exeter,Devon,EX4 4QJ.

/t 1


19/26

DISPATCHES COMMENTS ON THE SMALLWOOD REPORT AND RELATEDMATTERS

Perhaps the most helpful thing would be for me to comment on the reported comments byinterviewees in turn.

I am not an accountant; I am an economist. Until March 2005 I was chiefeconomic adviser to Barclays, and in earlier phases of my career was senioreconomist at BP and an economic adviser to the Treasury and the CabinetOffice. In the late 1980s, I was also economics editor of The Sunday Times.It is true that I have no medical background, but it was nevertheless perfectlyreasonable that I should be asked to carry out a study looking at the costs andbenefits of complementary medicine. This is because economists are skilledat appraising costs and benefits. Hence, Nick Stem, with no background inclimatology, was asked to compile the Stern Report, drawing on inputs fromexperts in that field. This is exactly what I did in another area. I hadextensive inputs from across the world of complementary medicine of whichfull account was taken. Although Ernst refused to cooperate, other professorsof complementary medicine did so: if you look at Appendix B, you will find12 pages of interviews with professors and other medical experts who helpedus. Ernst was very much alone in choosing to stand apart. A large number ofpractitioners also took part and allowed me and the team of consultantsworking for me to examine their records of the benefits and costs associatedwith treatments given. I believe that this was a perfectly respectable way toproceed.I was asked to undertake this study precisely because I was a leadingeconomist who had no connection with any of the entrenched factions in thisarea. The value of the exercise lay in asking a reasonable outsider to take a

detached view of the complementary medicine scene and to report in astraightforward way what he found. I undertook the study on the explicit basisthat there would be no attempt to influence my conclusions, and none was evermade. I did not meet the Prince of Wales until well after the study wascompleted. I began with a sceptical frame of mind, and I simply reported whatI and my team found.

ii. On the second collection of points, far from being selective in its evidence, theReport went out of its way to be as comprehensive as possible. To understandhow we went about it I ask you, in a fair frame of mind, to read theattached piece from the Sunday Times, where this is explained. There was a


20/26

2

threefold approach which incorporated a literature scan, which may not havebeen perfect, but was the best we could do with the guidance of experts,including academic experts, in the field; a statistical examination of theexperience of complementary health centres on the ground; and widespreadinterviews with academics and practitioners to see if there was any sort of

consensus about what worked and what didn't. We then `triangulated' andcame up with a rather limited set of conclusions which no fair-minded personcould characterize as either `irresponsible' or `dangerous'. These are set out inthe newspaper article, and more fully in the carefully-considered executivesummary of the Report which again I hope you will read.I hope I have dealt with the clam that there were preconceived conclusions.They were pr ecluded by our approach, and I give you my personal assurancethat there were none.As for the claim that the Report contradicted available objective evidence,again you will see if you read it that that was the last thing we were tryingto do. The `recent report' you refer to on back pain may have been too recentto be included. The idea that the Report made false claims about the efficacy ofhomeopathy, especially in relation to asthma, has been repeatedly peddled byMr Ernst and is entirely false. The considered summary says quite clearly:"Our survey indicates that the best evidence for homeopathy is associated withits use as an alternative to conventional medicine in relation to a number of

everyday conditions, particularly asthma. The ev idence is however fragmentary,and the most that can safely be said is that these are conditions commonlytreated by homeopaths for which they report good results (italics added)."The report is therefore very cautious, but not arrogant enough to dismiss theclinical experience of thousands of practitioners in the field.

On glucosamine, chondroitin, it is true that there was a mistaken reference onp.78 to glucosamine in the herbal medicine section. This was a survival from amistake made when the team was assembling an earlier draft. It does notappear anywhere else, so it would be a great distortion to use this to make ageneral claim that the Report contains factual inaccuracies. It doesn't.

iii. Although it may be for Sir Michael Peat to reply about this, I must respond tothe account given of Mr Ernst's breach of confidence. What you have been toldis an outrageous travesty of the truth. I wrote to Ernst months before the Report

was published, as I did to many other academics and experts in the field,explaining that we were trying to present a detached and balanced picture ofwhere thinking about complementary medicine had got to and asking if he wouldbe prepared to help us come up with the right conclusions. Everyone else readily


21/26

3

agreed to do so and observe confidentiality. Because he had a difficultreputation, I wrote to Ernst saying quite explicitly that I would appreciate hishelp, but that I could only show him early drafts and speak to him on the basis ofcomplete confidentiality because it could be very damaging if anything leaked

out before our conclusions were properly considered and finalized. He agreed toobserve confidentiality, so I went to talk to him and showed him some very roughearly drafts of our work and asked for his inputs, along with the other academics'.Shortly afterwards, there appeared a full-scale attack on "the Smallwood Report"all over the first two pages of the Times with extensive quotes from Ernst,attacking the Report as unscientific, biased and all the rest. What he had seen wasof course not the "Smallwood Report" but early working drafts of one sectionwhich had not yet been shaped to support any conclusions, as he very well knew.And to go to the papers after his undertaking to me was the most blatant anddisreputable breach of confidence I have ever known.Nor was this just my view. The editor of the Lancet (quite independently) wroteto the Times on 29 August in the following terms. "Prof Ernst seems to havebroken every professional code of scientific behaviour by disclosingcorrespondence referring to a document that is in the process of being reviewed

and revised prior to publication. This breach of confidence is to be deplored."I attach the letter which also stresses the scientific importance of peer review

which can only be carried out in conditions of confidentiality.Ernst was fully entitled to comment on the Report after it came out, and attack itall he wished, but he couldn't wait, and did a lot of damage by claiming in the TheTimes and on the Today programme (again before the Report was published) thatthe Report said lots of things which in fact it didn't.I cannot believe that if the individuals you have interviewed knew the true story,

they could possibly complain about a "wholly improper attempt to put theProfessor's career in jeopardy". The purpose of the letter, as I understand it, wasneither to silence Ernst or put his career in jeopardy, but to complain about thethoroughly disreputable way he had behaved, which in my view was thoroughlyjustified. If he behaves with more circumspection in the future, that will be anexcellent outcome, but from the notes you sent me I am not holding my breath!

If you want to call me on 020 8946 7434, I shall be happy to talk to you about all this.

Christopher Smallwood 27 February 2007


22/26

Nineteenth ReportHM TreasuryThe Accounts of the Duchies of Cornwall and Lancaster.,Is the Duchies of Cornwall and Lancaster are not Government departments, thefirst part of the response to the Nineteenth Report from the Committee of Public.-Iccounts, is in respect of the recomm endations made direct to kIM T reasury. Theresponses by the Duchies of Cornwall and Lancaster to recommendations made tothem are attached below.Recommendations made to HH Treasury:PAC conclusion (v): The Treasury should amend its Accounts Direction so thatthe Duchies have to follow public sector good practice and thereby comply withthe sane disclosure requirements as most other accounts presented toParliament....1. The Treasury will review and re-issue its Accounts Directions to the Duchies.The intention of the current directions is to require the Duchies to prepare theiraccounts in accordance with generally accepted accounting practice in the UK (UKGAAP), taking account of their legal structure. This will remain the case. TheTreasury does not believe that it will be appropriate to specify in the revisedaccounts directions the detailed presentation of specific statements and notes to theaccounts: the acco unting standards themselves and other sources - eg theCompanies Act(s) - deal with such presentational issues.PAC conclusion (ix): The Duchies do not pay corporation tax or capital gainstax. As the Duchies are trading entities , it would be useful for the Treasury toprovide justification for the tax position of the Duchies , as distinct from that ofThe Queen and The Prince of wales , and explain the impact of this favourabletax position on the Duchies ' competitive position in the property and othermarkets in which they operate.2. The Duchies are not within the charge to Corporation Tax. The Duchies wereestablished for the sole purpose of providing an income for the Sovereign and Heirto the Throne. This ensures that they maintain a degree of financial independencefrom the Government of the day. The tax treatment of the Duchies must be seen inthis context, alongside that of their beneficiaries. This was the basis of the RoyalTrustees' report on Royal taxation and the Memorandum of Understanding,published in 1993.3. The Treasury does not believe that this treatment impacts on the competitiveposition of the Duchies. In this context, they can be considered to "compete" withother property investment organisations in the buying, selling and renting ofproperty. However, this is done in the open market. The Duchies have no advantagehere and are subject to market forces and prices in the same way as the otherorganisations operating in this area. Moreover, other very significant organisationsoperating in the investment property market face s imilar tax treatment to that of theDuchies.PAC conclusion (x): There should be an assessment of how well the surpluses ofthe two Duchies correspond to the respective needs of the Households of TheQueen and The Prince of wales....

1


23/26

4. The Duchies are required by their governing legislation to provide incomes forcurrent and future Dukes. It is their responsibility to generate as much income as isreasonably possible, subject to having regard to sustainability, good managementpractice and, in particular, balancing the interests of current and future beneficiaries.It is also worth bearing in mind that the Civil List legislation makes no provision forsupporting the official duties of the Prince of Wales.

2


24/26

DUCHY OF CORNWALL1 0 B U C K IN G H A M G A T E L O N D O N S W 1 6 L A

The DUCHY of CORNWALL' s response tothe Public Accounts Committee Report

PAC conclusion (i): The direct involvement of The Prince of Wales in themanagement of the Duchy of Cornwall creates a potential conflict between theinterests of the current ... [and] future beneficiaries . The Duchy should:

(a) modify the governan ce arrangements so that... the [current]beneficiary has no role... in the management of the Duchy, and

(b) ... [make ] the appointment of Members to The Prince's Council.... onmerit [so as to]... command public confidence.(a) The Duchy of Cornwall does not accept this recommendation. The potentialconflict of interest was recognised and addressed in the Duchies of Lancaster andCornwall (Accounts) Act 1838 and the Duchy of Cornwall Management Act 1863.The Acts provided, in effect, that the Treasury should act to protect future interestsby, in particular, directing that proper accounts are maintained and by approving allsignificant capital transactions. Section 8 of the D uchy of C ornwall ManagementAct specifically states that in considering any authorisations the Treasury shall haveregard to the interests of both present and future D ukes of Cornw all. Thearrangement has stood the test of time and has worked well as reflected in theperformance of both the Revenue and Capital account. It should also be borne inmind that it is the close involvement of the D uke that has contributed to theconsiderable success over recent years.(b) Appointments to The Prince's Council are made on merit. The current Prince'sCouncil is comprised of individuals who are eminent within the primary areas ofactivity in which the Duchy op erates, including experts from the fields ofagriculture, commercial property, landed estates, law and finance. Having said this,in view of the Public Accounts Committee's recommendation the Duchy of Cornwallwill give further consideration to the way in which appointments to The Prince'sCouncil are made.PAC conclusion (ii): The role of the Treasury should be made clear in the Duchyof Cornwall's accounts....The Duchy of Cornwall accepts this recommendation and indeed had alreadyexpanded the references to the Treasury in its latest accounts which were issuedbefore the Public Accounts Comm ittee report was published. The report andfinancial statements for the year ended 31st March 2005 included the following:

The m anagement of the Duchv is subject to extensive review by T hePrince 's Council and by the Treasury (which in particular ensures that theDuchvs Capital is maintained for future benefic iaries)'.,the Treasury has an important role in overseeing the Duchy 'financialtransactions and reporting, as set out in the various Management A cts,and, for example, land transactions over 200, 000 can only be carried outwith Treasury approval'.

3


25/26

Additionally, the annual accounts list Treasury consents under Section 7 of theDuchy of Cornwall Management Act 1982.PAC conclusion (iv):.... The Duchies ' accounts are required to be presented toParliament .... scrutiny and accountability would be more effective if theComptroller and Auditor General were to be the auditor of the Duchies, or atleast... have access to their books and records.The Duchy of Cornwall does not accept this recommendation. The primary roles ofthe National Audit Office are to audit the financial statements of all governmentdepartments and to report on the economy, eff iciency and effectiveness with whichgovernment bodies have used public money. The Duchy is a private estate and is notfunded by public monies.The role of the auditor is set out in the Duchy of Cornwall Management Acts, mostrecently under Section 9 of the 1982 Act. The responsibilities of the auditor includereporting to the D uke of C ornwall on the truth and fairness of the financialstatements as presented and also reporting on the satisfaction of or compliance withother provisions set out in the Management Acts which seek to protect the Capitalaccount.The Duchy of Cornwall Management Acts stipulate that the appointment of asuitably qualified auditor be made by the Duchy of Cornwall. The Duchy is currentlyaudited by Rodger Hughes, who is a partner in PricewaterhouseCoopers LLP whoprovide the resources to conduct the audit. The audit report confirms that theaccounts have been prepared in accordance with the Treasury directive and that therequirements of the Duchy of Cornwall Management Acts have been adhered to.The Duchy audit report as required by law is an independent report addressed to theDuke of Cornwall. It is not considered that the National Audit Office would be ableto report independently both to the Duke and Parliament where the Comptroller andAuditor General has a statutory duty.The Duchy of Cornwall considers that the scrutiny by the Treasury andPricewaterhouseCoopers is in excess of that applied to most companies, includingthose who have many outside shareholders requiring protection.PAC conclusion (vi): The Duchies' accounts should be made clearer and moretransparent... [ so as to[ assist readers of the accounts....The Duchy of Cornwall is always keen to increase the transparency of its accountsand several of the recommendations have already been adopted in the Duchy Reportand Accounts for the year to 31st March 2005.With specific reference to borrowing from the Capital account , additional disclosurein the accounts to 31st March 2005 has already been provided . 'There is no questionof the utilisation of the borrowing facility inflating the Revenue surplus. For theavoidance of doubt , any borrowing facility drawn down is classified as a balancesheet item and does not therefore impact on the Revenue surplus for the year.Interest is payable by the Revenue account on any borrowing that is undertaken. Thespecific purpose of the loan is to provide for the possibility of very short termRevenue cash flow deficits that may arise due to many of the historic tenancyagreements being payable half-yearly in arrears.Historically, the Duchy has voluntarily given disclosures that have gone beyond theminimum requirements.

4


26/26

PAC conclusion (vii): [To assist Parliament and other readers of the accountsthe Duchies should include in their accounts details of the targets they have setand performance against them....

This recommendation is not accepted. The Duchy of Cornwall is a private landedestate; not a government department which is given public money. Hence, the Duchydoes not consider that disclosing targets is appropriate. No other entities, includinglisted public companies, publish detailed target figures as they are regarded as beingcommercially sensitive. It is therefore not considered appropriate for the Duchy todo so.PAC conclusion (viii): The Duchies should report more information on theircharitable and other activities , and the principles that underline them. Thenarrative section of the Duchy of Cornwall' s accounts is a helpful supplement[in that regard].This recommendation is accepted. The Duchy places considerable importance on thereview of activities narrative within the financial statements. The Duchy supports awide range of charities. However, the Capital account by virtue of Section 36 of the1863 Management Act has very limited powers in relation to charitable activities.The Duke of Cornwall in his private capacity spends a huge amount of time oncharitable activities and last year helped to raise 109million in support of thosecharities. A significant amount of the income from the Duchy of Cornwall is usedby HRH The Prince of Wales to meet the cost of this charitable work. Further detailscan be obtained from HRH The Prince of Wales Annual Review 2005.

5

letter from clarence house to dispatches (channel 4) 5th march 2007

Documents