Civil List pay deal has escape clause

MARGARET Thatcher and John Major buried an escape clause in the controversial 10-year package under which the Queen's Civil List payments were more than doubled last year.

Baroness Thatcher and Mr Major, as Prime Minister and Chancellor of the Exchequer, were two of the Royal trustees who recommended an increase in the payment, from pounds 3,850,000 in 1990 to pounds 7.9m from 1 January 1991.

They argued in October 1990 that their proposal, which included an assumed annual rate of inflation of 7.5 per cent, was 'more consistent with the honour and dignity of the Crown' - than the annual uprating that had been brought in under the terms of the Civil List Act 1975.

The deal also included similar upratings in the annuities paid to other members of the Royal Family, including an annual payment of pounds 249,000 to the Duke of York, pounds 228,000 to the Princess Royal, and pounds 219,000 to Princess Margaret. But in their 1990 report to Parliament, Lady Thatcher and Mr Major suggested 'that the 1975 Act should not be repealed for the time being. They do not anticipate any need to utilise its powers but consider it prudent to leave them in place'.

The Prime Minister's Office yesterday rejected 'creative' speculation that the current Civil List arrangements were to be changed by agreement between the Queen and Mr Major following his visit to Balmoral.

But if parliamentary pressure for change became overwhelming, the 1975 Act would provide a ready-made route for retreat - without the potential for embarrassing debate that would be required with new legislation. Meanwhile, the latest, unpublished accounts for the Duchy of Lancaster, obtained by the Independent, show that the Queen received a tax-free payment of pounds 3.1m to the Privy Purse from the Duchy last year, while the market value of Duchy investments rose from pounds 9.4m in 1990 to pounds 15.1m in 1991.

The Prince of Wales receives no payment from the Civil List, but he does get an annual revenue from the Duchy of Cornwall - from which, unlike the Queen, he makes a voluntary payment of one quarter of net income to the Treasury's Consolidated Fund.

His income from the Duchy last year, according to the latest accounts, was just above pounds 2.9m, from which he will have paid more than pounds 725,000 to the Treasury for the current financial year.

The Queen's hereditary revenues from the Crown Estate are also paid into the Consolidated Fund, and they amounted to pounds 70m for 1991-92. The value of the estate was put at pounds 1.77bn at the end of last March. No similar valuation is available for the Queen's Duchy of Lancaster estates, which originated in 1265, and are thought to include parts of Yorkshire, Cheshire and the City of London, as well as Lancashire itself.

The Duchy of Lancaster accounts provide no factual breakdown of its estates, unlike those for the Duchy of Cornwall.

Duchy of Cornwall. 1991. Revenue and Capital Accounts for the year to 31 December 1991. Commons paper 73. HMSO; pounds 3.50.

Letters, page 22