The Duchy of Lancaster made headlines recently after secret documents revealed that it had invested about £10 million of the Queen’s private money in offshore funds. But what exactly is the Duchy of Lancaster?
The Duchy is a private estate intended to fund the Sovereign’s Privy Purse (i.e., their private income). It is separate from the Sovereign Grant, which pays for the Monarchy’s operating costs. According to the Duchy’s website, the core of the Duchy consists of over 18,000 hectares of land throughout England and Wales. In addition, it owns commercial and residential properties as well as financial investments.
The Duchy of Lancaster was founded in 1351 when Edward III gave Henry Grosmont the title of ‘Duke of Lancaster.’ Edward also made Lancaster a ‘county palatine,’ giving the new duke special powers over his domain. While a county palatine is not an independent state, its ruler enjoys considerable autonomy. For example, the Duke had the power to appoint the Duchy’s judges, as well as its sheriffs, justices of the peace, and other key officials. Initially, these palatine powers were limited to the first Duke of Lancaster, but when the Duchy passed to one of Edward III’s sons, John of Gaunt, he convinced his father to make the grant permanent.
In 1399, John’s son, Henry Bolingbroke, ascended the throne as Henry IV. He declared that the Duchy of Lancaster should descend through Henry’s male heirs, though it was to be held separately from the main Crown Estate. Because of this stipulation, the Duchy was not affected when George III transferred the proceeds from the Crown Estate to the Government in exchange for a parliamentary allowance, and it remains the Sovereign’s personal property to this day.
The Monarch continues to enjoy several residual palatine powers as Duke of Lancaster, though nowadays, the distinction is largely one of form rather than substance. Two key examples of this are the appointment of High Sheriffs and the exercise of ecclesiastical patronage. While the Queen-in-Council appoints High Sheriffs for the rest of England and Wales, the Queen appoints the Duchy’s High Sheriffs during a private audience with the Chancellor of the Duchy of Lancaster. Similarly, the Queen exercises her ecclesiastical patronage within the Duchy on the advice of the Chancellor rather than the Prime Minister or the Lord Chancellor.
In addition to these ceremonial rights, the Sovereign enjoys a practical benefit in the form of bona vacantia. In the United Kingdom, the Crown receives the assets of people who die intestate and without heirs. For most of the country, the government receives these assets on behalf of the Monarch, but within the Duchy of Lancaster, they go to the Queen directly. However, she gives these proceeds to charity instead of keeping them for herself.
The Queen is not directly involved in the administration of the Duchy. The Chancellor of the Duchy of Lancaster has overall responsibility for its affairs, though in practice, many functions are delegated to bodies such as the Duchy Council. Even though the Duchy is the Sovereign’s personal property, the Chancellor is a Cabinet minister, although the low workload associated with the position means that the occupant is basically a minister without portfolio. The Chancellor’s ambiguous position is reflected in the fact that they are sworn in at a private audience with the Queen rather than at a Privy Council meeting like other Cabinet ministers. Day-to-day management of the Duchy is handled by the Clerk of the Duchy Council (who is also the Duchy’s CEO), the Chairman of the Duchy Council, and the Chief Financial Officer. They in turn are overseen by the Duchy Council, which is analogous to a corporate board of directors.
Although the Duchy is technically a private estate, it is regulated by Parliament. While the Crown Lands Act 1702 strictly prohibited the alienation of Duchy assets, this stricture has been relaxed by subsequent enactments. The Duchy can now sell land if it’s not deemed convenient to hold it any longer, and the Duchy can lease land as well. Furthermore, the Duchy of Cornwall and Duchy of Lancaster (Accounts) Act 1838 requires the Duchy to file annual reports with the Treasury, and the Treasury must lay these reports before both Houses of Parliament.
While there is nothing in the Paradise Papers to suggest that the Duchy has done anything illegal, the Duchy needs to rethink the way it manages the Queen’s assets. Her financial advisers have shown a lamentable lack of judgment. Offshore investments like these aren’t illegal, but they are controversial, and they present special problems for someone in the Queen’s position. Her financial advisers need to be extra cautious and ensure that there is nothing even vaguely scandalous about her financial dealings. Hopefully, these disclosures will serve as a wakeup call, and they will serve her better in the future.
 Other examples of counties palatine in England are the Duchy of Cornwall and County Durham.
 Queen Victoria styled herself ‘Duke of Lancaster’ rather than ‘Duchess of Lancaster’ on the grounds that a duchess was merely the consort of a duke. While this was not an official decision, the precedent has held.
 The High Sheriff of Cornwall is another special case. Since the Duchy of Cornwall is also a county palatine, its Duke (i.e., the Prince of Wales) appoints the sheriff.
 Generally, this audience takes place immediately after the Privy Council meeting where the rest of the High Sheriffs were appointed.
 Nowadays, the Chancellor is typically given responsibility for the Cabinet Office, though the office is sometimes given to the Leader of the House of Commons or the Leader of the House of Lords.
 Duchy of Lancaster Lands Act 1855.
 Duchy of Lancaster Act 1988.