King’s estate to transfer £100m into ethical funds after bona vacantia revelations
Exclusive: Duchy of Lancaster changes investment policy amid questions over how money collected from dead people is used
Sat 25 Nov 2023 05.00 EST
Last modified on Sat 25 Nov 2023 21.31 ESTKing Charles’s estate has announced it is transferring more than £100m, including funds collected from dead people under the archaic system of bona vacantia, into ethical investment funds after an investigation by the Guardian.
The surprise announcement came amid growing pressure on the king over the Duchy of Lancaster’s use of funds collected from people who die in the north-west of England with no will or next of kin.
On Thursday, the Guardian revealed some of the funds were secretly being used to renovate properties that are owned by the king and rented out for profit by his estate. The duchy conceded that some bona vacantia revenues are financing the restoration of what it calls “public and historic properties”.
However, the king’s estate has also been battling separate questions over its management of another portion of bona vacantia funds that are given to its charities.
Two of those charities have used bona vacantia to build major endowment funds worth more than £40m. Their accounts state that there are “no specific constraints on the investment portfolio in terms of ethical, social or environmental (ESG) matters”, although investment managers are advised to take such matters “into consideration”.
Contacted by the Guardian this week, the Duchy of Lancaster initially declined to say whether its charities had invested in any oil or gas, tobacco, weapons or mining companies. However late on Friday, a spokesperson for the estate announced a change in policy.
“In line with the king’s longstanding support of ethical investing, the Duchy of Lancaster has begun the process of transferring its investment portfolio into ESG funds. This process is expected to be completed by the end of the financial year,” the spokesperson said.
There been no suggestion from the king’s estate that it plans to cease collecting bona vacantia or change how it is spent.
However, the shift in investment policy will bring the Duchy of Lancaster’s approach into line with that of the Duchy of Cornwall, another royal estate that receives bona vacantia funds, which has an ethical investment policy. The king previously owned and closely managed the Duchy of Cornwall, which raises profits for the heir to the throne. When Charles became king, it was inherited by his son Prince William.
At the same time Charles inherited from his mother the Duchy of Lancaster, which exists to raise “private” income for the monarch. Both the duchy itself, and its charities, have investment portfolios. The duchy’s own portfolio, according to its accounts, include equities, bonds and other financial investments worth £74m. That too is now being transferred to ethical funds.
The charities the duchy gives bona vacantia revenues to, the Duchy of Lancaster Benevolent Fund and Duchy of Lancaster Jubilee Trust, have also built large endowment funds, worth £18m and £26m respectively.
Both charities’ accounts state they aim for an annual return of £500,000 from their investments, and benchmark the success of the bulk of their stock investments against the FTSE All-Share Index, an index that includes companies such as Shell, BP and British American Tobacco.
Ben Faulkner, of the ethical investment company EQ Investors, said benchmarking against an index could mean replicating investments in the companies involved: “Using an index as a base for a replication strategy is very common, known widely as index tracking. When doing so you will typically have more invested in the biggest companies within the index you are tracking … Shell is the largest listed company within the FTSE All-Share Index.”
In the last five years, the Duchy of Lancaster Benevolent Fund has made nearly £2m in income from its investment portfolio, while the Jubilee Trust has made £2.5m.
The Duchy of Cornwall, which collects bona vacantia from Cornish residents, has a clear ethical policy in relation to investments by the Duke of Cornwall Benevolent Fund, which has built a £5m endowment. Its accounts state: “The fund is entirely invested in the Newton SRI Fund for Charities, a global and diversified portfolio of equities and fixed interest securities with particular emphasis on environmental, social and governance considerations, screened against negative socially responsible investment criteria.”
The Duchy of Lancaster’s announcement of a similar policy comes amid growing questions for the royal estate which has long claimed that bona vacantia proceeds go to charity after costs are deducted. In a shift in language, it now concedes funds are additionally spent on “restoration and repair” of qualifying buildings on the estate.
Leaked documents reveal properties deemed eligible for the funds include a suite of properties rented out to raise profit for the king, including holiday lets, farmhouses, a barn on a shooting range and a petrol station.
The duchy collects bona vacantia assets from residents of the ancient county palatinate of Lancashire – a territory that includes Lancashire and parts of Merseyside, Cheshire and Cumbria.
Cat Smith, MP for Lancaster and Fleetwood, said: “Like so many other local people I was surprised to learn the anomaly that means those dying without a will or heir in the county palatine see their assets passed to the king rather than the state. It’s an unjust and archaic hangover from the medieval times and I’ll be seeking advice on how to bring my constituents’ rights out of the feudal era.”
Her comments come after criticisms from two mayors from the north-west of England. “This appears to be a bizarre remnant of feudal Britain,” said the Greater Manchester mayor, Andy Burnham. “At the very least, people in the north-west are owed transparency and accountability. They should also have a say on how these proceeds are used. I would call on the government and the Duchy of Lancaster to initiate a public consultation on this issue to work towards a set of arrangements that could command greater public consent.”
Steve Rotheram, the mayor of the Liverpool city region, also expressed concern. “Worthy causes have been bypassed and instead it appears that funding has been spent renovating royal properties. I hope the situation will be clarified urgently and, if money has been misused, it is put back where it should be: with those charities it was promised to.”
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