The Royal Albert Hall is to be investigated by a judge-led inquiry into why its trustees can own seats privately and then sell tickets for them at marked-up prices.
Jeremy Wright, the Attorney General, has formally agreed to refer the row over governance on the ruling board of the the Royal Albert Hall, home of the BBC's Proms season, to a judge-led charity tribunal, after the issue was highlighted in a series of articles in The Daily Telegraph last year.
The investigation is only the third tribunal probe in the past decade and the first ever to be into a specific charity. Hearings, which can be held in public, are expected to begin later this year.
The two previous tribunals, both in 2011, examined public benefit law in relation to public schools and how benevolent funds help the poor.
The tribunal will examine whether it is right that Royal Albert Hall trustees can own seats, profit from ticket sales and at the same time control the charity’s board that runs the hall.
The tribunal, which will be chaired by a judge, will determine whether this level of private benefit is acceptable in charity law.
If the inquiry finds that it is not, the Charity Commission has powers to appoint its independent trustees to run the 150-year-old Royal Albert Hall.
Richard Lyttelton, a former president of the hall who has campaigned for reform for years, welcomed the formal inquiry, telling The Daily Telegraph: “This goes a long way towards vindicating a lengthy campaign to bring the issues of governance at this iconic national institution to light.
“Through an archaic constitution and more recent opportunities afforded by on-line ticket sites, certain commercially minded members have been able to profit by selling tickets to their seats, sometimes at many times face value.
“Apart from the questionable morality of this practice it is clearly not what the charity was designed for.”
The row has been rumbling on for years. Last year Live Aid promoter Harvey Goldsmith,who organised concerts featuring Pink Floyd’s Dave Gilmour at the hall in 2015 and 2016, said it was “morally reprehensible” that debenture holders were able to profiteer from the resale of tickets at the expense of fans.
He said he had considered a boycott of his acts from the Royal Albert Hall but thought it would be futile to act alone.
Members of the public who helped fund the hall’s construction in the 1860s were given the right to seats which could be handed down generations, or traded on the open market, like property.
While tickets can be sold on through the hall’s box office at face value, the seats’ owners are also free to sell them very profitably on the open market.
Around a quarter – 1,275 – of the 5,000 seats at the charity-run hall are owned in this way.
Part of the Charity Commission’s concern has been that 19 out of the hall’s 25 trustees are seat owners, meaning that they can influence which events are open to private ticket sales and also profit from those sales themselves.
The Royal Albert Hall’s annual accounts show that trustees and their related parties own around 140 seats, worth tens of thousands of pounds when they are sold for concerts.
At the hall’s annual meeting last May, Leon Baroukh, a trustee since 2008 who controls 47 seats directly or indirectly, admitted the charity’s “whole model is provocative”.
Last year a box of 10 seats in the hall’s grand tier was sold on the open market for £2.5million.
The Royal Albert Hall - where Cirque du Soleil's show Ovo has just opened - said it was "disappointed" by the Commission's decision.
A spokesman said: "Over many years, the Hall has engaged in a meaningful way to resolve what is a complex set of issues, however the Commission has chosen to refuse to meet us, whilst pursuing what will be a costly and drawn out route.
"Whilst we will, of course, cooperate with this process, our focus will remain on entertaining audiences and to enhance our considerable charitable activities.
"Our unique structure and self-funding operating model, which requires no regular government subsidy, enables us to evolve our Grade 1 Listed building and continue our charitable outreach work that benefits and touches many hundreds of thousands of people in our communities every year."