A £2.6-BILLION transfer of assets from the Church Commissioners to diocesan stipend funds, for use to support parish ministry, is to be proposed to the General Synod next month.
The sum relies on a calculation of the quantity that diocesan boards of finance could have gained had they invested the sums that they’ve contributed to clergy pensions since 1998.
The motion is to be moved by the Bishop of Bath & Wells, Dr Michael Beasley, who writes in an accompanying paper that, without the urgent change called for within the motion, “the increasing crisis consequent to the catastrophic inadequacies of diocesan stipendiary funds” will “fatally undermine” the national Vision and Strategy.
The success of the Commissioners — who now preside over assets of £10.4 billion — is “not supporting parishes or dioceses of their current situation of destructive and destabilising financial deficit”, he writes. The size of the endowment acts “as an lively discouragement to people in churches and their communities participating in fundraising, giving and calls to generosity”.
Among the examples of “widespread degradation” in parishes and dioceses listed are the sale of homes and other assets, and cuts to clergy posts “achieved through pastoral reorganisations with the creation of ever more and bigger multi-parish benefices which might be devastating to the workload and morale of clergy, church officers and parishes”.
The paper warns that “the concept in the long run dioceses may not have the option to pay for his or her clergy is a serious disincentive to people answering God’s call on their lives.”
The motion follows the diocesan-finances review, which found that 35 dioceses expected to report deficits in 2023, totalling £62 million by 2024 (News, 21 June 2024). Among the dioceses cutting stipendiary posts is Bath & Wells. In 2023, it announced plans to make savings of £450,000 every year by reducing stipendiary parish posts from 178 to 150 (Features, 18 October 2024).
Attached to Dr Beasley’s paper is a report, The 1997 Settlement: Its effectiveness and consequences, presented to the Finance Committee of the Archbishops’ Council in 2021 by one in all its members, Benjamin Preece Smith, diocesan secretary in Gloucester. Under the 1997 settlement, the duty to pay future clergy pension contributions was transferred from the Commissioners to the dioceses.
This followed a disastrous period for the Commissioners, during which they’d over-committed support for stipends and pensions, and, with the assistance of enormous bank loans, invested heavily in industrial property that didn’t deliver the hoped-for returns. It was reported that, without reform, as much as 90 per cent of their funds could be tied up with pensions by 2010.
At the time, Mr Preece Smith writes, PCCs and particularly DBFs were “financially stable”, and it was hoped that the fee of pensions could be met by parish giving. In reality, contributions have been “substantially funded from the sale of historic assets, in effect a big scale dis-endowment of the local church, felt at diocesan and parochial levels”.
Pension contributions are almost double the unique estimates, and congregations have declined significantly. Meanwhile, the Commissioners’ funds have grown from £3.48 billion in 1997 to £10.6 billion in 2024. Their pension liabilities have fallen from 63.2 per cent in 1997 to 16.3 per cent in 2020.
“There is currently no agreed plan for when or if this recovery plan/high asset growth model can be stopped, or what ‘enough’ funds with the Church Commissioners looks like,” Mr Preece Smith observes. “This only results in tensions and discord.”
The instability in DBFs is “conveyed on to parishes”, he writes. “It is ‘their’ houses which might be being sold, their clergy which might be reduced, their Common Fund/Parish Share that keeps going up. This again gives a way of lost control and disenfranchisement.”
While clergy can have been the intended beneficiaries of the 1997 settlement, they’ve “arguably borne the most important personal cost as well”, operating “on the sharp end of merged benefices, sold parsonages and a parish share that increases inexorably above inflation yr on yr over a long time”.
The shift within the financial balance between the Commissioners and the dioceses has been accompanied by “a shift within the locus of ‘strategic’ decision making in the identical direction, away from the bishops of their diocese to the NCIs”, he suggests.
In 1997, DBFs received £19.5 million (roughly £35 million in real terms) from the Commissioners “with no real conditions attached”. Today, funds are distributed through the Strategic Mission and Ministry Investment Board, and £240 million is about to to be allocated in the present triennium through the Diocesan Investment Programme, for which dioceses must submit bids that align with Vision and Strategy.
“This side of the grave, money brings power — the financial flows of the past 25 years have disrupted the traditional balance of authority within the Church, this shouldn’t be ignored,” Mr Preece Smith writes.
Dr Beasley’s motion has already been carried in seven dioceses (Hereford, Gloucester, Coventry, Bath & Wells, Blackburn, Chichester, and Lincoln), and is to be moved on behalf of the Bishop of Hereford. It suggests that the cash needs to be “disbursed directly and recurrently to diocesan stipend funds as part of the present and future Triennium funding agreements”. The £2.6-billion figure — set out in Mr Preece Smith’s paper — must also be re-calculated, it says.
A response from the Archbishops’ Council’s Secretary General, William Nye, incorporates each a defence of the Council’s spending — planned distributions to dioceses in the present triennium are 54 per cent greater than in 2017-19 — and a warning that, if the funds were transferred, there’s a “risk that returns from the Church’s investments would cut back”. It also sets out the legal considerations, noting that primary laws could be required to realize any transfer of assets from the Commissioners to diocesan stipends funds.
The motion involves the Synod similtaneously an update from the diocesan-finances review, which sets out proposals for a shake-up of funding flows between the NCIs and the dioceses. These include providing £200 million of “time-limited additional support to dioceses” over the course of nine years; a rise in Lowest Income Communities Funding; and abolishing diocesan apportionment.
It doesn’t indicate a fundamental change to the shift in power identified in Mr Preece Smith’s paper. A summary provided by Carl Hughes, who chairs the Finance Committee, states that Strategic Mission and Ministry Investment will remain “the important thing funding pillar to support dioceses to understand the Vision & Strategy in parishes and worshipping communities”.
There is an expectation that “missional interventions” are to translate into “improved financial health” — an echo of the diagnosis that Mr Hughes gave the Synod last yr (“the first crisis the Church is facing today is missional. The financial challenges are consequential”).
Among Mr Preece Smith’s conclusions is that — given the failure of giving to satisfy the fee of pensions — “the present model of ministry funded principally through giving could also be unsustainable in lots of places and caution applied to easily doing more of the identical.”
