A £2.6-BILLION transfer of assets from the Church Commissioners to diocesan stipend funds, to be used to support parish ministry, is to be proposed to the General Synod next month.
The sum is based on a calculation of the amount that diocesan boards of finance could have gained had they invested the sums that they have 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 in 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 in their current situation of destructive and destabilising financial deficit”, he writes. The size of the endowment acts “as an active 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 houses and other assets, and cuts to clergy posts “achieved through pastoral reorganisations with the creation of ever more and larger multi-parish benefices that are devastating to the workload and morale of clergy, church officers and parishes”.
The paper warns that “the idea that in the future dioceses may not be able to pay for their clergy is a major 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 each 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 of its members, Benjamin Preece Smith, diocesan secretary in Gloucester. Under the 1997 settlement, the obligation to pay future clergy pension contributions was transferred from the Commissioners to the dioceses.
This followed a disastrous period for the Commissioners, in which they had over-committed support for stipends and pensions, and, with the help of large bank loans, invested heavily in commercial property that failed to deliver the hoped-for returns. It was reported that, without reform, up to 90 per cent of their funds would 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 cost of pensions would be met by parish giving. In reality, contributions have been “substantially funded from the sale of historic assets, in effect a large scale dis-endowment of the local church, felt at diocesan and parochial levels”.
Pension contributions are almost double the original 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 will be stopped, or what ‘enough’ funds with the Church Commissioners looks like,” Mr Preece Smith observes. “This only leads to tensions and discord.”
The instability in DBFs is “conveyed directly to parishes”, he writes. “It is ‘their’ houses that are being sold, their clergy that are reduced, their Common Fund/Parish Share that keeps going up. This again gives a sense of lost control and disenfranchisement.”
While clergy may have been the intended beneficiaries of the 1997 settlement, they have “arguably borne the biggest personal cost as well”, operating “at the sharp end of merged benefices, sold parsonages and a parish share that increases inexorably above inflation year on year over decades”.
The shift in the financial balance between the Commissioners and the dioceses has been accompanied by “a shift in the locus of ‘strategic’ decision making in the same direction, away from the bishops in their diocese to the NCIs”, he suggests.
In 1997, DBFs received £19.5 million (approximately £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 set to to be allocated in the current 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 ancient balance of authority in the Church, this should not 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 money should be “disbursed directly and regularly to diocesan stipend funds as part of the current and future Triennium funding agreements”. The £2.6-billion figure — set out in Mr Preece Smith’s paper — should also be re-calculated, it says.
A response from the Archbishops’ Council’s Secretary General, William Nye, contains both a defence of the Council’s spending — planned distributions to dioceses in the current triennium are 54 per cent more than in 2017-19 — and a warning that, if the funds were transferred, there is a “risk that returns from the Church’s investments would reduce”. It also sets out the legal considerations, noting that primary legislation would be required to achieve any transfer of assets from the Commissioners to diocesan stipends funds.
The motion comes to the Synod at the same time as 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; an increase in Lowest Income Communities Funding; and abolishing diocesan apportionment.
It does not 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 key funding pillar to support dioceses to realise 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 year (“the primary 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 meet the cost of pensions — “the current model of ministry funded principally through giving may be unsustainable in many places and caution applied to simply doing more of the same.”
