The Church of England finds itself in a very odd situation. On the one hand, it is facing continued decline in attendance, and I think in influence and reputation in our culture. The decline in attendance has been calculated with mathematical precision at John Hayward’s Church Model website; if nothing changes, then he calculates that the Church of England will be extinct by about 2060.
There are some questions to be asked about this prediction; on the one hand, decline happens exponentially, in a curve not a straight line (as John has assumed), for organisations. On the other hand, my observation about local churches is that when decline sets in, it often accelerates as people suddenly all ‘jump ship’ and go somewhere else, and for older congregations there will be a ‘cliff edge’ decline when a whole generation dies off. Either way, it is not looking good—but the key phrase is ‘if nothing changes.’ The C of E has done plenty of its own research, and has a clear idea of what to do to see growth (though is, arguably, avoiding the most obvious question), and has put plenty of money in that direction.
But here is the paradox. Whilst the C of E doesn’t seem to be doing a good job of growing attendance, it is doing an excellent job of growing its investment assets.
The Church Commissioners’ active investment approach and risk-mitigating diversification across a broad range of asset classes enabled it to generate returns of 13.3% in 2021, exceeding its target of CPIH +4%, and the Commissioners has [sic] beaten its return target over the last three, 10 and 30 year periods. The fund was valued at £10.1 billion as at the end of 2021.
The continued strong investment returns have enabled the Church Commissioners to increase its funding of the Church’s mission and ministry in the 2023-2025 triennium to an all-time high. The Commissioners will contribute £1.2 billion to the Church’s funding in the next three-year period, which will account for about 20% of the Church’s expenditure. The Church Commissioners plan to maintain that level of funding in the subsequent six years, subject to investment performance and market fluctuations, which would help the Church to plan for the medium and long term.
(I have quoted the article in the logical order, but note that it is reversed in the article, in order to put the good news for the wider church first—wisely!)
This is surely good news, and those managing the investment portfolio are to be congratulated, and will be remunerated accordingly.
But this is good news which creates a significant tension in the Church, one that I don’t think is sustainable. It is the tension and sheer incongruity that I experienced three years ago when in a meeting of the Archbishops Council in the Guard Room at Lambeth Palace. We were discussing the steady erosion of the clergy stipend—and I was sitting next to one of the portfolio managers who had that morning been awarded a bonus of £250,000. As he was, in the meeting, congratulated, it felt like we were in a strange, parallel universe, not least because I myself am non-stipendiary. It was tempting to ask if he’d like to share it!
This sense of tension and incongruity is (it seems to me) one of the main drivers of the Save the Parish movement, along with others who are frustrated by the central strategy of distributing some of the Church Commissioners’ money across the dioceses. Around half of this is distributed as the Lower Income Community Fund (LInC) which are allocated according to need, and the rest as Strategy Development Funds which must be applied for with an explanation of why the projects funded will have a good chance of leading to growth—that is, not merely sustain existing ministry, but reach into new areas, and call people beyond the Church to faith in Jesus. It is very hard to challenge this as a strategy; if we have money, and we are not growing, surely we should put our money towards projects that have a chance of seeing some growth?
Yet this does not address the question felt on the ground, where unsustainable patterns of ministry are allowed to wither, and clergy are not replaced. In fact, there is a genuine contradiction developing in many dioceses, where repeated annual deficits which have eroded diocesan reserves cannot be sustained, and so they are now looking at cutting clergy numbers (as has been announced in Chelmsford, Sheffield, Leicester and Lincoln, and will surely follow in at least ten more very soon). At the same time that we have been increasing the number of ordinands…because of a predicted shortage of clergy!
The Church’s own research has demonstrated that investing in stipendiary ministry is the one of the key elements of seeing growth—though it is not enough on its own, as those stipendiary leaders need to also be intentional about growth, and the culture needs to be one of invitation. But we appear to have a national strategy of funding that is oriented towards growth, whilst at the same time many dioceses are adopting policies in the opposite direction.
At this point, it is worth doing some simple sums.
The Commissioners’ assets grew this year by 13.3%. Last year the growth was 10.4%, and that itself was well ahead of both target and what was needed to fund ministry and protect the assets. But taking that as a base line, there is this year a surplus over last year’s performance of 2.9%, or £293m. That works out at an average of £7m per diocese, and with stipendiary clergy costing around £50,000 per annum, it could pay for 139-stipend years in each diocese, that is (for example) it could fund 30 full-time stipendiary clergy for the next 5 years.
In each diocese.
Just from the marginal surplus from one year’s investment results.
I find that a little eye-watering. Don’t you?
We could go a little further. CPIH in 2021 was 4.8%, so the Commissioners own target for growth was 8.8%. Against that, the 13.3% was 4.5% more than was needed, and in 2020 CPIH was 0.8%, the target therefore 4.8%, and the surplus over target that year was thus 5.6%. In total for the two years, the excess over target works out at around £1,020m, or £24m per diocese, or 486 stipend-years per diocese—enough to pay 30 additional stipendiary clergy in each for the next 16 years.
It is very welcome that the Commissioners have agreed to increase their support of ministry over the next three years to £1.2bn, that is, an average of £9.5m per diocese per year—but passing on this surplus would nearly quadruple that.
All this raises some important questions!
Should the Commissioners assets all be returned to the parishes, reversing the Endowments and Glebes measure of 1976? Undoubtedly not, since there is no guarantee that parishes would manage their assets as well, and part of the reason the Commissioners have had such a good return is because of their size. The two questions of managing assets, and control over distribution, do not need to be held together.
Should the Commissioners pass significant funds, in terms of income, to dioceses in order (for example) to eliminate their deficits? I am sure that many bishops would welcome this (is this the understatement of the year?) but I think it would create more tension in parishes, since it would invest diocesan structures with even more power, and this imbalance is precisely what is currently creating resentment at local and national policies. And if dioceses are running deficits, do we want simply to subsidise that and avoid the hard questions about sustainability?
Should the surplus in assets be paid directly to parishes in order to invest in ministry at ground level? That would be a very interesting approach—though the challenge would be in working out how to make such a distribution. I think this is seriously worth considering in some form.
Should the Commissioners continue with their policy of ‘CPIH + 4%’ as their growth target? This is an important question to ask, but so far answers have not been very forthcoming. This target has been formulated in anticipation of poorer performance in markets over the coming years, since recent growth is unlikely to continue, and there is plenty of uncertainty in the world just now. But the underlying question, for which I cannot find an answer, is: what is the goal for overall assets?
It is not very hard to work this out. Suppose we say that the ministry of the Church should be supported to the tune of £500m each year. Suppose that we estimate that we will get an average return on assets of 8% (not unrealistic, given performance over the last 30 years) and, assuming we return to a low inflation economy in the longer term, we need 2% of that to protect the asset base. In order to deliver this, we would then need an asset base for which 6% is £500m, which is £8.3bn. We are now past that milestone, and it means that the Commissioners are sitting on a surplus of around £2bn of assets, 20% of the total, beyond what is realistically needed to sustain current levels of ministry support.
The reason why we need to address these questions urgently, and make some changes, is fourfold.
First, with the cutting of stipendiary ministry we are facing the real possibility of the C of E withdrawing from large parts of the country. Perhaps that needs to happen, in order for new and effective ministry to be re-established at a later date—but we cannot just ignore this reality.
Secondly, clergy stipends have been in long-term decline, and there is a real sense of hardship amongst those clergy with children and without a second income. Given the overall financial situation, I think this is a scandal.
Thirdly, in 2015 the clergy pension was unilaterally reduced by a third, by what I regard as a sleight of hand. Questions in Synod have confirmed that this would cost a mere £25m per annum to rectify. (I say ‘mere’ in the light of the numbers above). This must surely be put right, and better provision made for housing for clergy in retirement who were not able to buy their own property during ministry. If you are a member of General Synod, please sign my Private Members’ Motion proposing that we address this.
Fourthly, our residential theological colleges are under threat and financial pressure, for a range of reasons, but principally because of the disaster of the RME changes, and because of the unmanaged growth of other forms of training. Historically, these have been vital sources of theological learning; we have already lost what was the largest college, and it would be a tragedy to lose another. These are assets which can never be regained once they are lost.
We need to talk now about making these things happen. The maths is not complicated; what is needed is the will.