Economic crisis hits Anglicans as parishes are left on their own

LONDON LETTER:IN A NOTE in his parish newsletter column in Plaistow in West Sussex last month, the Reverend Paul Redpath had some sobering thoughts for his parishioners in West Sussex.

The parish, he told them, is losing nearly £1,200 a month, despite the “courageous and often sacrificial” donations from congregations to pay for the church’s work in the area.

“The crisis point is here now and individual parishes are being asked to forget about historic subsidies, it’s all down to them now. And this is hard,” he wrote.

The situation in the diocese of Chicester as a whole, which covers Brighton and Hove, is not much better, worsened, no doubt, by fewer churchgoers in many districts.

The focus on the Church of England has increased in a week when leading atheist Richard Dawkins produced an opinion poll which argued that even self- declared Christians believe few of their churches’ central tenets.

On Wednesday, Queen Elizabeth – the Defender of the Faith, among her other titles – was unusually outspoken when she said the Church of England was “misunderstood” and “under-appreciated”.

Her words followed a warning from a leading Conservative that secularists want to erase religion’s place from all parts of British public life.

Despite being the Established Church, the Church of England does not receive public subsidy, bar the salaries paid to its chaplains working in prisons, hospitals and the military.

However, its standing costs are considerable. It has 16,000 buildings across England, 9,000 spread across rural parts, while half of its stock of churches are grade 1-listed buildings.

The financial pressures are forcing some hard decisions. In a document last week to the church’s general synod, its pension experts warned that it may have to close its final-salary defined pension for retiring vicars and other staff.

Currently, it pays an extra 40 per cent of a cleric’s pay to cover pension costs, leading to fears that it will have to move to a hybrid pension scheme, where both the church and the cleric share the risk, if the existing £262 million pension deficit gets worse.

However, it can be argued that the church has already taken tougher and quicker action than many employers to ease the difficulties: the qualifying retirement age was raised from 65 to 68 two years ago, while the years needed for a full pension jumped from 40 to 41.5 years.

Equally, it moved in 1998 to close its original scheme, where it entirely funded all pensions earned before that date – a liability that cost it £114 million in 2010, according to the 2010 church commissioners report.

The Church of England has £5.5 billion under management by church commissioners, the second- largest charitable investor behind the Wellcome Trust, but the need for dividends has forced it into unusual territory for a religious organisation, perhaps.

Ten per cent has been invested with hedge funds, regarded by many as the source of all evil with their efforts to profit from the fall in shares. The association with the hedge funds, which came after the 2008 crash, has, however, helped the commissioners to recover from a £1 billion loss that year when they had been over-exposed on equities.

In their latest report, the commissioners say they achieved a 15.2 per cent return on investments during 2010 and had “outperformed its comparator group over the past 10 and 15 years”.

Despite the hedge-funds associations, the commissioners insist they act ethically, pointing out that shareholdings in tobacco and alcohol firms are banned, as are those in defence companies.

Even though hedge funds are among the worst offenders on pay, the Church of England’s ethical advisory group has spoken out repeatedly about the evils of stratospheric awards to top financiers.

Meanwhile, the commissioners and the church’s pensions board – which deals with the post-1998 liabilities – were among the few to vote against the Royal Bank of Scotland’s pay awards that ran into a wave of public protest.

The church abstains, the group’s chairman Edward Mason says, where remuneration exceeds three times the basic salary of a director or executive and votes against if it goes above four times. It voted for just a third of all packages last year.

In 2010, the commissioners – who set themselves the target of getting a return that exceeded inflation, plus 5 per cent on the retail price index — allocated £200 million to cover pre-1998 pension costs and parish work, up by £10 million on the year.

Although successful, the commissioners however are doing little to ease the woes of the Rev Redpath, who sees a future of fewer full-time clergy and their replacement by unpaid ministers, readers and volunteers.

Local diocesan official John Sherlock, pointing out the congregations throughout East and West Sussex already contribute £25 million a year, warns that the idea that the church’s ministry is funded by “some huge central pot is a complete myth”.

“Church closure really is the last resort, but ultimately if the money runs out, it’s inevitable. We are not immune from the normal rules of good housekeeping.”