Talk given by Admiral Sir James Burnell-Nugent at a Save The Parish meeting for MPs and supporters in the House of Commons on 25 Apr 2023.
The question that I’ve been asked to address is whether parish mergers and cuts to parish clergy are financially necessary.
If dioceses put forward proposals to merge parishes and cut clergy, they generally have some financial argumentation behind them. The Archbishop of Canterbury, in an interview with the Church Times, said “We’ve got a lot of money. It’s not always in the right place. In fact, it’s usually not in the right place, actually.” I will demonstrate my support for him in that respect by answering three financial questions.
The first question is “What proportion of the Church of England’s investment income actually gets to parishes?” Most investment income held by the Church of England, either by the Church Commissioners or by dioceses in some form or another, was almost certainly donated for parishes.
The second question is “Are diocesan headquarters bloated?”
And thirdly “Are dioceses good at managing the investments held for parishes?”
We have constructed his diagram (see slides) at Save The Parish. Don’t worry if you can’t see the numbers, it’s on our website. But it’s a schematic with numbers on it to show the flow of money around what Marcus called the Church’s financial eco-system. This has been constructed by a team of auditors and accountants who work for us very kindly behind the scenes. It has been shown to the finance staff in Church House. So we have reasonable confidence in its structure and accuracy. And the other point is that all the figures I will mention this evening are for 2021, because that is the most recent year for which all Church of England accounts have been published.
This diagram essentially is made up of three building blocks. There are parishes at the bottom who generate a total income of just under a billion pounds per annum. About £600 million of that stays in the parishes in terms of maintenance, upkeep and utilities, and £300 million goes up to the dioceses in the form of the parish share.
At the top of the diagram are the Church Commissioners and the Archbishops’ Council. Money cascades down to all sorts of places from them, some mandated by Parliament such as for bishops and archbishops; some to keep the pension fund topped up. And some flows out in the form of grants down to dioceses, shown here in the middle.
I now want to focus in on those three questions using this diagram.
First question was what proportion of investment income gets to parishes. There are three main sources of investment income: £226m comes in from the Church Commissioners; £100m comes in from other investments held by dioceses; and £34m comes in from Diocesan Stipends Funds (of which more later). So the total flowing in is £360m, shown in red circles. Flowing out in the square boxes are £49m in pension contributions of serving and recently retired clergy, and £332m on parish ministry. This is all for parish ministry. But that is offset by the parish share of £314m, which we all know largely pays for our parish priests because we are told that the parish share needs to cover the ‘cost of clergy’.
Here it is in tabular form: £360m coming in, £381m going out, offset by the parish share of £314m coming in, makes £67m. £67m divided by £360m is 19%.
So my Financial Fact No1 is that just 19% of the income C of E investment donated over many generations gets to parishes.
The next question is whether diocesan headquarters, as shown in the centre of the schematic, are bloated. I use the Ministry of Defence term ‘teeth to tail’ here. In this context, parish priests are the ‘teeth’, and the ‘tail’ is the various bits of apparatus in support in the dioceses. Percentages of staff in each category are shown by diocese in this table. The ratio in the dioceses of Carlisle, Sheffield, Birmingham, Leicester and Truro are about 2:1. That is for every one person in diocesan headquarters, there are only 2 stipendiary priests in parishes. The average across all dioceses in the whole of the Church of England is 1 headquarters person for every 3.5 stipendiary (paid) priests. Isn’t that shocking? (Audience replies “Yes”)
So my Financial Fact No 2 is that in 2021 the 42 dioceses received £590m from various sources and they spent £119m on their own administration. Of course there is administration to be done, but that’s 20%.
20% of the total cost of ‘operating’ a diocese goes on their headquarters.
Comparative figures for Oxfam and the RNLI are 11% and 11.8%. Please don’t fall for the argument about the unique governance responsibilities of dioceses. The RNLI have immense training, operating and safety responsibilities for operating offshore in some of the worst weather we can imagine.
A good charity sector figure for complex headquarters costs is about 10 – 11%. Dioceses are nearly double that.
The third and final question is whether dioceses are good at managing investments held for parishes. This is about the bottom right hand piggy bank on the schematic, which refers to Diocesan Stipends Funds. This is not money for a rainy day – it is money for paying stipends, which generated £34m in 2021. Most parish assets were transferred into dioceses for financial management purposes in 1976 – the so-called Glebe Measure. This was a sensible thing to do because there were huge imbalances in relative wealth of parishes. But this money is held by dioceses for paying stipends in parishes.
In 2013, in response to requests from the Charity Commission, because of very substantial growth in endowment funds and investment portfolios over the previous two or three decades, Parliament approved Total Return Accounting. This in turn was approved by the General Synod across the Church of England. Under these rules, charities, including dioceses, are allowed to spend some of their investment capital subject to strict actuarial rules. Thus both income and a small slice of the capital can be used by dioceses for stipends. Total Return Accounting generates a substantial amount more money available for paying stipends.
In 2021, just 10 dioceses took advantage of this scheme. They contributed to their stipends double the amount of the other 30 dioceses. Yet more shocking, in 2021 the dioceses of St Albans, Peterborough and Ely, who between them hold over £200m in their Diocesan Stipends Funds, contributed nothing from those funds into stipends. The stipends were paid from other sources, mainly out of the parish share.
So here is my Financial Fact No 3. – If all 40 dioceses (because there are two dioceses that don’t have Diocesan Stipends Funds) managed their investments only as well as the average diocese, there would be an extra £25m p.a. available for parish clergy. There are huge sums of money there allowable to be used (it’s not rainy day money, it’s money for paying stipends).
So here are my three financial facts, summarised in response to my three questions:
Financial Fact No1: Only 19% of C of E investment income arrives in parishes.
Financial Fact No. 2: The average diocese ‘teeth to tail’ ratio is 3.5 to 1. They are bloated.
Financial Fact No. 3: Three quarters of dioceses are seriously underperforming their management of investments held by them for parishes.
Reducing diocesan staff by only a third is not too big a challenge. Look at the things Local Government are doing in response to financial pressures. They share functions. I come from the West Country where we have the Devon and Cornwall Police. They are already partnering with Dorset. The South Hams District Council and the West Devon District Council have combined their office functions. The councillors are independent, they still keep their own responsibilities (there’s no diminution of the responsibilities of the police between Devon and Cornwall, but they operate as an integrated police force) – but with huge back office savings. Why can’t dioceses wake up to some of these proven arrangements which are commonplace in this day and age? And better management of investments as I have just described.
These two things alone would pay for over 1000 clergy. I can hear you gasp – twice. Really that many and where are they going to come from? I can tell you where. There are 980 ordained clergy serving in diocesan headquarters and the National Church Institutions. There are 7700 stipendiary priests ‘on the payroll’, and in 2020, the most recent year for which there are published figures, 980 of those were in office jobs. I do recognise that some of those jobs are supporting parish ministry – but the fact of the matter is that they are not in parishes.
To return to my core question, are parish mergers and cuts to clergy financially necessary? My answer is No. There’s no financial need to merge parishes or cut clergy.
The three financial examples I have given are choices. They are choices being made by the institution of the Church of England in its various forms. Some of these may have evolved – I am not necessarily suggesting people have sat round a table in a committee and made these choices. But this is where the Church of England has arrived and is going in terms of financial choices.
And as they are choices, they can be changed.