THE First Church Estates Commissioner, Andreas Whittam Smith, presented the Church Commissioners’ annual report on Saturday evening.
Mr Whittam Smith reflected that the Church Commissioners had sold a lot of residential assets before prices fell, but should have taken more refuge in cash soon enough.
The problem that had to be confronted was the “terrible choice” whether the economy was heading into inflation or deflation. “Inflation is what we have to look out for,” he suggested. He rejected as implausible the idea that “we do deflation first, and then flip into inflation.”
The Commissioners were keeping an eye on what employees were doing when their firms hit hard times: they were preferring to hang on to their jobs and take low pay. Lower pay was the route to deflation. Globalisation was still present: there were some protectionist moves, but not yet serious.
A forecast of what the Church Commissioners would achieve in 2009 was in the range of nought per cent to minus-ten per cent. He was beginning to wonder whether that now might be nought per cent to minus-15 per cent — “on the bear-ish side”.
The Commissioners were very close indeed to announcing the appointment of a director of investments. “We can’t go on without making our investment management even more professional than it already is,” he said.
The House of Bishops must play a strong part in helping the national institutions decide how best funds could be distributed, he suggested.
The Commissioners had been running seminars for dioceses, to discuss priorities. Questions about the cost of the hierarchy quickly became circular questions. “We feel like close observers, but can’t lead the discussions,” he observed.
There had been many queries about the cost of the see-houses portfolio, and whether it would be better for bishops to be based in diocesan offices. One view was that the Church should be careful of disposing of its national assets.
The Revd Mark Ireland (Lichfield) wanted to know why so little of the Church Commissioners’ resources was devoted to youth work.
The Revd William Raines (Manchester) said that he understood that all the Church Commissioners’ support for the CHARM scheme would cease in mid-2010. “That worries me, because CHARM is very important for the poorest clergy.”
Mr Whittam Smith said it was up to the dioceses to deploy the resources of the Commissioners for youth evangelism. It was not a decision that should be taken by the Commissioners. CHARM was the least successful of the Commissioners’ investments. They were talking with the Pensions Board about how such pensioners might be supported.
Alan Fletcher (Leicester) wanted to know whether the private-equity element in the Commissioners’ investments was subject to their ethical guidelines.
Mr Whittam Smith said that the Commissioners’ ethical investment policy “cost 0.7 per cent of our assets”. But it was right to have an ethical investment policy.
The ethical investment policy applied “to everything”. The Church Commissioners’ funds, originally from Queen Anne’s Bounty and the 19th-century estates of bishops, had been collected under enabling legislation passed by Parliament. “So, in a narrow sense, we are accountable to Parliament.” Peter Mandelson had recently been appointed a Church Commissioner.
The Third Church Estates Commissioner, Timothy Walker, said that in 2008, £4 million had been raised from the sales of closed churches. Two-thirds went back to the dioceses, and one third was used to pay the Commissioners’ contribution to the Churches Conservation Trust. Dioceses would get less money this year.
Dr David Blackmore (Chester) said that the report recorded a loss of capital of £1.3 billion, leaving capital resources of £4.3 billion at the end of 2008.
Mr Whittam Smith said: “We have not lost 30 per cent of our capital. The value of our assets fell 18 to 19 per cent.” The distinction between revenue and capital was “a silly thing”. There was no meaningful distinction between the two.