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‘Good year’: return of 14.4 per cent

17 July 2015

Church Commissioners

THE Third Church Estates Commissioner, Andrew Mackie, introduced the Church Commissioners’ annual report for 2014. He said that it had been a good year, with their return of 14.4 per cent, which comfortably outstripped industry benchmarks.

He said that the Commissioners had been cautious, and had refused to take on too much risk by investing in larger companies. One of the largest moves was the sale of their stake in the Pollen Estate, property based around Savile Row in central London. Mr Mackie paid tribute to the “outstanding work of our colleagues in achieving significantly more than the book value” of the Estate.

Mr Mackie also said that the Commissioners had beaten their long-term target of RPI inflation plus five per cent over 30 years, which was providing a “durable and sustainable income flow for our purposes”. He also referred to the Commissioners’ part in the Reform and Renewal programme — injecting a one-off time-limited amount of money to try to grow the Church.

“We need to think about what future generations are going to inherit in terms of the Church — we want to do everything we can to make sure it is a flourishing and growing Church.”

The Commissioners supported the simplification agenda being led by the Bishop of Willesden, the Rt Revd Pete Broadbent, Mr Mackie said. The question was not just trying to find things that could be changed without any cost, but balancing what was lost by simplifying with what was gained.

Gavin Oldham (Oxford) congratulated the Commissioners on their performance last year, but questioned why UK equities underperformed the market for the first time in the last year. He also asked if the money invested in research was simply going into “low-hanging fruit”.

Paul Hancock (Liverpool) wanted more detail on the investment income that had declined.

Mr Mackie answered that it was not always possible to produce “stellar” returns in every area. The Commissioners had invested in smaller companies, which, as a class, underperformed last year, which could explain the decline. He explained that £700,000 had been invested into research over three years to 2013 and spent investigating what conditions encouraged growth. This then led to From Anecdote to Evidence and then the Reform and Renewal programme. “We need to find ways of investing in those parts of the population which are harder to reach, but that doesn’t mean what we have done has not been money spent wisely,” he said.

Sam Margrave (Coventry) challenged the Commissioners over the pay for its highest members of staff. When he had previously asked the Commissioners to adopt a “bias for the poor”, he had been told that it would amount to “professional misconduct”.

He asked how the Commissioners could justify an 18-per-cent increase in salary to one member of staff — an increase of £75,000 to take his annual salary to £409,000 — alongside several salaries in excess of £110,000. “In regards to the reputation of this Church,” he said, “what does this say to people out there when we are giving an 18-per-cent increase in salary?”

The Revd Christopher Hobbs (London) said that the highest-paid member of staff was paid 22 times the amount of the lowest member of staff. “Is that something you would challenge if you were at the AGM of other companies?” he asked.

“It would be entirely wrong of me not to say that the amounts of money that are being highlighted are considerable. They are considerable amounts of money for any organisation to pay to anybody. It would be wrong to pretend anything else,” Mr Mackie said in response.

“However, they are very capable people who have produced the sort of returns I have spent some time discussing. They receive considerably less than they would be paid if they were not working for the Commissioners.”

The pay was not linked to short-term performance, but long-term performance, and an element of the pay “relates to the length of time they have to wait in order to receive it”. The “correlation between good performance and remuneration is not infinitely elastic,” he said, “but we believe that we have it right. Otherwise, we wouldn’t pay the sort of sums we are paying.”

In response to a separate question from Mr Hobbs, Mr Mackie said that the big increase in the amount of money spent on the Bishop of Exeter related to a large amount of “incoming works” on the see house. “Not much work had been done on the building for some time, and the numbers were inevitably higher than last year.”

Martin Sewell (Rochester) asked about the Commissioners’ engagement with supermarkets. He wanted to know whether they would raise the proposed relaxation of Sunday-trading laws with them: the change would be “toxic on family life in this country”.

Mr Mackie said that this was “clearly a critical question”, and “something that we all have to engage with”. The Commissioners would raise the issue with the Ethical Investment Advisory Group “to see whether anything can be done to inform our dialogue with supermarkets”.

Tim Hind (Bath & Wells) asked about the “balance between investment income and social responsibility”. He wanted to know whether the Church Commissioners were committed to ongoing dialogue with an area.

Mr Mackie said that the Commissioners “work very closely with local authorities, and we talk a great deal to the relative local community. We have to strike a balance between our responsibility to you all for the funds we manage on behalf of the Church, and our responsibility to particular communities when we are looking at particular properties.”

There were “ongoing tensions”, and the Commissioners “won’t always get it exactly right. There is not always one right answer in any particular context.”

In response to a question from Dr Philip Rice (London) on intergenerational funding, Mr Mackie said that the Commissioners had a duty “not just to look to the current generation but to future generations”. Today’s Church had to “make sure that future generations inherit a Church that is as growing and as flourishing as we can make it”.

On a question about recruiting staff while keeping costs low, Mr Mackie told Peter Collard (Derby): “You won’t be surprised to hear me say that we face very considerable challenges on that front, and we do our best to overcome them.”

Philip McDonough (St Albans) wanted to know whether “excess money”, generated “when income exceeds the budget”, could be “passed on to dioceses to enable them to take pressure of parishes in parish share shortfalls”. He suggested that diocesan boards of finance could apply for funding to offset parish-share shortfalls.

Mr Mackie did not agree that there was any excess money. “We have to manage the funds as a whole,” he said. “We are not in the business of managing this money for any other purpose than supporting the mission of the Church.”

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