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National Insurance hike takes its toll on C of E

24 September 2021

£1.5 million to be found for clergy, and that’s just the start

Alamy

CHURCH finances, already suffering from a drop in giving during the pandemic, are facing a multi-million-pound hit next year as a result of the Government’s National Insurance increase to pay for medical and social care.

The 1.25-per-cent rise in employees’ National Insurance contributions, announced at the start of this month, means that the Church of England’s 7670 stipendiary clergy will have to find at least another £1.5 million in total*. The employers’ contribution (for this purpose, C of E dioceses are regarded as employers) is still being calculated, but is expected to be a similar amount.

The dilemma for diocesan authorities is whether they cover both parts of the increase. The clergy stipend has never been regarded as a salary: the level is set at what a cleric needs to fulfil his or her ministry. As a consequence, there should be no question that clergy cover this increase themselves. The Church of England Clergy Advocates (CECA), part of the Unite union, have already said that they don’t expect clergy to take a pay cut — particularly at a time when energy prices are rising.

But the National Minimum Stipend for 2022 was set in June, well before the National Insurance increase was proposed, to allow dioceses to complete their budgets for year. A one-per-cent increase was proposed, from £25,265 to £25,518. Dioceses can vary the amount paid, and many do, but their view is canvassed when national levels are set. Without diocesan intervention, the NI increase would swallow almost the whole of the expected increase.

This comes after a two-year freeze in stipends because of the pandemic. A national review of stipends and conditions of service, which reported in June, found that 13 per cent of clergy were finding it “quite or very difficult to manage” at present levels (62 per cent of stipendiary clergy said that they were “living comfortably or doing all right”; 25 per cent were “just getting by”) (News, 24 June). The review recommended targeted financial support for clergy who were struggling.

The Church of England’s Remuneration and Conditions of Service Committee met last week, but came to no conclusion. Its chair, the Bishop of Hereford, the Rt Revd Richard Jackson, said on Wednesday: “We will examine the effect that this will have on clergy, especially as some will not have received a stipend increase in 2021, but we will also take into account the ability of dioceses to increase stipends at a time of financial pressure.

“These are matters that affect not only clergy, but others whose giving funds stipends, and this needs more reflection, discussion, and analysis.”

Peter Hobson, who chairs CECA, was also present at the meeting. He said on Wednesday: “We’re told the principle of the stipend is to ensure clergy are able to pursue their ministries without undue financial stress. On behalf of our members, and indeed all clergy, CECA has called on the Church of England to ensure that clergy will be compensated in full for the impact of the increase in NI taxation on their stipends. We await a clear response to our call.”

CECA has 1600 clergy members, drawn from every level of the Church’s work.

In many dioceses there has been a drop in parish giving, and they are conscious that donors will be hit by the same increased costs. Speaking in June about stipend levels in general, Bishop Jackson said: “We have to recognise we are working in a very difficult place, recognising that stipends are paid by and large by parish contributions, which are contributed by lay people who have their own financial struggle. We are trying to tread a delicate balance between all the stakeholders, and supporting clergy as best we can” (News, 24 June).

A spokeswoman for the remunerations committee reiterated that it was too early to give a breakdown of the effect on the Church. “Every employer up and down the country is going to have to work this through, including all church bodies funding or employing people, recognising that the levy applies to both employers and employees NI.” She confirmed that employers’ NI contributions are payable in respect of clergy stipends.

The cost for clergy is just part of the National Insurance increase faced by the Church. It will hit all diocesan staff such as administrators and safeguarding personnel, as well as everyone employed in the central services in Westminster and elsewhere. Church schools, already on tight budgets, will be affected, too. Although in these instances it is only the employers’ contribution that must be found, the increase will add pressure on salaried staff, who will be looking for at least cost-of-living increases after the pandemic.

 

*How we calculated this figure: 91 per cent of stipendiary clergy are full-time. We assumed for this sum that the others were half-time. We worked on the basis of the National Minimum Stipend of £25,518, at which level NI contributions are set to rise by approximately £200 p.a. But most clergy are paid more than the minimum, varying from diocese to diocese, and also in recognition of seniority.

Letter, page 14

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