CHURCH FUNDS INVESTMENT MEASURE, 1957

HL Deb 23 January 1958 vol 207 cc177-81

3.22 p.m.

LORD HAWKE moved to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Church Funds Investment Measure, 1957, be presented to Her Majesty for the Royal Assent. The noble Lord said: My Lords, it is usual for Church Assembly Measures to be presented to your Lordships from the Bishops' Bench, but in the Church of England finance is the care of the laity, and it is for that reason that I have been given the honour of presenting to your Lordships this Measure, which, from the point of view of finances of the Church of England, is regarded as an important one.

The main body of the finances of the Church of England, as we have just heard, are vested in the Church Commissioners, who provide a skilled investment management with wide investment powers. The central management has made for efficiency, and the wide investment powers have enabled a good degree of security from inflation to be achieved. The remaining funds of the Church of England are not so large in total, but represent innumerable trusts, many of them of very small individual amounts; and they represent an infinite variety of purpose. They are mostly vested in diocesan and parochial authorities. These authorities have not the arrangements for skilled investment management, and the multiplicity of small separate funds makes it difficult to provide it. Moreover, most of these trusts have investment clauses which make it difficult to provide against any deterioration in the currency.

For some time these two problems—that of better investment management and better protection from inflation for these funds—have been exercising the authorities of the Church, and this Measure is the result of those studies. It passed through the Church. Assembly during the year 1957 without a division, and now comes for Parliamentary approval. It is modelled on the Universities and Colleges Trust, Act, 1943, and the Orders in Council made under that Act. The object of the Measure is to provide facilities for the better investment of the corporate funds of the Central Board of Finance of the Church of England, the corporate funds of diocesan boards, the funds of the Church of England educational endowments, and the funds of any other charitable trusts connected with the Church of England. It proposes to do this by three steps. First, it enables the Central Board of Finance to set up investment funds and deposit funds in which can be placed monies from the sources I have mentioned. Secondly, it provides that investment of these funds shall be considered to be an authorised investment for the purposes of the trust deeds relating to the particular trusts in question; and. thirdly, it lays down investment powers for these funds, rather circumscribed for deposit funds and very wide for investment funds.

The advantages to be expected are a wider spread of investments than can be provided at present; a wider range of investment, permitting, presumably, higher interest earnings and better protection against inflation; and, thirdly, a more professioal management. As a byproduct, of course, it provides a source from which diocesan and other authorities may be able to obtain temporary loans. The scheme is purely permissive, and no body need come into it if they think they can do better for themselves. The trusts concerned must be charitable—in other words, must not be subject to taxation—and they must be connected with the Church of England. Contributions can be in money or in securities or land, with the permission of the Central Board. The expenses of day-to-day running will be covered by a levy on income or capital, and the expenses of investment of new money or the disinvestment of old money will be covered by a levy on entry and exit. The mechanics of investment are set out in the Schedule.

To summarise them, briefly, the funds are to be of two sorts. There will be one or more deposit funds, with a rigid investment clause (paragraph 21 of the Schedule deals with that), and depositors will have their right to their money back, no more and no less, and to receive annual interest at the rate agreed. One would expect these deposit funds to be used mainly where it is intended to spend the capital at some future date, rather than the income from the capital. Then there are to be one or more investment funds, which have a very wide investment clause (paragraph 5 of the Schedule). These funds are modelled on the unit trust system which is well known to investors. A contributor will own a share in the fund proportionate both to the money he puts in and to the value of the assets immediately after he has entered. He will get his share of the annual revenue, though the Board may lay aside some annual revenue and put it to reserve. This is a slight departure from unit trust principles. When he wishes to withdraw he will give the proper notice, and at the next valuation he will be paid out his share of the total assets of the fund—neither more nor less. It may be more than he put in, or it may be less; but it will be precisely his share. We anticipate that this form of fund will be used by those who do not have to spend the capital, but who expect to spend the annual income.

These investment and deposit funds are to be managed by the Central Board of Finance of the Church of England who, 'however, have power, with the consent of the Church Assembly, to devolve the management upon any other body connected with the Church. The Central Board of Finance are in a position to call upon most expert investment advice, as I am happy to say that there are many men highly skilled in this field who are willing to give their advices freely to the Church.

There have been full consultations with the diocesan authorities and the Government Departments concerned. The Ecclesiastical Committee has reported favourably. I do not think I need go through the Measure in detail. Clauses 1 to 3 are the main substance, and the mechanics of investment are contained in the Schedules. I would commend to your Lordships the very clear drafting of the Measure. It is much easier to understand than many other publications that come before us. I hope your Lordships will approve this Resolution, and allow the Measure to go forward, because I think it has been well conceived and will offer a better system of investment for those innumerable trusts held up and down the land by various Church authorities. I beg to move.

Moved to resolve, That in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Church Funds Investment Measure, 1957, be presented to Her Majesty for the Royal Assent,—(Lord Hawke.)

3.31 p.m.

THE LORD BISHOP OF NORWICH

My Lords, I apologise for detaining the House a second time in one afternoon. Nor do I wish to attempt in any kind of way to follow the noble Lord in his technical description of this Measure and the very clear and ample statement he made about its purposes. Nevertheless, I think it is fitting that a Bishop should rise to say that this new financial arrangement has the wholehearted support, so far as I know, of every single diocesan board of finance in the country. As for myself or my brother Bishops I can assure the House that every Bishop spends a large amount—I think everyone would say an undue amount—of time dealing with finance; not merely the raising of new funds for new needs, always very difficult and pressing, but with the care of the finances of the diocese for which the Bishop must, in spite of all his expert advisers and helpers, take very real responsibility.

I doubt whether many people realise what a large number of trust funds there are, in favour of good purposes, belonging to parishes up and down the country but handed over to the diocesan board of finance to hold—not to administer but to hold—on their behalf. I do not know whether my diocese is typical of others. It includes nearly 600 almost entirely country parishes, where one would not expect a great deal of invested trust money. But I find that my diocese possesses £122,000 of trust money of this kind, broken up into units, large or small, belonging to the various parishes, and dating, of course, from many different ages and applying to very many different purposes. The care of trust funds of that magnitude is an important responsibility.

This Measure will give much wider powers of investment, as well as make available export financial management which we ourselves may not possess. No doubt it will be possible to transfer only some of these invested trust funds, but those which can be transferred will certainly gain by it; and any new funds that may be created will be capable, under this Measure, of investment by the Central Board of Finance, with quite certainly substantial advantage to the parishes or beneficiaries concerned. Perhaps the only surprising thing is that we have had to wait so long for such an obvious financial arrangement of an advantageous character. At least I hope that your Lordships will feel that in approving this Measure you will be giving help and encouragement to one portion, and not the least important, of the work of the Church.

On Question, Motion agreed to, and ordered accordingly.