HC Deb 25 February 1994 vol 238 cc527-8W
Mr. Frank Field

To ask the right hon. Member for Selby, as representing the Church Commissioners, to what extent in money terms gilt stripping activity is currently being undertaken by the commissioners; and if the commissioners will make it their policy that money from these sales is used to replenish the capital account to prevent further capital erosion of the commissioners' assets.

Mr. Alison

The income from coupon trading—or "gilt stripping"—in 1993 was £13.6 million. The amount to be generated in 1994 and ensuing years is still to be determined in the light of income requirements. Until these are brought in line with expenditure, the capital cannot be replenished. The commissioners have accepted the recommendations of the Lambeth Group concerning the need to preserve their capital in real terms, and coupon trading will be phased out as soon as possible.

Mr. Frank Field

To ask the right hon. Member for Selby, as representing the Church Commissioners, what agreement the commissioners have reached with their auditors on how they should treat for book-keeping purposes their gilt stripping activities, following the evidence given to the Social Security Committee.

Mr. Alison

The commissoners have recently obtained counsel's opinion on their methods of accounting for capital and income. They have been advised that coupon trading—or "gilt stripping"—does not constitute a breach of trust if it is carried out with a view to balancing the investment strategy as a whole and compensating for a low yield on other investments with a greater potential for capital growth. In those circumstances, the whole of the income thus generated may correctly rank as income in their accounts.

The coupon trading activities are part of the policy recently given publicity in the press, namely that the cuts in the commissioners' allocations shall not be at so fast a rate that they will risk short-term, but irreversible, damage to the Church, while at the same time maintaining, so far as is possible, the integrity of the commissioners' portfolio.

The commissioners are discussing this matter with their auditors, whose opinion will be given in the context of the annual report and accounts taken as a whole. The commissioners cannot anticipate that opinion before the accounts and audit have been completed.

The amount of income generated by coupon trading will continue to be disclosed in the commissioners' annual report and accounts.