Investments (Hansard, 4 March 1994)

§ Mr. Frank Field
To ask the right hon. Member for Selby, representing the Church Commissioners, what was the income from gilt stripping for 1989, 1990, 1991 and 1992; and what has so far been the size of the erosion of the capital base by gilt stripping in each of these years.

§ Mr. Alison
The income from gilt stripping in the years in question was:

£ million

1989 6.6

1990 6.1

1991 4.9

1992 8.9

Gilt stripping refers to the accounting policy of recording interest on gilt-edged securities on a receipts basis rather than an accruals basis. To the same extent that the income so recorded is higher than it would have been under the accruals basis, there will be a reduction in the increase, or an addition to the decrease, of the valuation of the capital base.

§ Mr. Frank Field
To ask the right hon. Member for Selby, representing the Church Commissioners, pursuant to his answer of 25 February,Official Report, columns 525–26, if gilt stripping covers dividend stripping.

§ Mr. Alison
The phrase "gilt-stripping" was used by the hon. Member for Birkenhead (Mr. Field) in his question of 25 February and was taken to refer to the accounting policy described in my earlier answer.

§ Mr. Frank Field
To ask the right hon. Member for Selby, representing the Church Commissioners, pursuant to his answer of 25 February,Official Report, columns 525–26, if he will place in the Library a copy of counsel's opinion on the commissioners' methods of accounting for capital and income; and what is meant by maintaining the integrity of the commissioners' portfolio".

§ Mr. Alison
The commissioners have taken counsel's opinion on their methods of accounting in order to assist their compliance with the relevant legislation. It is recognised that legal advice is given in confidence: the commissioners would feel constrained in taking legal advice, on this or any other issue, if such advice had to be written in anticipation of the possibility that it might be made public.
It is the commissioners' aim to maintain the major part of their investments in assets which will generate increasing returns over the long term. Investment of a significant part of their assets in fixed interest securities such as gilts would not satisfy this aim for that part of their 882W investments. There is a natural conflict between the need to limit the short-term cuts in allocations and the long-term requirement for growth.

§ Mr. Frank Field
To ask the right hon. Member for Selby, representing the Church Commissioners, if he will list details of those assets which the commissioners believe will produce above average capital growth and their estimate of the size of this growth; and by what date that capital growth will be realised.

§ Mr. Alison
The commissioners invest in a wide range of properties and securities with the expectation that the portfolio as a whole will produce returns by way of a combination of income and capital growth. Those investments which currently yield less than an average income are retained by the commissioners in the expectation that they will return more than average capital growth. It is not practical or realistic to list details of all such investments, nor would it be in the interests of the commissioners or the Church of England to disclose such commercially sensitive details of individual investments.