Diocesan Conference 2009: Finance Speech
Given by Mr Sandy Blair, Chairman of the Diocesan Board of Finance (DBF)
When I addressed you last year the Credit Crunch was just starting to bite and we speculated about how hard things were going to get. Global action has since secured that the developed world has not gone into total meltdown and indeed there is optimistic talk in the City of Recovery.
Well that’s all very well for those who can afford a long term view. But we all know that the reality on the streets, particularly in parts of the country, like much of our diocese, which have not seen prosperity for several decades, life is already tough and it is going to get tougher.
Whoever wins the General Election next year and the Assembly Election in 2011 will have to implement the consequences of the next Spending Review of national finances which is forecast at the most optimistic levels to require reductions of 15% per year thereafter. Recovery in the City may only take months, recovery in the rest of the country will take many years.
That’s the bad news and you knew it already: the good news is that the long term position of the Church in Wales is surprisingly healthy. Yes, investments have taken a hit in short term value and income is down in the current year, but the Church’s finances are strong enough in Wales for there to be full confidence in the pension fund and for the RB to maintain its commitment to support Dioceses for several years ahead.
At a recent meeting of the Governing Body, the Chairman of the Representative Body “guaranteed the enhanced block grant until 2014” and the Chairman of the Investment Committee reported that “pensions are well covered by capital and income”.
So, what about this diocese’s finances?
The most recent accounts are for 2008, these were approved by the DBF Executive who are your trustees and then adopted by the full DBF after receiving the very positive opinion of the Auditors.
I invite you to look at the Summarised Financial Results (download as .pdf)
Income and Expenditure
The immediate left hand column shows figures for 2007, the words in the middle describe the categories of Income (top part) and Expenditure (middlepart), whilst the right hand column shows the figures for 2008. You are thus able to see how we did in 2008 compared with 2007.
In summary we raised £229,000 more in income than the previous year but spent £434,000 more. We thus ended that year with a small deficit compared with a small surplus the previous year. The most significant unbudgeted causes were higher than anticipated requirements for Council Tax, clergy training, and essential repairs and improvements to Parsonages.
As usual, you have illustrations in pie chart form to show the proportions in which money is raised and spent. You will be only too well aware that the major portion of expenditure is on support for Ministry throughout the Diocese.
Assets
The summarised balance sheet again allows you to compare year on year and you will see that the value of Property increased (following the first revaluation for some years) whilst the value of our investments fell.
The consequence of all this is that our total funds fell by a fraction over £500,000 ie about 17% in a year when almost all indicators of value fell more. Furthermore, most of that fall is temporary being accounted for by short term fall in the value of our investments.
The advice from both the RB Investment Committee and our own Diocesan Investment Advisor is that we can expect good recovery over the long term.
2009
We budgeted for less income and less expenditure (about £500,000) to reflect the continuing transfer of responsibility for total Ministry costs from the RB to the Diocese and a slight consequential reduction in the total number of clergy. At the half year mark, I can report that expenditure was within budget but, not surprisingly, income was falling a little short of target. I say ‘not surprisingly’ for two reasons: investment income is down, and the overall pattern of parish share payments in this difficult year is a little further behind than normal. Let me pause at this moment however to thank and congratulate all parishes for the efforts made to maintain payments without which the church in this Diocese could not continue with its mission and ministry nor provide the range of other provision so well set out in the Conference Report. The DBF is conscious that current circumstances make it a challenging task to increase giving and wish, together with the RB, to provide such advice and guidance wherever reasonably possible. As Treasurer of a small parish myself, I find the consistency of payment by Direct Debit, where people are willing, to be very re-assuring.
Other things:
During the year DBF have undertaken a number of reviews which are all hopefully going to help ensure it is in good shape to face the challenges of the future. Most particularly:
- Your DBF has examined its Governance arrangements as Trustees. We have recommended that there be more clarity over the relationships between the various different bodies that serve the Diocese. Your Standing Committee is now looking at how further value exercises might assist.
- Together with the Archdeacons and inspired by the deep commitment of Sharon Smith herself, we have made adjustments to our staffing profile to release up to 50% of Sharon’s time as Accountant to develop new ways of supporting parishes.
- There has been a review of accommodation needs and a contract to provide essential repairs and minor improvements to the Diocesan Office has been let, funded out of capital value and without any charge on Parish share.
- We have undertaken an independent Review of Staff Pay and Grading and established for the first time a formal grading structure covering DBF-funded staff.
- We are also well-advanced in planning a significant recruitment exercise to find a replacment for your Diocesan Secretary, about whose impending retirement more later.
So to the Future, what of next year?
The last page of our Financial Information sets out next year’s budget together with forecasts for the following 4 years. We have, in consultation with the Bishop and the RB over clergy numbers and associated pension and housing costs respectively, attempted to curtail cost where possible whilst making some provision for future priorities eg greater support for children and more relevant training for both clergy and laity. We have also taken a prudent view of likely income challenges and have reduced the annual increase in parish share from the previous target of 5% to 3%. Whilst we hope we may not need to call on any reserves you will see we have budgeted for a deficit as is shown by the figure in brackets in the penultimate line.
None of this can happen without considerable effort by a wide range of people, I would like to thank my fellow membes of the DBF, especially those who serve on the Executive as your Trustees, Richard Tarran, Sharon Smith, and the other staff of the Diocesan office; you Bishop and your senior clergy and most particularly all the parish treasurers who in financial terms are the frontline of the church.
Thank you for listening, I commend the DBF report to you.
Sandy Blair, Chairman Diocesan Board of Finance