Skip to main content

Clergy Pensions

Volume 281: debated on Wednesday 17 July 1996

The text on this page has been created from Hansard archive content, it may contain typographical errors.

[Relevant document: The Fifth Report from the Social Security Committee, House of Commons Paper No. 340 of Session 1995–96 on Church of England pensions.]

11 am

My colleagues and I in the Church Commissioners are grateful for your great help, Mr. Deputy Speaker, in allowing us to have this debate in prime morning parliamentary time on important matters relating to Church of England pensions.

The Order Paper shows that the fifth report of the Select Committee on Social Security, House of Commons paper No. 340 on Church of England pensions, is relevant. In that context, I should like to express warm thanks to the hon. Member for Birkenhead (Mr. Field), the Select Committee Chairman, and to thank Committee members, especially my hon. Friends the Members for Cheadle (Mr. Day), for Westbury (Mr. Faber), for Colchester, North (Mr. Jenkin), for Gainsborough and Horncastle (Mr. Leigh), for Dover (Mr. Shaw) and for Harrow, West (Mr. Hughes), and the hon. Members for Islington, North (Mr. Corbyn), for South Antrim (Mr. Forsythe) and for Vauxhall (Miss Hoey), for all their services: for the probing and painstaking, yet sympathetic and constructive, way in which they have occupied themselves with the sensitive issue of Church of England clergy pensions, for their attendance at endless meetings to take evidence and to consider drafts and so on. The House and particularly the Church Commissioners are very much in their debt.

The Church Commissioners are of course accountable to Parliament, and the Select Committee's inquiries and reports have given rise to two debates about Church of England affairs on the Floor of the House within the space of 14 months. That is a striking signal of Parliament's concern for its responsibilities, and it will greatly encourage people outside who depend on a proper oversight of the commissioners' exercise of stewardship, which the Select Committee has certainly undertaken.

The Select Committee's fifth report addresses directly the issue of clergy pensions. I need not remind colleagues that pensions generally have been one of the major financial issues that Parliament has considered in recent years, so Church of England pensions fit into that general picture of reform, but with some specially complex features and variations.

The Church Commissioners' forerunners were established to relieve the poverty of the poorest clergy, and to rationalise the Church of England's endowments so that the new towns and cities that were springing up during the industrial revolution could be churched and ministered to. It might be taken for granted now, but the unique nationwide ministry of the Church of England was sustained during those Victorian and Edwardian decades of rapid change, moving with the people from its rural idyll in pre-industrial revolution times into harsh, urban locations, where the Church of England could so easily have chosen not to venture.

Despite all that has happened in the intervening century and the growth of secularism, the decline in churchgoing, and Matthew Arnold's "melancholy, long, withdrawing roar" of the sea of faith, the Church of England has retained its nationwide ministry. As has often been said, the clergy are, in some of our most deprived cities and city areas, the last remaining representatives of the professional classes. Everyone else—lawyers, solicitors, local government officials—has retired to the leafy suburbs. It is the clergyman who remains at the heart of the inner city, keeping the Christian gospel of care and compassion alive in precisely the sort of bleak, unpromising places where it is most needed.

The Church Commissioners' funds have been a primary source of support, helping all parishes with the cost of ministry and, in particular since 1954, with pensions.

Does my right hon. Friend agree that the work of clergymen of all faiths in the inner cities is significant, but that that of the Church of England is especially significant because of the peculiar constitutional position that professional clergymen and the Church of England have: they have a statutory responsibility for universal coverage of the country, which no other faith has?

I am much obliged to my hon. Friend for reminding us of that and for putting it on the record; the Church of England is unique. The very fact that we are discussing the Church Commissioners' affairs underlines the fact that that statutory duty and responsibility is vastly underpinned by the Church Commissioners' funds—the parliamentary charity with which we are concerned today. The two go together. I take my hon. Friend's point.

During the 1980s, however, the commissioners' resources have became overextended and their need for more income has led them in recent years to invest too heavily in property. Both the Select Committee's reports on Church of England affairs have had some harsh things to say about that, and the lessons have been taken to heart. The property portfolio is being slimmed down on a controlled programme and the proceeds switched into equities here and abroad, which offer the best long-term prospect of promoting income growth in line with projected expenditure.

The proportion of assets in commercial property has halved from a peak of more than 50 per cent. in 1990 to 23 per cent. at the end of 1995. In the same period, borrowing has fallen from more than £500 million to just £23 million. In the past three years, the value of the total fund, which was written down by the notorious figure of £800 million between 1989 and 1992, has risen by £600 million. Expenditure has been cut to the same cash level as in 1989 and a further £18 million is being cut this year and in 1997. Those reductions have not only helped to reduce the income deficit; they have enabled the commissioners to start rebalancing the investments.

That recovery should reassure Parliament of the commissioners' renewed competence and professionalism under the leadership of Sir Michael Colman, who took over as First Church Estates Commissioner in 1993, but the longer-term structural imbalance between assets and liabilities, which was crystallised by the investment losses to which I have referred, must still be rectified.

The Church of England has accepted that the commissioners' assets cannot stretch to carrying the whole cost of pensions and honouring their other trusts and commitments, of which my hon. Friend the Member for Colchester, North has just reminded us. The implications of the present situation are dramatically illustrated by the pattern of expenditure on stipends and on pensions. In 1986, the two categories of expenditure were in balance, at £35 million a year each. By 1995, the ratio had moved almost two to one in the direction of pensions, the cost of which more than doubled in that decade. That was a deliberate improvement in the pensions position and a reflection of what the Church of England felt was right and proper for its retired pensioners. It was associated with the introduction of a compulsory retirement age for clergy, who had in many cases simply soldiered on since the stipend was their only source of income. If the change in the ratio were allowed to continue, the commissioners' ability to fund ministry in poorer parishes would be wiped out.

In essence, the Church of England's proposals for funding clergy pensions are to split the liability in two, with a closed and ultimately self-liquidating scheme for past and current beneficiaries and a new fully contributory scheme for future entrants. The dividing line would be some fixed date in the future—for the sake of illustration, 1 January 1998.

Under the new arrangement, the commissioners will meet the cost of past service liabilities accrued up to the date of change—pencilled in for 1998—and dioceses will raise funds from parishes to meet the cost of pension contributions after that date. The General Synod in York approved the continuation of the current scale of pension benefits for future service last Monday, with the support of the diocesan boards of finance. For the record and to remind colleagues, in the round, the pension represents two thirds of the previous year's national stipend per 37 years of service. The national stipend is in the region of £14,000 a year, in addition to which a lump sum of £26,750 is also available for the retired clergyman.

The General Synod has endorsed and committed itself to continuing that frame of pension provision. It is accepted that the Church Commissioners will have to make transitional provision to reinforce the limited impact of pension contributions for the new scheme in early years. Discussions about that interim help are at an advanced stage between the commissioners and the diocesan boards of finance. The latter are planning to take on the full cost over six or seven years.

One key principle for shaping the new arrangement that has been of particular interest to the Select Committee is that the commissioners should be empowered to use capital for pension purposes. That is a radical innovation and an unprecedented departure from the basis on which Parliament originally legislated to set up the commission. Until now, only income flows from the capital, and not the capital itself, could be disbursed by the commissioners. I shall say more on that sensitive issue.

A draft pensions Measure to give effect to the new contributory proposals was approved by the General Synod of the Church of England last November. The Measure is now before a Revision Committee of the Synod. Recognising Parliament's particular interest in draft legislation that involves the commissioners' assets, the Synod has invited interested parliamentarians to submit suggestions for the Revision Committee's consideration so that Parliament can influence the drafting of the Measure before it is set in concrete. This debate is one of the obvious opportunities for that input, and the Select Committee's report is another primary source of input to the pension Measure's revision stage.

The first recommendation of the Select Committee is that the new powers that the Church of England is seeking should provide for the full application of the more general, secular legislation passed by Parliament recently to regulate and control pension schemes in the round, particularly matters relating to the so-called minimum funding requirement. The Church of England intends that the new arrangements should offer the same safeguards as secular schemes, subject essentially to the same regulations and controls, but adapted where necessary to reflect the practical realities of the Church of England's fund-raising arrangements—essentially through parish donations—and, in the case of clergymen, the technical lack of an employer. The pensions board is in discussion with Government Departments about those issues.

The Select Committee's second and fourth recommendations concern the use of the commissioners' capital. Parliament has an interest in that matter, since roughly one third of the capital derived from the Crown and was given in trust for the maintenance of the clergy of the Church of England in the deployment to which my hon. Friend the Member for Colchester, North referred. The other two thirds of the capital derive from Church sources. Parliament set up the Church Commissioners in 1947 to consolidate and hold in trust those capital sources and resources on behalf of Church and state for the same common purpose: the maintenance of the clergy of the Church of England in that national and statutory deployment to which my hon. Friend referred. The Select Committee is understandably cautious, therefore, about the expenditure of capital.

Hon. Members may wonder why capital has to be spent at all. I am afraid that the answer is sheer practicality. The commissioners' projected pensions expenditure, including transitional help for the dioceses, would greatly exceed their likely income unless they suspended other expenditure—breaching their trusts and imposing additional burdens on dioceses—or repeated the errors of the 1980s by moving back into high-yielding investments, such as property and gilts, at the expense of future capital and income growth. The power to spend capital, if given to the Church of England by Parliament, would enable the commissioners to meet their obligations while pursuing a prudent and fruitful investment policy.

Another aspect needs to be borne in mind, however, especially by those who may suspect that the use of capital is an exercise in selling the family silver. Under the proposed arrangements, a new fund of contributions from dioceses will build up as the commissioners spend the capital needed to satisfy the past service liability. Although not an exact symmetry, as the sand flows out of one hourglass, fresh sand will be flowing into another.

I was puzzled when the right hon. Gentleman referred to the six-year period. I come from another Church background. We realised that the change would take longer. Secondly, is there a place for the clergy contributing to their pensions, which is what we have done in our Church? That has resulted in a marked improvement in the pension schemes.

The time frame to which I referred relates to pension liabilities that will arise from the new entrants contributory scheme. In the early years, although vast sums will not be flowing in, there will not be a vast number of beneficiaries. By definition, the scheme will be for people who are at the outset of their careers. Contributions to and demands on the fund will, to some extent, increase in parallel.

The difficulty with the hon. Gentleman's second point is that Church of England clergy are not exactly highly paid. They receive a stipend of about £14,000 a year to bring up a family. If they were asked to make a pension contribution, their stipend would have to be raised to offset the extra cost, and that would place further obligations on parishes to supplement the stipend. There would be the additional disadvantage of further national insurance contribution liabilities for the extra money given to clergy to offset pension contributions. On balance, it was felt that a contributory scheme from the parishes only was the most rational proposal. It was simply an exercise in how to use resources most efficiently, given the overarching presence of that dark shadow—the state tax and national insurance collector.

The Select Committee's second main recommendation would enable the commissioners to meet their obligations for the first five years, including the transitional support needed to cushion the introduction of pension contributions. Leaving aside for a moment whether these changes should be effected by a Church of England Measure or by a Bill in Parliament, the Committee's proposals would go quite a long way to meeting the Church of England's requirements. I know that many in the Church of England would prefer the commissioners to acquire a permanent power to spend capital on an unlimited scale, including the power to transfer capital to a new pension fund. It must be admitted that the Select Committee's recommendations inevitably leave some uncertainty about how the commissioners could manage their commitments after the recommended five years. It is in this context that some in the Church of England find a major attraction in being allowed to have a fixed and final capital transfusion; it would cost about £1.2 billion or £1.3 billion to wipe out future liability in one fell swoop.

Sir Michael Colman's evidence to the Select Committee, and his note reproduced on pages 25 to 30 of the Committee's report, underline the commissioners' reservations about draconian transfers of capital, at least until there is an established contribution flow into the future service fund. An initial limitation on their power to spend capital would effectively defer the issue of a wholesale transfer of capital, and I hope that the Church of England will accept that what the Select Committee proposes in this, its most significant recommendation, can be the basis on which the Measure is revised and moved forward.

If it is possible to secure an accommodation with those who have drafted the General Synod's propositions and members of the Revision Committee, I suspect that the Church of England might press for the stipulated period to be not five years, as recommended by the hon. Member for Birkenhead, but a period to tie in with the likely required transition period for support for the new fund, which is more likely to be seven years. The Revision Committee favours inserting a seven-year maximum on the length of the transition period. That might be a more appropriate time frame, chiming in with the harmony that may arise if the Select Committee is happy for its five-year recommendation to be extended to, say, seven years.

At the end of the transition period, if all goes well, the Church of England will be able to show that the new arrangements are working smoothly and that parishes have proved their ability and willingness to meet the cost of pension contributions. Further legislation might then be simply a matter of finishing off what had already been well begun.

I turn finally to the Select Committee's comments about the implications of the Turnbull commission's recommendations for the control of Church Commissioners' assets under some future structural framework of change. Turnbull recommended in the report, "Working As One Body", that the proposed archbishops' council should take over the Church Commissioners' responsibility for applying their income. The commissioners' role would ultimately be reduced to managing assets and declaring, so to speak, an annual dividend to the new council.

Work on Turnbull is more complex and less far forward than the pension proposals. The steering group under the aegis of the two archbishops is charged with the follow-up to the report, and this follow-up group is addressing a wide range of key issues using the Turnbull report more as a vision than as a cut-and-dried blueprint.

The evidence given to the Select Committee by Philip Mawer, Secretary-General to the General Synod, was a clear exposition of the case for reforming the commissioners and their role by Measure as opposed to Bill. This is the way in which Church legislation has been handled for more than 75 years, and it enables the Church to design its own proposals in its own time with its own internal and external consultations. The Church is alert to the fact that, on issues affecting the commissioners' assets, Members of this House and of another place would like input into the drafting, as is in effect provided for by the Select Committee's recommendations on the forthcoming clergy pensions Measure and by this debate.

The Select Committee's report sets out with equal clarity and robustness the opposite case: that proposals affecting the independent control of the commissioners' assets—in this case the application of their income—should be legislated for by Bill rather than by Measure. This suggestion has, I am bound to say, caused considerable anxiety in some quarters of the Church of England, who fear that it would represent retrogression from the devolved powers granted by Parliament in 1919.

I hope that colleagues in the House today and members of the Select Committee will allow me, for the moment at least, to sidestep this, the Committee's fourth and most controversial recommendation—effectively that changes that might arise from the proposed Turnbull organisational reforms should be the subject of a parliamentary Bill rather than a Measure. The key phrase in the recommendation is "further changes", to distinguish these from the pensions Measure that the report majored on. At present, such changes have not been officially, specifically and finally formulated, and must lie in the realm of the hypothetical. The scale and scope of what may in the end be proposed will properly determine the shape of a Bill versus Measure debate, but we are simply not there yet.

I hope, however, that at least today's debate and the immense impact that the Select Committee's inquiry and recommendations had on the Church of England draft pensions Measure will indicate that Parliament has not been, and cannot be, bypassed, even on the minutiae of what is proposed in Church Measures.

11.28 am

It is always a pleasure to follow the right hon. Member for Selby (Mr. Alison) in these debates, and it is particularly so today. Once again, we are witnessing the ability of some Members of Parliament to maintain their friendships with different, if not disparate, groups, both in the House and outside, and to be able to tell the truth as they see it. In an age when roughing up politicians is more popular than the national lottery, it is a pleasure to draw attention to those hon. Members who add distinction to public life. In that context, I am happy to draw attention to the contribution that the right hon. Member for Selby always makes to our debates and to the welfare of the nation.

I would also make a second general comment by way of introduction, and that concerns the performance of the commissioners. I wish to emphasise what the right hon. Gentleman has said about the leadership of the commissioners and the stewardship that they are giving us. The Select Committee has given a clear vote of confidence to Sir Michael Colman, the First Church Estates Commissioner, to Patrick Locke, the secretary, and to the staff of the Commission for the way in which they have recovered from the shocking event of losing so much of the historic resources only a few years ago. The Select Committee was critical at that time, and obviously that remains in our memory, but as we move into a new area where confidence is required, it is important that the Select Committee can, without any equivocation, make that recommendation to the House about its feelings for those who currently work for the Church Commissioners.

Technically, today we are debating what is happening about pensions, particularly pensions for the clergy of the Church of England, but we cannot do that in a way which divorces our debate from the English nation. We cannot understand the history of England without considering how it is interwoven with the history of the Church.

One of the many great distinguishing marks of the Anglican Church in Britain is the fact that, because of its closeness to the English nation, it has understood how much religion the English are prepared to take, which is not very much. It has designed its ministry according to that fact rather than in ignorance of that fact; hence the importance of the Peel reforms of the late 1830s and 1840s which gave us, first, the ecclesiastical commissioners and then, as the right hon. Member for Selby said, the Church Commissioners in the 1940s. In regrouping the historic assets, Peel and the Church Commissioners sought to ensure that clergy would be paid for in those areas which could not pay for their clergy.

Owen Chadwick's biography of Hensley Hanson showed how, at the start of his career, he was a deep opponent of establishment, subsequently became a fan of establishment, and then, when he saw that there was a possibility of a Labour Government appointing bishops, became an opponent of establishment again. At the start of his career, after graduating from Oxford, he was appointed to act as a tutor to one of the great shipping families in Merseyside. It was as a result of his observations of life in Birkenhead and the way in which the Church tried to perform its role of administering to the nation that Hensley Hanson became a convert to establishment. He did not believe that the poorest areas of Britain could support their clergy.

In a sense, that is the backdrop to today's debate and the concern expressed in the Select Committee's report that, while it is crucial that past pension commitments are honoured, we 'want to do so in a flexible way so that the commissioners can fulfil their other great historic role, which has been to maintain a national presence in Britain while having a real understanding of the English and their religion. If that is broken, it should be broken by the populace itself, not because we have not got right the financial affairs of the Church Commissioners and their relationship with Synod.

Having made those introductory remarks, I want to address my comments to two aspects of the report. The first concerns the pension proposals themselves. The second concerns the Select Committee's recommendation—which the right hon. Member for Selby, for good reason, sidestepped today—on whether the moving of the historic assets away from their current stewardship should be by Bill or Measure.

The question which most concerned the Select Committee, arid which we now have a chance to debate on the Floor of the House of Commons, which a hope the Revision Committee will be able to consider, concerns the form of the pension proposals that are implicit in the Measure. Because people, perhaps rightly, are sensitive about the comments that we make, I preface my comments by saying that I am not trying to criticise those people who drew up the draft Measure. They clearly had instructions from Synod to establish pension schemes, and the Measure does that. However, I am anxious that they should think further than the mere form of the legislation that they at some stage will ask the House to approve.

It is implicit in the Measure as currently drafted that the form of the pension provision will be a company pension scheme. I want to suggest three reasons why, when the Church, both as Synod and as diocesan boards of finance, and even more importantly as local parishes, begins the debate in earnest on the form of pension provision, it will find that the company pension model is unsatisfactory because of the financial liabilities that it will place on diocesan boards of finance and parochial church councils. Unless other reforms are adopted, those two bodies will be asked to accept unqualified, open-ended financial liabilities.

Diocesan boards of finance and parochial church councils are charitable bodies, the first by registration and the second by declaration. If one considers how the Charities Act 1992 impinges on their duties, it is clear that they must act prudently and should not commit themselves to debts which amount to more than their assets; yet that is what we shall be asking them to do if we go down the route of an ordinary company pension scheme type model for the second pension scheme that will be enacted by the measure.

The first scheme relates to past entitlements which have already been earned, for which the commissioners take responsibility. and the diocesan boards of finance and parochial church councils would take responsibility for the second scheme. We cannot ask them to undertake that responsibility because, with the best will in the world, they cannot meet it. They cannot know that they will have the resources to meet that responsibility. That is not to say that they should not meet them, but that they should design a pension arrangement so that they can meet them.

I wish to emphasise what the hon. Gentleman is saying. The bodies that he has described do not decide the terms and nature of the liabilities that they will enter into. The benefits of being in the pension scheme are decided by the trustees of the pension scheme, so they would be taking on liabilities that they simply could not control.

Not for the first time the hon. Gentleman puts the point better than I. With that emphasis, I leave my first objection or worry about the current provisions that we are considering.

Some people have begun to understand what the obligations will be under the charity regulations. Many hon. Members will have become separated from charities with which they have been involved because their attendance here does not allow them to attend the charitable boards regularly. Is it not possible that people who have played an enormous part in the life of their parish church councils, and who would probably have been prepared to commit themselves in future, would hesitate to do so if we were to go down that route?

That is part of my worry. Again, my hon. Friend makes that point in friendship to those drafting the Measure, not in a hostile manner. We are anxious that when the Measure comes to Parliament, it should be in the best form that we could propose—not best in that it is the most popular in today's terms but in that it is a contract sustainable over the generations and not merely in the first year of its existence.

My second concern is that the parochial church councils, and especially the parishioners, will be anxious when they realise that the clergy will be dealt with in different ways under the proposals. I understand why the commissioners want to meet the future pension liabilities of bishops, deans and what are extraordinarily called the higher clergy, but most of us would think that there is no higher calling than that of parish priest. The higher clergy may have additional responsibilities, but the cardinal role of parish priest should not be undermined.

If I were an ordinary parish priest in Birkenhead, I would be slightly anxious that my future pension liability was to be met from the second fund, which will be dependent on what the laity contribute each year, while those of senior clerics would be met from the historic assets. That is not acceptable. It will cause problems in this House and even greater problems with the laity in our parishes. They will feel that that is not fair treatment of the clergy who bear the burden of the day, especially those who have the toughest parishes, whose children are often beaten up at school because they speak with slightly different accents and whose houses are regularly ransacked by yobboes. We should treat that group as the most privileged, and not subject it to risks to which we are not willing to put bishops, deans and other clergy.

Thirdly, it is a fantasy to think that even if the House voted half the assets over to a new pension scheme, it would close the commissioners' responsibilities. They would not be able to defend the rest of their assets from a company pension scheme that cannot maintain its flow of income. There would be enormous moral pressure on them to hand over yet more assets to meet any deficit that the dioceses or parishes did not meet.

I therefore propose a form of pension provision that I believe is sustainable in the long run and that can safeguard the remaining assets of the commissioners once they have met their current liabilities to past pension commitments. I hope that the Church will consider seriously a personal pension scheme, whether group or individual. That would be a simple form of pension provision that would be easily understood. The assets that would be built up would be in the name of the priests. The assets would not be collectively owned, lost or damaged if anything untoward happened to the scheme.

Clearly, the House would have to take into account the circumstances that the Church will have to meet under a personal pension scheme, which, I believe, would unlock the door to a much wider pension reform for people who are not in funded pension schemes and who have no cover other than the state retirement pension. That would give the House the opportunity to consider personal pensions to which contributions may be irregular. We should accept that people should not be fined or lose assets because of irregular contributions.

People should be allowed to pay small inheritances into their pension schemes. While I do not think that any of our clergy do the lottery, the pension scheme should allow winnings to be paid in rather than dissipated. People should clearly understand that the scheme is theirs. A unit trust-backed, individually owned personal pension scheme would give maximum security to our clergy and allow parish church councils and diocesan boards of finance to enter into a legal agreement honestly, knowing that their commitments can be fulfilled. The Church, by seeking such a Measure, would unlock the debate that we need about how to universalise second-funded pension provision.

I have taken a long time, so I shall speak only briefly on the historic assets. I shall try to choose my words carefully and I hope that my brevity will not be misunderstood. When we considered the difference between a Measure and a Bill, in no way was the Committee trying to overturn the 1919 settlement, whether by frontal attack or in a subtle manner. We were trying to register only that while the Church rightly has all the self-government given it by the Church of England Assembly (Powers) Act 1919, the historic resources of the church and nation are a different matter from all the other Measures considered in the House, such as the ordination of women or the alternative service book, which largely put aside the Book of Common Prayer.

My second point is addressed to the Archbishop's advisers. He has an enormously difficult job to manage the Church in an age in which it is not an easy task. There are many centres of power to which he is responsible—the Synod, the commissioners and Parliament. When his advisers help him to respond to reports from this House, I hope that they will not do so in a partial spirit. If they do, they will guide him into even greater troubles than he currently has to manage. Above all, they should help him to take a global view rather than the partial or campaigning view of any of the different sects that are trying to gain dominance in the Church.

Thirdly, the theology of the matter has come into play. We are told that it is an offence to think that the Church cannot do precisely what it wants because it is the physical representation of Christ in this country. That sounds fine as theology, but we should remember that the Anglican Church was established by the Crown. Even if it were formally disestablished, everyone in Britain is subject to the rules and regulations made by Parliament. It would not give the Church special privileges, although they may claim that its theology was only as old as the Tractarians. The Tractarians have done much mischief to the English Church and this is clearly part of their legacy.

The Turnbull report is a deeply un-Anglican document because it believes that one can concentrate power. It says that it is establishing an archbishops council, but it is a model of the Roman curia. The Church is free, if it wishes, to opt for that reform, but it will not be sustainable because it is trying to graft something on to a body that will reject it.

The Anglican Church was established in an age of great extremes, and those who founded it tried to find a middle way to accommodate those extremes. Part of that settlement meant that although we are always taught that we are a clergy-led Church, historically we have always been a laity-led Church. That lay representation has devolved power through many Church institutions. To try to group them together because one is passionate about the ministry of the Church is to try to take a short cut that will flounder.

That is a personal comment. The Church has every freedom to embark upon those reforms; the Select Committee merely asks in innocence whether the Church cannot achieve most of the reforms that it wants to introduce as a result of the Turnbull report without even coming to the House. The Select Committee put down the marker—and my right hon. Friend the Member for Selby, the Second Church Estates Commissioner, has emphasised the point publicly at most opportunities—that when we come to the ownership and control over the historic assets of the Church, we have a different agenda from all the other subjects that have been presented to the House since 1919.

11.50 am

The Parliamentary Under-Secretary of State for the Home Department
(Mr. Tom Sackville)

I shall not attempt to answer the debate, as is sometimes the role of the Minister, but simply make a brief intervention to welcome the fact that the debate is taking place and to make a couple of points on behalf of the Government.

First, I thank my right hon. Friend the Member for Selby (Mr. Alison) and the hon. Member for Birkenhead (Mr. Field) for their thoughtful contributions. I am sure that many people would wish that the deliberations of the House were carried on in today's atmosphere more often. We are aware that there are those who are involved in Church matters, be it their local church or wider than that, and there are others who have little involvement. Those hon. Members who are present are deeply involved in Church matters—perhaps there should be more.

All of us are aware of the difficulties that the Church faces in the latter part of the 20th century. Some of them have been referred to already.

When I arrived at the parish of Irnham in Lincolnshire on Christmas eve, following a long drive through rush-hour traffic, I found that I had been volunteered to accompany five carols at midnight at the local parish church. That filled me with some alarm because my musical talents are more in the nature of a nightclub pianist than a church organist. I had been volunteered because the regular organist had gone down with pneumonia. When I arrived at the church to practise, I got an inkling of why that might be. None the less, everything went off well. My main problem with the rather simple instrument that I had to play was in discovering the trick of getting the last verse played much louder than all the rest so as to go out on a heroic note without one of those pedals that change the settings. I finally solved the problem by asking my sister-in-law, the estimable Mrs. Bevan, to sit beside me on the bench and pull out all the stops for the last verse. That was the first time I understood the full force of that phrase.

I congratulate the Church Commissioners on having pulled out all the stops to get the affairs of the Commission back in order. There is no doubt that the affairs of those who are or will be eligible for a pension from the Church are in the best possible hands. Sir Michael Colman and my right hon. Friend the Member for Selby and his colleagues should be congratulated on what they have achieved.

Those who are employed by the Church live for a long time, perhaps because they have a fulfilling career, so there is a huge liability, which we must take seriously. Whatever changes are made, we must be certain that they are in line with recent pensions legislation so that the pensions and any other arrangements that are made for those involved have the full protection of the law.

As for whether any changes should be achieved by Measure, I hope that some arrangement can be reached so that we can continue the honourable long tradition of affecting changes in Church matters by Measure. As has been suggested, it is quite possible that some transitional or partial change in the arrangements could be achieved by Measure, but in the end it will be a House of Commons decision. It is perhaps worth placing on record that if a radical proposal was made to transfer a substantial part of the funds of the Church Commissioners, the House may decide that a Bill was required—as it might regarding any radical change to the Commission.

For 13 years, I have often listened to my right hon. Friend the Member for Selby reporting on Church matters. It is a sad fact that he is retiring from service in the House, because there will be a great gap. Over the years, he has made a huge contribution to steering that difficult relationship between the Church and the state. As they say in show business, I am sure that he will be a hard act to follow.

11.55 am

None of us comes to debates unencumbered by our experiences and personal histories. I was brought up as a Welsh Presbyterian and then accepted into the Church of England while at university in England. For the past 30 years, however, I have been a communicant in the disestablished Church in Wales. I am therefore able to combine sympathy and objectivity in the debate.

I speak with some trepidation, because I am an expert in neither ecclesiastical nor legal matters—I am certainly not an expert in ecclesiastical law. The way in which we approach such matters in the House requires a good deal of care as well as sympathy.

It is clear that important principles have to be dealt with and financial problems need to be resolved regarding the Church of England's pensions for its clergy and the responsibilities of Parliament to respond to its proposals.

The right hon. Member for Selby (Mr. Alison) has, as always, made a massive contribution towards enabling us to understand our responsibilities and the way forward. The report of the Select Committee on Social Security is a valuable contribution, because it refers to matters that need to be considered and resolved.

It is inevitable that one of the difficulties that we must face is how Parliament should respond to proposals to resolve the problem. When we last debated the issue on the Floor of the House, I expressed the view on behalf of the Opposition that the resolution of the long-term problems would require primary legislation. At the time we understood that the Archbishop of Canterbury and his advisers felt that that contribution had been helpful to the debate. That view about primary legislation was not questioned, and it has just been in the past couple of weeks that a different view has been expressed to us.

We are sympathetic to the need to deal with the immediate problems as expeditiously as possible—that desire informs the recommendations of the Select Committee. As the right hon. Member for Selby acknowledged, provision for the longer term requires difficult questions to be answered. It has been said that there is nothing, including pensions, in the long term as well as in the short term that cannot be resolved by Measure. Indeed, that is the view of the right hon. Member for Selby. Some of the briefing documents have suggested that, since 1919, there has been no case of a Church of England matter being dealt with other than by Measure.

The briefing from the House of Commons Library reached a similar conclusion. The basis for the expeditious treatment of Church of England matters was clear when it was pointed out in 1919 that only 33 out of the 217 Church Bills that had been introduced from 1880 to 1913 had been successful. The position has been greatly improved by the existence of an expeditious way of responding to matters resolved by, and proposals brought forward from, the Church authorities.

The Church of England Assembly (Powers) Act 1919 set up an arrangement whereby Parliament could deal with those matters expeditiously, and explicitly stated that the Measures
"shall have the force and effect of an Act of Parliament on the Royal Assent being signified thereto in the same manner as to Acts of Parliament".
A question remains. I have been told that, although Parliament has the power to introduce legislation, it has never done so, and that that even applied to the establishment of the Church Commissioners in 1947. In reading through the briefings and texts in the Library just before the debate, however, I was surprised to read of the Church of England Convocations Act 1966, which represented the use of an Act by Parliament after 1919.

I argue that we have a responsibility to consider the right means, by Act or Measure, to resolve the issues before us. That needs proper discussion to ensure that we fulfil the responsibilities of Parliament in the right way.

The responsibilities are obviously shared. The recommendations leading to the 1919 Act came from the Convocations, and that was regarded as important in showing that the Church Assembly's powers rested on the authority of the Convocations as well as Parliament. Similarly, the responsibility to help to resolve those issues is shared by Parliament and the Church authorities. That was demonstrated again after disestablishment, when the Church in Wales did not take over its share of funds. Instead, a different settlement was reached: in effect, the Church in Wales was disendowed at that time. I believe the position in Ireland to be similar.

I mention those points to show that a responsibility rests on Parliament to ensure that what it does is an appropriate response to the proposals of the Church authorities. We should properly understand our responsibilities as well as our powers. As the Minister rightly said, there is an element that requires sensible discussion and resolution, so that Parliament and the Church can proceed co-operatively in agreement, and so that we do not end up arguing about constitutional issues that might be an obstacle to a proper, lasting resolution of those issues.

The Select Committee report is a helpful contribution to the process of working towards a solution; but an interim solution, which is what is suggested, must be seen only in the context of a clear view of the long-term resolution of issues and how Parliament is asked to respond.

The Select Committee report makes the point, reinforced by my hon. Friend the Member for Birkenhead (Mr. Field), that many of the reforms that the Church wishes to make can be undertaken without requiring endorsement by Parliament. I am sure that the reinforcement of that point today will be regarded as helpful. I am sure that Parliament would wish to encourage progress wherever possible.

Obviously, the reference in the report to the limit to a five-year arrangement is an attempt to say that a step forward can be taken, with agreement, in sympathetic consideration of the problems that confront the Church. In response, the right hon. Member for Selby made the valid point that a seven-year arrangement might be preferable to a five-year arrangement, and I am certain that we would be sympathetic to that variation on the recommendations of the Select Committee.

This matter will be easier to resolve in the context of a long-term agreement or settlement. I hope that my comments today will be regarded as helpful, so that the issues can be discussed, formally and informally, as soon as possible, to try to find ways to prevent us from encountering procedural blockages, which would not be in the interests of the Church or of Parliament.

I am sure that parliamentarians and Parliament will be willing to listen to the views of the Church authorities and to seek a resolution that meets the needs of the Church of England, protects the poorer parishes and thus the needs of the inner cities—for which the Church has a deeply felt and recently voiced concern—and allows Parliament to fulfil its responsibilities in accordance with the law. Obviously, clarification on the procedure is needed, and it is sensible for that to be discussed as soon as possible by all the parties involved.

We must be careful not to interfere in the Church's independent decision-making responsibilities, but we must ensure that Parliament fulfils its separate and distinct responsibilities. Parliament and Church are very different in their constitution, culture and decision-making processes. Partnership and the sharing of responsibilities between different organisations are always difficult. There is an obligation on each to respect and understand the duties and responsibilities of the other. Dialogue is necessary to achieve what my hon. Friend the Member for Birkenhead described as a sustainable solution to intractable problems.

I welcome the briefing and information with which we have been provided in the past few days by the Church authorities, and the authorities' willingness to engage in discussion about the responsibility that Parliament must fulfil. It is right that we should seek to resolve those issues together, and I thank the right hon. Member for Selby for seeking today's debate. It has allowed us to express a wish, which the Minister also expressed, to resolve these matters by agreement, to tease out the correct responsibilities of Parliament and to establish a way forward that will be sustainable and deal in the long term with the issues. If we do so, it will allow Parliament and the Church authorities to sleep securely in their beds at night.

12.6 pm

I am grateful for the opportunity to participate in the debate, and I very much welcome the comments by my right hon. Friend the Member for Selby (Mr. Alison). He struck exactly the right note, and reflected many of the Select Committee's anxieties as well as our enthusiasm for the Church Commissioners and the confidence that we now have in them.

I pay tribute to Sir Michael Colman. He took on the difficult task of repairing the procedures and the management of the assets under the charge of the Church Commissioners and—perhaps much harder—the task of repairing the commissioners' reputation.

It should be well understood that our most recent report reveals a switch in emphasis from our previous report, which strongly criticised the way in which the Church Commissioners had handled their affairs. That switch in emphasis may have caught some other participants in the debate about Church affairs a little off guard.

I can well understand why the Synod, having been frustrated year after year in its investment policy and by the lack of support for projects that it considered important, should feel that the mismanagement of the assets should herald complete reform and change of the Church Commissioners. That is not the Committee's view. The Committee strongly feels—I am sure that the hon. Member for Birkenhead (Mr. Field) would endorse this—that the commissioners have repaired themselves effectively and can once again become a firm financial anchor for the Church of England, to the benefit of the Church of England and the whole nation.

The role of the Church Commissioners depends principally on capital. The Church Commissioners are the capital of the Church—the two are indivisible, which is why that capital has such a peculiar status in the minds of those who serve on the Select Committee and, I hope, of those who serve in the House. I remind my right hon. Friend the Member for Selby of what he said at the press conference about our report. He said that he would regard any Measure that significantly depleted the capital of the Church Commissioners—apart from the current pension position—as "inexpedient", and that it would be so regarded by the Ecclesiastical Committee of this House. It is not for me to prejudge any Measure that may come before that Committee, but my right hon. Friend's use of the word "inexpedient" reflected widespread concern in this House.

I endorse the warnings issued by the hon. Member for Birkenhead about going for a major single transfer to try to relieve the commissioners of the pensions obligation. Anyone who has been involved in occupational pensions knows that it is impossible accurately to measure what that obligation is. Moreover, if such a transfer is made, who will be responsible for any resulting deficit, and who will own any surplus? This applies especially to the sort of closed fund that has been mooted to deal separately with historic pension liabilities, while new liabilities are taken on by a different fund.

I also endorse what the hon. Member for Birkenhead said about the type of pension that should be available to clergymen. Traditional occupational pension schemes are a legacy of a more paternalist age when pensions were designed to attract people to certain forms of employment and to keep them there. The idea of portable pensions is relatively new, as is the idea of the personal ownership of pensions.

Public confidence in pensions is not strong at present, so we should not be surprised to find that the clergy worry about their pensions, given the recent history of the Church Commissioners. We want the enthusiastic support of the laity to help to provide the funds for these pensions. That is why I think it would be better to come up with some sort of group personal pension scheme that allowed parishes to see exactly what they contribute to their clergymen's pension funds. It will be much easier to attract the funds if people can see the purposes for which they are used—easier, for instance, than asking parishes to contribute to a general fund of indefinable liabilities that is not owned by anyone in particular.

We are presented here with a huge opportunity to open up new forms of giving to the Church of England, to attract new funds that allow parishes and parishioners to see that they are contributing to the pension of a particular individual. We also want to give clergymen a heightened sense of security. Given the size of their stipends, it may be inappropriate to ask them to contribute to their own pensions, but there should be no obstacle to giving clergymen and women more control over the contributions made on their behalf. That is a more realistic way of controlling liabilities. I refer to an individualised money purchase scheme that enables people to benefit from what they have put in, instead of building up an undefinable liability that may eventually end up on the books of the Church Commissioners, thereby reducing their ability to pay for the work of the Church throughout the nation and especially in poorer parishes.

I reiterate the point about the 1919 settlement and to place on record the assurances given when the Bill was passing through Parliament. Introducing the Bill to the House of Lords, the Archbishop of Canterbury said that it
"does not take away from Parliament any power which it at present possesses … Although there is an increased power of doing work better, I am by no means anxious to suggest that it is freeing us from State control in its proper place. It does not do so."—[Official Report, House of Lords, 3 June 1919; Vol. 34, c. 989.]
Subsequently, in 1935 a report from the Archbishops' Commission summarised the impact of the Act—I quote from paragraphs 36 to 39 of our report—as follows. The Church of England Assembly (Powers) Act
"left constitutional relations of Church and State substantially unaltered. The sole legislative authority after, as before, its passing is the King acting by advice of the two Houses of Parliament. What the Enabling Act did was to offer an alternative process by which Parliament could determine the advice which it should give the King. The Church Assembly"—
the predecessor of the Synod—
"is entitled to 'frame legislation'; if it does so, Parliament considers whether or not it shall advise the King to give effect to the legislation so framed."
Now comes an important assurance:
"Moreover, the old power of legislating by Parliamentary Bill without any reference to the Church Assembly remains unimpaired."
It is of course unlikely that Parliament would initiate Church legislation without the consent and involvement of everyone in the Church of England. The quotation dates from 1935, long after the 1919 Act had been passed. At the very least it legitimises the discussion between parliamentarians and members of the Church of England about the appropriate role of Parliament in Church affairs.

12.17 pm

I dare to intervene briefly, first to congratulate my right hon. Friend the Member for Selby (Mr. Alison) on the way in which he introduced the debate. I join others in thanking him for the tremendous service that he has given to the role of Second Church Estates Commissioner over the years.

I hope that the cardinal objective of those managing the Church of England's investments will always be to maximise those investments. Of course the Church cannot be amoral; it will not want to invest in certain companies or places. But I hope that it will not reduce its property portfolio on the grounds that it wants nothing to do with property. Rather, it should reduce it so as not to depend entirely on one sector of our economy.

I share the view of the hon. Member for Birkenhead (Mr. Field) that we cannot divorce any discussion of the clergy's pensions from other Church matters. I very much hope that those who allocate the national lottery funds will recognise the importance of conserving the splendour of our ecclesiastical architecture. By that I mean not just our great and wonderful cathedrals but our glorious parish churches—including churches that do not belong to the Church of England.

I have been immensely informed by this debate, but it has brought me once again to the realisation that parishioners must make whatever financial contribution they can to their church. It cannot just be left to the Church Commissioners. I recognise the difficulties: while there may be money in the leafy suburbs, it is hard to come by in city centres. But I would like much more twinning of churches between the leafy suburbs and city centres. I hope that that can be encouraged, although it is obviously a matter of personal priority and commitment in the individual parishes.

In conclusion, I should like to make a point for discussion. I am not competent enough to judge whether the changes should be brought about by, if not enshrined through, a Measure by the Synod or a Bill in Parliament. As a member of the Ecclesiastical Committee, I sometimes regret the straitjacket of that Committee's purpose, which is merely to find Measures from the Synod either expedient or not expedient. I should like much more interchange so that a Measure from the Synod could be brought before the Ecclesiastical Committee and ideas and thoughts carried back, just as we are trying to encourage much of the legislation in the House to go to Special Standing Committees and be given more time for consideration before the remaining procedures.

As a distinguished ex-member of the Whips' Office, how would my hon. Friend feel about the occasional substitution of parliamentary Bills for Church Measures? He will understand the implications, from a Whip's point of view, of what might then arise.

After six and half years in the Whips' Office, my scarred memory leads me to believe that anything is possible, although the Whips' Office tries to avoid most things. I understand the point that my right hon. Friend makes. I would like the Ecclesiastical Committee's role to be more flexible, but I recognise that that in itself would require the 1919 Act to be amended.