In the final few months of 2008, the commissioners established two new mandates with funds raised from UK equity sales in the first half of the year. They were an active global equities mandate and an unconstrained mandate, which invests in a mixture of equities, bonds and cash, as determined by the manager. Both mandates added value in the final quarter of the year and delivered positive returns in a difficult environment.
Obviously some sagacity has been shown in taking money out of equities. I am aware that an important paper is to go to the General Synod this month on the implications of the financial crisis and the recession. Will the management of the funds continue to protect assets and assist the Church in its ministering role?
The hon. Gentleman is perfectly right, in the sense that the Church looks at the long term and at inter-generational fairness. The commissioners, in common with similar funds, have been affected by the global economic downturn, but we are not speculating on figures. The audited results will be published in our annual report, but the latest actuarial advice that we have received, which fits in with the hon. Gentleman’s question, is that we will be able to meet our 2008-10 expenditure plans, and that because of the way in which we smooth our non-pensions expenditure, we expect to maintain these distributions in cash terms into 2011 and 2013, further falls in the market notwithstanding.
I know that the Church Commissioners have regard to an ethical dimension in the investments that they make. In view of the General Synod’s discussions next week on the Church’s response to the financial crisis, will my hon. Friend ensure, through his good offices, that that ethical dimension is maintained, even in these difficult circumstances, when there is always an idea that it might be possible to make a quick buck? The Church should remain above all those elements and ensure that it learns lessons from the General Synod’s discussions next week and builds them into its future investment programmes.
I am grateful to my hon. Friend for that question. We look forward to that debate in the General Synod. In my Father’s house are many mansions, and next week there will be many aspects to the debate on the Government’s economic policy.
On ethical investment, I can assure my hon. Friend that the two new mandates are not permitted to engage in short selling, but they do have the ability to invest in instruments to protect funds under their management against adverse currency movements. There are no positions in hedge funds or direct exposure to sub-prime assets. Ethical investment has been the cornerstone of the Church of England’s Commissioners for many years, I think going back to the 1940s.