Diocese of Lichfield ‘will weather financial storm’

Lichfield Cathedral. Pic: James Stringer

Lichfield Cathedral. Pic: James Stringer

Cutbacks by the Diocese of Lichfield in 2002 will help the Church of England in the region weather the current financial storm, it has been claimed.

The prediction was made by the finance director of the Diocese of Lichfield, Jonathan Hill, at the Annual General Meeting of the Lichfield Diocesan Board of Finance and Synod in Chase Terrace.

The Lichfield Diocesan Board of Finance is the financial arm of the Church of England in Staffordshire, the northern half of Shropshire and much of the Black Country.

Mr Hill told the meeting that the prudence shown by the Diocese was now paying dividends – but warned there may still be challenging times ahead. He said:

“This diocese had to make some very hard decisions in 2002.  As a result we cut our expenditure and our parishes responded very positively in restoring the diocese to a strong financial footing.  So while we are inevitably facing the same financial difficulties as every other organisation, the diocese is in a much stronger position than some other dioceses and certainly stronger than we were in 2002.

“We face ever increasing liabilities in the year ahead – not least the clergy pension contributions.  But we are on a firm financial footing to face these challenges and liabilities that are beyond our control, because we have made the right decisions so far.  The fact we can make choices is proof that we are heading in the right direction but we must not underestimate the challenges we face.

“We live in very difficult financial times and the church isn’t immune from the difficulties facing the nation and the communities we serve.  But I’m confident that the decisions we’ve taken in recent years and the commitment from the parishes and our congregations will help us through this turmoil.  But we rely on the continued goodwill and generosity of our members to ensure we don’t slip back into the dark days we faced at the turn of this century.  And our local churches rely on the generous giving of their members to ensure they are able to continue to make Jesus known to the communities they serve.”

The annual report and accounts for the year to December 31, 2008, show a mixed picture with a movement of funds surplus of £2.34m – mainly due to sale of property (£1.66m) and the introduction of new funds (£0.944m) as part of an exercise to reorganise the Diocesan Trust.  The parishes’ share or contribution towards the budget came in on target; and expenditure was under budget.

But in the same year the value of the diocese’s investments fell by 19 per cent (£2.66m), which, although significant, is favourable compared to the FTSE which at one stage fell up to 40 per cent, but over the year fell around 22 per cent.  As a result, the Board’s net deficit in the year was £0.326m.  Finance director Jonathan Hill shrugged off the effect of the fall, saying the Diocese was “not in the process of investing short term”.   

In cash terms, the Board made a surplus of £1.208m in unrestricted funds, which is being used to correct the Stipends (clergy salary) Reserve which has been hit by falling investments value, and to build up specific reserves to cover future increases in clergy pension costs.

Clergy benefit from a final salary pension scheme managed by the Church of England Pensions Board.  In April, the Pensions Board said contributions paid by dioceses would rise from 39.7 per cent to 45 per cent from January 1, 2010, and warned that they could rise as high as 57 per cent in the near future. 

This year, the Diocese of Lichfield expects to spend £2.374m on pension contributions for its clergy – rising to £2.726m next year. 

Despite ever rising costs, Mr Hill assured the meeting that parishes wouldn’t be expected to take on the burden. He explained:

“It is often said that the Board of Finance use external factors as an excuse to increase parishes’ share of the budget.  Well now we have addressed these issues and we are not passing on these costs to parishes as we may have done in the past.  I hope we can reassure parishes that we are identifying issues and addressing them while, hopefully, decreasing the level of increase to the parishes.

“We understand that we can’t keep passing increased costs to parishes and expect them to pay.  Since 2003, we have capped the increase in the Parish Share – that part of our budget paid for by our parishes – at four per cent per year.  And in the past couple of years we have managed to reduce this to 3.75 and 3.5 per cent.  The budget for 2010 is still being finalised and will be approved by our trustees – the Bishop’s Council – later in the year.  We are working to ensure that the level of increase is reduced still further.”

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