In the interests of complete openness, which I try to apply to everything concerning the Share, an issue has arisen that I now want to explain to you, and it involves some fine tuning of the figures for 2006.
As you know, the budget for 2006 is based on a 5% increase, which is intended to give a small surplus of £50,000. However, the simple model which is at present used to do the calculations works in three stages:
- It applies a percentage increase above 2005 which was set at 5%
- It adds increments for deaneries whose initial allocation does not cover their basic ministry costs
- It applies a ceiling of 9% as a maximum for any deanery and a floor of 3% as a minimum increase.
In fact this process creates a surplus.
I didn’t report this to Synod in detail last year because there was a successful appeal by one deanery which largely consumed the smaller 2005 surplus. What I did was to explain that the appeal had been covered out of a surplus that would otherwise have arisen.
The position this year needs different treatment, to aim at the outset for a result very close to the 5% maximum which has been promised. The simple facts are as follows:
- The 3% floor would bring in some £20,000 more than is absorbed by the 9% ceiling.
- The “ministry cost increments” from appropriate deaneries would bring in some £95,000 more than is handed back in minimal remissions to deaneries paying over 150% of their ministry costs.
This surplus of just over £100,000 was not “intended”, and could not (in my view) have legitimately been held to build up our reserves when I have made so much of a 5% limit. The Vice Chairman Michael Hardman, Nigel and I deliberated about the best process to use, keeping entirely within the rules and using the only model at present available. We concluded as follows:
- The “basic increase” at “stage 1” should be reduced from 5% to 4½%
- The floor and ceiling should apply
- The existing “Ministry Cost Increments” should apply. (A manual check was made to see whether the lower increase triggered additional Ministry Cost Increments for any deanery, but it did not.)
The effect of this adjustment will be to prevent the diocese levying some £100,000 more than the 2006 budget required. It will give a small surplus of 0.17% (about £44,000) over the 5% requirement. However, given the fine margin we are working to it seemed sensible to round down to an exact half % rather than some finer gradation, and use the excess to moderate the Share increase in 2007.
Based on this year’s experience, we can no doubt use the model more sensitively in future years and generate more precisely the budget yield we need.
In the light of the above factors including the rounding down of the “basic increase” to 4½%, and the advice sent out provisionally to deaneries, I would invite Synod to approve a slightly higher figure than that on the agenda, and I move:
“That the deanery apportionments for 2006 be based on a figure of £15,597,401”. I also invite discussion.
Diocesan Synod 18th June 2005: 2006 Outline Revenue Budget and Projections for 2007 & 2008
The outline budget for 2006 that Bishop’s Council has approved, and that I am now asking you to note, shows a modest but satisfactory improvement compared with what I had in mind when I spoke here in March. Then I said that with tight control of expenditure it would be possible to cover our essential activities, meet necessary stipend and salary increases and our growing obligations to the national church, and achieve a minimal surplus, within a Share increase of 5%. I indicated that work would have to be done to make the surplus somewhat more robust. I am happy to say that paper ODS 05.9 shows an improvement of the surplus to a somewhat higher figure of £50,000. Although that is by no means sufficient to raise our free reserves to the three months’ level which is our turn-of-the-year objective, we are prepared to wait a little to achieve that target, in view of the reliability of the parishes in paying their Share regularly and on time.
The small cost reductions which have been identified come from two sources:
· A closer estimate of the number of clergy who will be in post based on careful analysis of recent experience
· A review by the heads of Church House departments achieving small but cumulatively useful expenditure savings, either internal to the diocese or in terms of paid-for external services.
At times like this, care given to the detailed control of our activities is vital, and I really appreciate the work that has been done to achieve this necessary betterment.
I would like to remind you of one significant change in 2006 that reduces the income we get from the Church Commissioners. The loss is fully provided for in the proposed budget and projections, and we have been expecting it. This is the withdrawal (with parliamentary approval) of “Guaranteed Annuities” which have been paid towards the stipends of clergy of Incumbent status, and certain other expenses. It will take from us just over £200,000 from next year onwards, which is about £1,000 for each of the clergy concerned. These clergy will shortly receive with their monthly pay-slip a letter asking them to agree individually to forego this contribution. Before they do so I believe we shall need to assure the clergy in our diocese who receive the letter that the change will not be to their disadvantage, and that the diocese intends to maintain their stipends at their anticipated levels, in accordance with the policy which this Synod has approved both in principle, and in endorsing successive budgets. The saving to the Church Commissioners will be used to give additional support to the poorest dioceses, but they will only benefit once individual clergy have responded.
I shall have more to say about the Share in the next item before us, but now I want briefly to move on to the projections for 2007 and 2008.
At present we are making no new assumptions about things to be done in those years, either within the diocese or in terms of national church support. As you can see, with Share increases of 5% in both years, we do begin to achieve more significant surpluses, which will begin to rebuild our free reserves to the agreed three-month level. It is of course unlikely that nothing will change in the next three years, but as we see control of the level of Share increases as a vital objective, there will no doubt be a need to bring to Synod from time to time questions of where our priorities should lie.
For the present, as you can see from your agendas, I now move:
“That the Synod takes note of Paper ODS 05.9” (not 05.10 as the agenda says), and invite discussion.
Brian Newey
