Chancel Repair (Church Commissioners' Liability) Measure (HC 773)
Church Funds Investment Measure (HC 772)
Debate between Marsha De Cordova and Jerome Mayhew
Marsha De Cordova
The lead Measure rationalises the legal basis on which the Church Commissioners are obliged to provide funds to repair the chancels of certain parish churches. The law in this area dates back to before the dissolution of the monasteries in the 16th century. The rule that applied generally in England was that the people of the parish were responsible for maintaining the nave of the church—the main part where people generally stand or kneel during services—and the rector of the parish was responsible for the chancel, which is the easternmost part of the church containing the altar and seats for the clergy.
Legislation over several centuries, beginning with the dissolution of the monasteries in the 1530s and concluding with the establishment of the Church Commissioners in 1947, has resulted in the commissioners inheriting some of the land that had belonged to the rectors of various parishes. Because the land once formed part of a rector’s endowment, ownership carries with it the rector’s liability to keep in repair the chancel of the relevant parish church.
The commissioners’ land carries liability for about 350 parish churches. In some cases, the commissioners have the whole liability; in others, they share it with other landowners. In 2023, they incurred net expenditure of around £354,000 on chancel repairs, which is considerably less than the £608,000 incurred in 2022. They expect expenditure for 2024 and 2025 to be in the region of £1.2 million for each year.
Cathedral chapters carry liability for the chancels of around 200 parish churches. The Church Commissioners currently have a statutory power to make grants to chapters to pay those liabilities. In 2023, the commissioners made net grants of about £124,000 to chapters for that purpose, meeting the entirety of the cathedral chapters’ liabilities in that regard.
When land that carries chancel repair liability is sold, the purchaser takes on the liability if it is registered against the title of the land. That has the potential to reduce the value of the land in question and result in lower sale proceeds than would otherwise be the case. If the liability is not registered against the title of the land, a purchaser takes the land free of the liability, in which case the parish loses out because the liability effectively disappears and the parishioners have to find the funds themselves to keep the chancel in repair.
The lead Measure will cut through some of the complex issues that I have just set out. It will detach chancel liability from any land that currently belongs to the Church Commissioners and turn it into a free-standing statutory obligation. Thus, parishes will no longer need to go to the trouble of registering chancel repair liability for which the commissioners are responsible, the parishes will continue to be entitled to receive payments from the commissioners to maintain the chancels of their churches, and the commissioners will be able to sell land without having to reduce the sale price to take account of a liability having been registered against the title.
The Measure will also simplify matters for cathedral chapters. Instead of having to rely on grants from the Church Commissioners to defray their liability to repair the chancels of various parish churches, chapters will no longer carry the liability; it will be transferred to the commissioners, who will become subject to a direct statutory obligation to meet the liabilities that have, until now, fallen on cathedral chapters. As hon. Members will be aware from the report, the Ecclesiastical Committee has considered this Measure and found it to be expedient.
Jerome Mayhew (Broadland and Fakenham) (Con)
This appears to be a very sensible proposal. I noticed that the parishes of Brundall, St Lawrence, Great Plumstead, St Mary and Buxton, St Andrew are all in my constituency. Am I right in thinking that as a result of the Measure, their liability for the repair costs of their chancels will not be increased, that there will be no increased liability for parishioners and that it will just make the process of applying for payment from central funds much simpler?
Marsha De Cordova
That is correct. This Measure is about making it simpler and the parishes will not incur any additional liabilities or charges.
The second Measure is another piece of reforming legislation. It updates legislation dating from 1958 dealing with pooled investment funds that belong to various Church of England bodies. Those are collectively known as the CBF—Central Board of Finance—Church of England Funds, but I shall refer to them as the funds going forward. Approximately 11,500 church bodies invest in these funds, including diocesan boards of finance, parochial church councils and cathedral chapters. The current assets of the funds are in the region of £3 billion.
The legislation authorising these investment funds, the Church Funds Investment Measure 1958, is out of date and prevents these funds from becoming regulated funds. To address that, the Measure enables the transfer of the funds to a “charity authorised investment fund”. The structure for that type of fund was created in 2016 by the Financial Conduct Authority working with the Charity Commission. It has significant advantages for investors. First, charity authorised investment funds are jointly regulated by the Charity Commission and the Financial Conduct Authority, which offers investors greater protection and reassurance that the funds are regulated and overseen in accordance with the industry best practice, while maintaining their charitable status. Secondly, no VAT is payable on the fees of the managers of these funds, resulting in modest cost savings for charities that invest in them.
The Measure enables the trustees of the CBF Church of England Funds to transfer the assets of the funds to a charity authorised investment fund. The result will be that instead of being unregulated, the funds will be authorised and regulated jointly by the FCA and the Charity Commission. VAT will also cease to be payable on the investment managers’ fees, resulting in a cost saving to church investors. The Ecclesiastical Committee has found this Measure, too, to be expedient.