Number One Millbank: The Financial Downfall of the Church of England 
by Terry Lovell.
HarperCollins, 263 pp., £15.99, June 1997, 0 00 627866 3
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The Church of England has always been run by wealthy people, who could never understand why pressure was exerted on them from below to control the Church’s wealth or, worse, to share it out among the poorer clergy. But the contradiction between the Church’s gospel and its behaviour eventually became too much even for Parliament. A law of 1840 created a body of 95 Ecclesiastical Commissioners and gave it the power to distribute the revenues of the cathedrals and bishops where the clergy needed it most. This organisation very soon started to show signs of the malaise it was set up to cure. One man, Charles Knight Murray, assumed great power over the Church estates, but forgot to tell the Commissioners that he was a director of the London, Chatham and Dover Railway and an eager speculator in railway shares. To pay for his prodigious share purchases, he intercepted and converted for his own use Church money drafts to the value of nearly a quarter of a million pounds in today’s money. In 1849, he was found out. He pleaded with some justification that his speculative abilities had produced a lot of money for the Church and he was not prosecuted. But for the next hundred years Church investments were kept well away from speculative adventures. The property the Church now bought was, in the main, low-rent housing in the inner cities, where it gained a reputation as a benevolent landlord.

All this changed after 1948, when a new body of Church Commissioners was set up by the postwar Labour Government. The finances and investments of the Church were obviously too complicated and diverse to be run by 95 Commissioners, so power over the money was vested, in effect, in two men: the First Estates Commissioner and the Estates Commission Secretary, now ensconced in nice offices at Number One Millbank, later to be known as Number One Millstone. Their job was to make money for the Church and they had little regard for sanctimonious bleatings about not serving God and Mammon. On the contrary, Mammon had to be served with great diligence in order to enrich the Church of God. Property investment was switched from low-rent housing to office and shop speculation on a grand scale. Max Rayne, the first of the great postwar London property speculators, immediately recognised the Church as a suitable partner. Its advantage was obvious: a bottomless purse, created by centuries of land-hoarding and the generous legacies of dying and repentant Christians. The division of labour between the speculator and the Commissioners was obvious, too. With his legendary ‘feel’ for a profitable property deal, Rayne would find the land, convince the owner to sell and provide plans for sumptuous developments. The Church would have to do nothing, really, except put up the money.

In the Fifties, when property development in bomb-shattered London was money for old rope, the partnership flourished and produced mighty revenues for the Church. The Commissioners’ success, however, was tarnished by the whining of rank-and-file Christians who noticed that profitable property speculation usually led to great distress among those leastable to cope with it. Hundreds of working-class families were chucked out of their homes in Paddington, for instance, to make way for luxury apartments and executive suites dreamed up by Rayne and financed by the Church Commissioners. The Rev. Kenneth Bartlett, who became vicar of St James’s Church in Sussex Gardens in 1963, infuriated the Commissioners by likening them to the slum landlord, Peter Rachman. Rachman, Bartlett said, had made life difficult for a few hundred people, the Church Commissioners had done the same for a few thousand. Another whinger was the Rev. Adam Duff, vicar of Holy Trinity Church in Bishop’s Bridge Road, Paddington, whose land was flogged off to developers for luxury flats. This decision, in defiance of the wishes of the parishioners who had voted for low-rent housing, stunned Duff. ‘The decision,’ he said, ‘did the Church little credit. This was an area of great social deprivation. The decision by the Commissioners, and indeed the diocese, caused a great deal of local anger and understandably held the Church up to charges of hypocrisy, being, as it was, so careless about the weak and vulnerable, those whom Jesus commands us to help.’

As long as these developments brought in vast rewards for the Church, complaints of that kind were ignored. In the Eighties, the Church’s weakness for property speculation turned into an obsession. From 1983 the Church’s money was under new management. Huge blocks of capital were invested in shopping malls on both sides of the Atlantic. Between 1985 and 1989 investment in retail projects increased from £156.6m to £460.3m, from 16 per cent of total investment to 48 per cent. The cost of these developments outsoared the expenditure approved by the Church’s Assets Committee. From 1985 to 1989 approved projects were valued at £557m, but cost £979m. There were huge over-runs on almost all the developments. St Enoch’s shopping centre in Glasgow included an ice-rink. The rink was covered with a glass roof, which, someone discovered too late, had the effect, on a fine day, of melting the ice. A new canopy had to be erected. Stories like this were repeated ad nauseam. Although these developments were joint operations, a common feature of almost all of them was that the Church bought out its partners at an early stage and at a generous price. Sir John Hall, the Newcastle entrepreneur, was bought out of the Gateshead Metro shopping centre before it was built. He got £40m, but the Church kept losing money on the project until it was finally sold at a staggering loss in 1990. Sir John’s controversial plan to build another stadium for Newcastle United is at least in part financed by the payment he was made by the Church Commissioners.

Terry Lovell conservatively estimates the total loss on these speculations at £400m. Who was responsible? The First Estates Commissioner from 1983 was a former head of Customs and Excise with the gloriously Dickensian name of Sir Douglas Lovelock. The Secretary was an accommodating Old Etonian called Jim Shelley. Their commercial property manager was Michael Hutchings, a young eccentric known as ‘the man with the golden nose’ – a reference not only to his ability to sniff out a nice little earner in the property market, but also to his highly-developed taste for wine. Hutchings loved travel and his work often took him to conferences and meetings in Europe and the United States. He had a fear of flying, and so travelled by sea, accompanied by cases of specially-chosen wine. This ‘ill-matched’ trinity, as Lovell describes them, were in a position of unassailable power. Unquestioned and unchecked, they built up a property portfolio worth nearly half the entire investment of the Church. Their principal agent in this endeavour was William Wells of Chesterton’s, the blue-blooded estate agents. Sir Douglas Lovelock described Wells to Lovell as ‘a man of total integrity who thought he was, and sometimes was, bringing to the Church very good opportunities for development, some of which turned out better than others’. In 1990, Chesterton’s were paid £7.5m ‘for agent and property management services’.

In the mid-Eighties, as Margaret Thatcher and François Mitterrand signed a joint treaty to build the Channel Tunnel, a couple of small-time speculators based in Scotland had the bright idea that the project would lead to massive property development in Kent. They started inquiring about options to buy land around the proposed rail depot at Ashford. They approached two speculating companies – Imry, run by Martin Landau and Martin Myers, both experienced developers, and European Land, run by a fly-by-night Yorkshireman called Jim Cookson. These three companies were keen to be involved in a development at Ashford but they needed a large, rich company to put up the money.

The Ashford ‘Great Park’ Plan envisaged an entirely new town in the Kent countryside, with 1500 houses, a 124-acre business park, five hotels, a vast leisure area, a 137-acre shopping and community centre and lakes covering 67 acres. Sir Douglas Lovelock adored the idea. He felt he knew about overseas travel from his time at Customs. Jim Shelley thought it was great. Michael Hutchings became entirely hooked on it. So did William Wells of Chesterton’s. If the development had come off, it would at a stroke have solved the financial problems created by all the other property disasters. Once again, however, the giant step forward for the finances of God’s Church was impeded by the congregation who worshipped in it. Major John Varrier, a churchwarden at St Mary’s church at East Brabourne, Kent, said he felt his Church was ‘stabbing us in the back’ – ‘riding roughshod over our environment and people’s local interests in order to make a lot of money’. Other protesters appealed to Robert Runcie, whose pronouncements about the reckless pursuit of profit in the inner cities had so annoyed Mrs Thatcher. Runcie concluded that the Ashford development was ‘the price we have to pay for economic expansion’. The good Christians and Tories of Kent didn’t agree and their vocal opposition was a clear warning to the Commissioners that they might not get planning permission, but this was never heeded. Almost incredibly, £87m was spent on the ‘Great Park’ even though it never received planning permission.

Some of the Church’s losses on its retail developments can be put down to the rise and fall of the market, and in particular to the 1990 recession. No such excuse can possibly apply to the fantastic waste at Ashford. Terry Lovell has tried as hard as he can to discover where the £87m went. Martin Myers of Imry helped a little. ‘Imry took fees,’ he told Lovell. ‘We got substantial fees over a period of time, so did Chesterton’s, so did others, we had the architect who took enormous fees ... there was the traffic engineer, there were numerous consultants.’ These fees, Lovell concludes, came to £4m a year for three years. What about the other £73m? According to Lovell, most of the recipients and the services they provided remain ‘a mystery’. Of all the parties involved, the only one to suffer was the Church, which, as in so many of its ventures, either bought the speculators out or guaranteed them against losses. Jim Cookson, who has since died, made an enormous fortune from producing absolutely nothing at Ashford Great Park. He was paid £1.35m for ‘marketing and setting up’ and his skilful re-valuations of his part of the project netted him hundreds of thousands more. He paid himself a huge salary and awarded himself endless perks, for no better reason than that this development was underwritten by the Church of England. His firm, European Land, went into receivership, but he profited even from that. Imry did well too: it had at least £400,000 of Church money which was never paid back. In 1990, before the final collapse of the plan, Martin Landau sold his shares in Imry at a vast profit. Imry went into receivership soon afterwards and the only substantial victim was Barclays Bank.

When the full scale of the property disasters was finally exposed in the summer of 1992 – thanks to an exceptional piece of investigative journalism by John Plender in the Financial Times – the Church authorities reacted with their usual sangfroid. Coopers and Lybrand, Maxwell’s accountants, who had audited the accounts throughout, were called in to conduct an expensive investigation. The actuaries Watsons were asked to report on the consequences for Church of England pensions, and Howard Gracey, a partner in the firm, was appointed to the Archbishop of Canterbury’s Lambeth Group, which also conducted an inquiry. Another member of the Lambeth Group, at least until the bank of which he was chairman went down the pan in circumstances more dramatic than anything the Church Commissioners could have imagined, was Peter Baring. The House of Commons Social Services Committee under Frank Field carried out a long investigation which resulted in unusually strong language for a Commons Committee. The ‘foolishness’ and ‘complacency’ of the Commissioners, the report concluded, has ‘in all likelihood done more than any other single act to destroy the parish system of the national church’.

The result of all this has been a proposal to streamline the Church of England bureaucracy. A secret cabal of high-born and City experts in charge of finances and estates has been replaced by a secret cabal of highborn and City experts in charge of finances and estates. Curiously, Terry Lovell seems satisfied with this. He appears to believe that the Church of England’s investments will be ‘more ethical’ in future. Neither he, nor Frank Field, nor anyone in the Lambeth Group, seems even for a moment to have come to grips with the real problem – that the quickest way to get rich in Britain today is by gambling in stocks and shares or in property or both, and that any organisation with pots of money will inevitably be enticed into taking part. Jesus had the right idea when he overturned the tables of the moneylenders.

Where are they now, the heroes of this story? Sir Douglas Lovelock, without a word of apology, has retired on a fat pension to his £300,000 house in Coulsdon. At least he talked to Terry Lovell. Jim Shelley, who has also retired comfortably, did not. Michael Hutchings got a pay-off/consultancy worth more than £100,000 from the Church he so devotedly advised. William Wells became a millionaire when Chesterton International was floated on the Stock Exchange, and was knighted in 1997 for services to health care. Martin Landau went home to Monte Carlo for a while, but returned to the British property market in the mid-Nineties with a new firm which included on its board the chairman of the Welsh Development Agency (who also lives in Monte Carlo) and a former treasurer of the Tory Party. Landau’s firm is now chaired by Lord Gowrie, chairman of the Arts Council. Charles Knight Murray, who started off the speculative investment of Church money so many years ago, confessed and apologised. He was not prosecuted. He took off to Australia where he became a very important person in the government, and the Bar, of New South Wales.

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