Charles Munn: Bank on the Kirk to help

THE Church of Scotland is well placed with staff and buildings to act against the blight of poverty, writes Charles Munn

FAR from making poverty history, we have made it the future. Jesus had much to say about economics and how we lead our lives. Indeed, he said more about this subject than any other. It seems that many of us have forgotten, if ever learned, these lessons.

The General Assembly of the Church of Scotland in May 2010 decided to establish a Special Commission on the Purposes of Economic Activity to look into what had gone wrong with our economic system.

A team of experts and leading economic thinkers have, on behalf of the Church of Scotland’s Church and Society Council, spent the two years listening to people who have experienced financial hardship and poverty. The Special Commission on the Purposes of Economic Activity also heard from former chancellor Alistair Darling and representatives from the credit industry.

The special commission was given the task of looking at where the economic system had gone wrong. In particular, it was asked to establish what the Church of Scotland could do to improve matters.

Our 47-page report, which will be presented to the General Assembly of the Church of Scotland next month, has been written against a background of debate and disquiet about the workings of our modern economy and the social and moral vision that underpins it. The report, which is published today, is against a backdrop of severe international recession and instability, a serious sovereign debt crisis, particularly in the eurozone, high and increasing domestic unemployment, falling living standards and profound social and economic inequality.

The easy availability of credit and loans, and the exploitive manner in which much of the market operates have brought real hardship to savers and borrowers alike. The once-respected financial institutions in Scotland have fallen victim to their own overweening ambition. The effects of the financial crisis will be with us for some time to come.

This is not the first time the Church of Scotland has tackled the question of economics. In 1988, two years after the so-called “Big Bang” in financial markets, the Special Commission on the Ethics of Investment and Banking reported to the General Assembly. The commission warned about the trajectory of developments in the financial services industry. Thereafter, the Church and Nation Committee, now known as the Church and Society Council, had a watching brief on developments in financial services.

The 14-strong commission that reports to the General Assembly in May is comprised of people from a range of backgrounds, including anti-poverty campaigners, economists, politicians and theologians. Other members represented the health service, STUC and CBI.

Our remit was to address five questions:

n How can the Church of Scotland best offer Scottish society a new vision of what might be achievable in the economic, social and community life of the nation?

n How can the Church of Scotland, at local and national level, be encouraged to become more engaged in transformative economics?

n How can the quality of life, well-being and values, such as justice, cohesion and sustainability become the measures for economic activity?

n How should inequality be addressed, ensuring the appropriate levels of choice are made available to all?

n What changes in peoples’ attitudes and beliefs toward the economy might be desirable?

But soon after the commissioners first met it became apparent that there were four main priorities: reducing inequality; ensuring sustainability; promoting mutuality; and ending poverty.

Thereafter, we took evidence from a variety of people with experience of different sectors of the economy, whether as producers or consumers. We also heard from organisations such as Christian Aid and Church Action on Poverty, which are engaged in helping people deal with a variety of economic problems. We spoke to people who had talked to the Poverty Truth Commission.

When we asked: “If there was just one thing that we could change that would make life easier for people living in impoverished circumstances what would it be?” the answer we most often received was to reduce the price of consumer credit. Consequently, we invited several providers of consumer finance to come and speak to the special commission. Only one representative from the credit industry accepted the invitation.

It is well-known the poor pay more for most things, but it was something of a shock to learn that some pay-day loan companies charge in excess of 2,000 per cent APR for loans. Such a figure is clearly exploitive, yet regulators seem to be reluctant to do anything to change the situation.

Given that consumer credit is so important for many people, it seems sensible for the Church of Scotland to give its support to credit unions and similar organisations that both encourage thrift and provide reasonable rates of interest. The Church may be uniquely placed to do this, as it has the essential ingredients of a building in every parish and is rich in people with the necessary skills to implement this.

All professional bodies in the financial services sector now have ethics programmes firmly embedded in their education systems. Only time will tell whether these activities will have much impact, because people cannot be taught to be ethical, they can only be shown the way.

The question which was more difficult to answer was what we as citizens and consumers might do to bring about a “right relationship with money” and thereby create a society where people understand that getting into debt is, almost certainly not in their best interests no matter what the pressure may be do so.

It is, or was, so much easier to answer that debt is seldom the solution to poverty. In most cases it will exacerbate the problem. As I said at the start of this article, Jesus had much to say about economics and how we lead our lives.

It is clear that many people get into financial difficulty or buy inappropriate financial products because their understanding of the financial system is modest at best. There is an urgent need for greater clarity in the selling of financial services, but much could also be done through our educational system to enhance public understanding in this area.

There was also a concern that economic difficulties in communities tend to exacerbate health problems. In particular, unemployment and under-employment, especially among young people, clearly impact on the health, especially the mental health, of people who have difficulty getting employment. As Scotland’s largest care provider, the Church of Scotland is already doing a lot of work both at local and national level. Despite the best efforts, there is still a mountain to climb.

The Special Commission on the Purposes of Economic Activity looked at many other areas, including tax havens, executive pay, inequality, early years interventions and mutual organisations. It is in this last area that the Church of Scotland is probably best equipped to make a substantial difference as it has the resource, in people and buildings, to make a difference.

Economic relationships do not sit apart from human relationships. Wealth creation at the expense of others’ wellbeing is destructive and inhuman.

Our concerns are not new. In the New Testament, people are warned about the dangers of wealth and are called to bring the good news to the poor. A failure to feed and clothe those in need is seen as failure to act as Jesus did.

• Professor Charles Munn is chairman of the Church of Scotland’s Special Commission on the Purposes of Economic Activity and a former chief executive of the Chartered Institute of Bankers in Scotland.

• The commission’s report, A Right Relationship with Money, is published today and will be presented to the General Assembly of the Church of Scotland next month.