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Lord Gisborough: I thank my noble friend for that explanation. I was especially glad to hear him say that the charges do no more than recover costs. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40, as amended, agreed to.

Clauses 41 to 43 agreed to.

Clause 44 [Grants to the new Agencies]:

Earl Haig moved Amendment No. 223ZZD:


Page 38, line 4, leave out ("may") and insert ("shall").

The noble Earl said: The amendment seeks to ensure that the agencies will have the money to carry out their statutory functions. One disadvantage of the Bill is that it would distance clients at the local level from sources of revenue. Under the present system in Scotland, funding is channelled from the local authorities through the river purification boards which are in close touch with regional authorities. Even if money is needed at short notice to cope with emergencies, it can be provided without delay.

Under the Bill, financial sources would be more remote. Procedures would take time. Time lags may emerge. Ministers who would control the purse strings with the approval of the Treasury might ignore urgent appeals from agencies. Treasury constraints may well cause agencies to be underfunded and unable to cope with emergencies.

The amendment means that all finances would not be left just to the discretion of Ministers and to the Treasury, but some money would be kept up front ready to meet emergencies. Ministers would ensure that grants were adequate for the agencies to meet their commitments, but the arm's length principle would prevail over too much control by central government.

Without some qualification of Clause 44, there must be doubts about the level of damage limitation in the event of a crisis. Perhaps I may declare an interest as a Tweed riparian owner. Since 1955, when the Tweed Purification Board was set up, there have been several events which might have turned nasty had there not been a quick and successful response. Thanks to careful monitoring, the quality of the water has improved. Through this simple proposal, we would have some assurance that we will enjoy the security we have enjoyed in the past. I hope that my noble friend will accept the amendment. I beg to move.

Viscount Ullswater: Amendments Nos. 223ZZD and 223ZZE seek to ensure that the agency will have sufficient financial support from government to enable it to carry out its statutory functions.

Clearly it is important that the agencies should be adequately funded, and although the charging schemes will enable them to recover their costs in respect of many of their activities, we do not expect that either of the agencies is likely to be entirely self-financing in the foreseeable future. We expect that they will continue to be supported by government grant.

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The current precept system is based on seven river purification boards with boundaries broadly similar to those of the Scottish Regional Council. That system is not appropriate for a national agency. The provision in Clause 44, however, is modelled on the equivalent provision for the NRA in Section 146(1) of the Water Resources Act 1991 and is the standard wording for ministerial grant-making powers to non-departmental public bodies. I see no reason to change this. I hope that my noble friend will withdraw the amendment.

Earl Haig: I am disappointed that the amendment has not been felt worthy of consideration. I can do nothing at this stage but take it away. I should like time to think about whether to bring it back on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 223ZZE not moved.]

Clause 44 agreed to.

The Earl of Lindsay: I beg to move that the House do now resume. In moving this Motion perhaps I may suggest that the Committee stage resumes again at 8.30 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Historic Buildings: VAT on Repairs

7.28 p.m.

The Lord Bishop of Norwich rose to ask Her Majesty's Government whether they will support moves within the European Union to set a lower rate of VAT for repairs to historic buildings, including Grade I listed parish churches.

The right reverend Prelate said: My Lords, I am glad to have the opportunity to ask this Question, because it allows me to highlight an issue of great importance and widespread interest. I am grateful to the large numbers of noble Lords from all sides of the House who have expressed their concern over this issue, even though many of them were prevented from being here this evening. I am also grateful to the noble Lord, Lord Mackay of Ardbrecknish, for being here, and I look forward to hearing his response.

This is a subject which deserves thorough treatment—far more thorough than is possible within the confines of this evening's debate. The issue is timely because the European Commission is pledged to revise the transitional phase of VAT by the end of December 1996. Under the definitive phase which follows, member states will be authorised to apply, in addition to the standard rate, one or two reduced rates, which must not be less than 5 per cent., to a limited list of products and services.

The revision of that list will be undertaken shortly, and there is a considerable and powerful body of opinion throughout Europe which is urging that heritage items should be included. It is therefore important to encourage our government representatives, not least the

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Chancellor of the Exchequer, who will attend a meeting of Ministers in March, to support such moves, or, at the very least not to oppose them.

The Question embraces all historic buildings, but I wish to limit what I say to the buildings that I know best—our ancient parish churches, particularly those in rural areas. A similar case can be made for cathedrals, stately homes, and other public buildings. But parish churches focus the issue sharply, because they, unlike some other categories of building, depend very much on money raised locally, often in very small communities; but, like the others, they form an important part of our national heritage.

I speak from personal experience of nine years in a diocese where I have the care of some 650 mediaeval churches which are listed as of special architectural and historic interest. My brother of Lincoln has a few more churches than I have but the diocese of Norwich has more mediaeval churches per acre than anywhere else in the world. The city of Norwich contains more mediaeval churches than the cities of London, Bath and Bristol combined. The large majority of those buildings are in small communities; nearly half in villages with fewer than 300 inhabitants.

Of course, we must not forget the great things that have been achieved. The past 30 years will go down in history as one of the greatest ages of church restoration, far exceeding that of our Victorian forefathers. Taken overall, most of our ancient churches are in a better state of repair than since the Middle Ages and the quality of the work is such that it will last for generations. Of that we can be justly proud.

However, serious problems remain. Perhaps I might illustrate that by quoting extracts from the letters of two Norfolk parsons. The first states:


    "We have just completed repairs to the church tower at a cost of over £30,000, thanks to the years of effort by the tiny congregation and generous grants. In another of my parishes with some 30 houses and a congregation that can be counted on the fingers of one hand, we faced repairs in excess of £40,000".

He concludes:


    "the days when it is possible for tiny congregations to maintain ancient buildings together with the expenses of the ordained ministry, sadly appear to be numbered".

Those are the words of a hard-working, very experienced, imaginative and faithful country parson like whom, thank God, there are scores of others in all our rural areas. But we need to take seriously the reality that he and his parishioners face week by week.

The second letter relates directly to the Question that I am asking. He writes:


    "We have just completed the repairs to our parish church. We are immensely grateful for the grant we have received from English Heritage. It just covers the bill for the VAT on the repairs".

That parson, little does he know it, was lucky because, taken overall, the grants received from the Government through English Heritage amount to less than half the total bill for VAT on the repairs to our church buildings. When we repair our ancient churches, the Government receive more than twice what they give. And that is true not only of church buildings.

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For years the churches have urged the Government to charge a lower or zero rate of VAT on repairs to church buildings. We have been met with adamant refusal. Ministers' replies to letters on this subject have been less than satisfactory. "You will appreciate", says one, "that a concession to one worthy cause raises expectations for similar special treatment from other equally worthy causes". The blandness of that reply evades the reality that there are very few causes where so much is undertaken by so few for so many. It is sometimes pointed out that extensions and alterations to churches are zero rated. True, but maintenance and repair involve 95 per cent. of our expenditure on church buildings and they attract the full rate of 17.5 per cent. VAT.

In recent years within the European Community there has been a growing and widespread opinion that concessions should be made for repairs to ancient buildings. The Maastricht Treaty of 1993 added to the provisions on Community policies a new title IX "Culture". In a single article (Article 128) it states,


    "The Community shall contribute to the flowering of the cultures of member states".

It also states that,


    "Conservation and Safeguarding of the Cultural Heritage of European significance",

shall be one of the priority action areas.

As far back as 1991 the Committee of Ministers of the Council of Europe advocated VAT relief among other measures in favour of the conservation of the architectural heritage. In addition, the Vienna Summit of Heads of State of the Council of Europe, meeting in October 1993, stressed the importance of the cultural heritage.

Our mediaeval churches are a rich inheritance which I believe we have a duty to care for. Parishioners in rural areas have raised millions. Those who are not regular churchgoers are also often generous in support of their building which is part of the whole community. In Norfolk, as in other counties, we have formed village church trusts, and we have the local support of the marvellous work of the Norfolk Churches Trust. But the size of the problem is enormous, and it is a problem which belongs to the whole nation because it concerns what is a significant part of our national heritage.

The Government recognise this in many of their public pronouncements and in the practical action they have taken in enabling grants to be made, notably through English Heritage. But much more needs to be done. It is not enough to point to the tax concessions made to individuals who give to charity. This is an issue which is beyond the scope of individual response; it is beyond the scope of small communities; it is beyond the scope of local trusts. It is an issue which belongs to us all and which is the responsibility of us all, including our Government.

I could have produced many more arguments, perhaps appealing to the Government's self-interest, by justifying the case in terms which would benefit the economy—concerning the importance of these matters in relation to one of our largest and growing industries, tourism; in relation to job creation; that it actually makes long-term economic sense. But I shall leave those

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arguments to noble Lords better qualified than I am. I wish simply to appeal to the Government's higher motives, and to what I regard as natural justice. It is a ludicrous and unjust state of affairs when the Government take back from those who guard the nation's heritage more than twice what they give to them.

This is not just an issue for the churches; it is an issue of our nation's heritage. The Government are fellow guardians with the churches and other groups of that heritage. We do not begrudge the money, time and energy that we give, but we do find it difficult to understand why the Government so far have been unwilling to look sympathetically at this issue. My hope is that the opportunity which is presented to us through new moves in Europe will encourage our Government to think new thoughts and make new commitments and perhaps to take a lead in Europe in a matter which is of immense importance to us and to the generations who succeed us.

The Government hath given and the Government taketh away. Blessed is the name of the Government that giveth just a little more than they taketh away.

7.37 p.m.

Lord Dean of Harptree: My Lords, I support the powerful case made by the right reverend Prelate the Bishop of Norwich. I was appalled to hear that, although the state gives certain contributions to assist the churches, it takes back substantially more in VAT. It is the old Whitehall trick; if you have to give with one hand, make sure if you possibly can that you take away more with the other.

The right reverend Prelate mentioned country churches. The church with which I am involved is a country church. There are three small villages with small populations and there are three churches. The treasurer tells me that normal maintenance—not large works—costs an average of £5,000 per year. Of course, VAT is added to that.

We must also take into account the fact that we in the Church of England are expected to raise larger sums of money in quota because less comes from the Church Commission. That is a new factor which I hope the Government will take seriously.

As was said by the right reverend Prelate, we have a rich and glorious heritage in our churches. We must maintain them in good order so that God may be praised in them for many centuries to come. Inevitably, repairs to churches involve specialist work, which is time consuming and therefore costly. Zero VAT rating, or at least a reduced rate, would be a great help. I hope that we shall receive a sympathetic and positive response from the Government.

7.39 p.m.

Baroness Nicol: My Lords, I am grateful to the right reverend Prelate for giving us the opportunity of this debate, even though it is very short and there is hardly time to say more than, "I agree with everything that he said". However, I shall do my best.

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It has been agreed generally so far that our churches are part of our heritage and that it is our duty to see that they are properly maintained. But by their nature, as the noble Lord, Lord Dean, has just said, they are expensive to maintain and repair. Although the heritage grants are extremely welcome, there is the disadvantage that they come with strings attached. Quite often the extra work entailed as a result of those strings adds considerably to the buildings costs. I do not blame English Heritage for that because I know that it must keep up its standards. Nevertheless, that is a factor which must be taken into account. As we have heard, the grant may be less than is paid out in VAT in some cases.

But the importance to the community of those churches cannot be overestimated, even though the congregations may be very small. That is no reflection of the feeling which local people have toward their church. I know that the congregations should be larger but they are not. However, whenever people are in trouble or want to get married or hold a christening, they turn naturally to the Church. It is only right and proper that that should be their feeling and that the church to which they go should be in a good state of repair.

Some congregations struggle very hard to keep up their churches. It seems to me quite wrong that the pennies that they raise by baking cakes and holding jumble sales, and all the other things which are done to raise money, should attract VAT. I hope that the Government will look kindly upon the request made this evening by the right reverend Prelate and that they will at least consider setting a lower rate of VAT if they cannot abolish it altogether.

7.41 p.m.

The Lord Bishop of Chester: My Lords, I am grateful to be able to intervene in the debate. I speak also as the chairman of the Committee for State Aid to Churches in Use. In that sense, we are grateful that over 10 years, English Heritage has given £90 million for churches. That is an average of £9 million per year. But in 1992, the bill for repairs and renovations was £112 million so that £9 million does not go far towards that, although we are grateful for it.

There are 16,364 Church of England churches of which 12,970 are listed Grade I or II buildings. They were built mostly in an age before mobility was easy. If the Church of England began today, it would not start from where it is. In view of the mobility in relation to supermarkets, medical centres and so on, we should probably build only one in 10 of our churches. But we have them and they are very much part of the nation's heritage, not just part of the Church's heritage. They crown the landscape all over our country and wonderfully so. In one town in my diocese, £100,000 was raised to prop up a tower which was about to fall down—a free-standing tower which used to belong to the church. That was done because it crowned the village. Without it, the village would never have looked the same. Therefore, there is a sense in which this is a national rather than a Church question.

Indeed, 40 per cent. of all that English Heritage does goes to churches. It estimates that that is the proportion of its heritage responsibility. The local community

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strains to continue with that work, as we know. It really is a fight for some small communities. There may be only 300 people in a community which has a large church. My diocese has many such churches. They are wonderful, beautiful buildings which are left rather like whales on the beach from a time when the community was all around. But they are there and the village people fight to maintain them. The last cruel blow is the 17.5 per cent. VAT on top of it all.

Now we have an opportunity for action. The European Commission recommending a review of VAT this year is, as I understand it, well persuaded by the strong heritage lobby in Europe that there must be an alteration to Annex H and, within it, there should be the possibility of a lower rate for the support and repairs of heritage buildings. If that is what is declared in a few weeks time—and I understand that it may be—that is the moment not for reaction but for action; it is not the moment for pathetic excuses or shilly-shallying. This is the moment that Britain should be a country of culture taking a lead to support that move. We should not drag our feet but should lead the way in Europe by setting a lower rate for the support of heritage buildings throughout Europe.

7.45 p.m.

Lord Montagu of Beaulieu: My Lords, I quickly declare an interest and go on to remind the House that there are half a million listed buildings and 14,000 scheduled monuments in England, all of which carry a repair duty of 17.5 per cent. VAT.

Sixty three per cent. of all listed buildings are domestic. They range from Blenheim Palace to humble cottages in Lincolnshire. The span of owners is similarly wide, from dukes to sometimes very poor retired couples on income support who own Grade II buildings. Of course, religious buildings represent the greatest number, but it is worthy of note that the Church of England, which is responsible for over 6,000 Grade I buildings, receives proportionately less public money per listed building than does the National Trust. Therefore, a reduction in the rate of VAT should certainly not be seen as a gift to the very well off.

The rise in VAT rates since its introduction has not been paralleled by any similar rise in government grants. Exact figures are almost impossible to come by, but the recent 2.5 per cent. increase in VAT represents about 10 per cent. of the total grant of English Heritage aid. There is no doubt that the Government are getting more back in VAT on repairs to historic buildings than they are providing in grant aid through English Heritage. That applies also to Scotland and Wales.

The impact of VAT on owners falls most heavily on those who have no opportunity to reclaim it. Those particularly affected include the owners of smaller historic houses and bodies such as the Church of England and charities. Commercial and business owners and those with major houses offset VAT on repairs against VAT charged on the services which they supply. The impact of VAT on historic building owners is thus not neutral but regressive.

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The campaign to achieve a lower rate of VAT for repairs to historic buildings has widespread support from building professionals. In England the Historic Houses Association and the National Trust, with English Heritage, have taken a lead with support from the major amenities societies, the Church and many other representative bodies.

The desirability of reducing VAT rates for repairs on listed buildings is the most important issue which concerns them. I am not arguing for a special regime for the repair of listed buildings in isolation, but I ask the Government to support the inclusion of repairs to historic buildings in the list of goods which attract a reduced rate of VAT in Annex H. It would not require the Government to introduce such a rate now in the UK, but would merely provide the opportunity for a future government to do so after 1997.

7.47 p.m.

Lord Bishop of Chelmsford: My Lords, I speak as chairman of the Churches Main Committee. The committee represents some 35 denominations and has, as part of its brief:


    "to act as a liaison body between the churches and the machinery of government".

Most of the denominations that we represent have historic churches and all of them suffer from the burden of VAT on repairs to their church buildings.

For some 20 years now, ever since the introduction of VAT, we have been in communication with successive Chancellors requesting some relief in VAT on repair expenditure. But always we have met with total resistance. It is all very well for the Government to say, as they do, that the proper way of giving tax relief to charities is through income tax rebates rather than VAT reductions, thus enabling the charities to spend their money as they choose. But the Church has to spend a large part of its income on items which are subject to VAT. If the buildings were not maintained, they would cease to be usable and may even become structurally dangerous. It simply does not have any choice in the matter.

The Government recognise the importance of maintaining historic buildings as part of the national heritage. They make grants towards the upkeep of some of them. But ironically, the grants which they make towards the repair of churches are far outweighed by the VAT which the Government claw back. Is that really how the Government wish to treat parishioners who shoulder on behalf of the nation a major responsibility in the maintenance of buildings which are part of our national heritage? In 1991, the Church paid £35 million in VAT, compared with £8 million of grant aid received through English Heritage. Today, the VAT bill is nearer £50 million.

Our church buildings have a religious community and cultural significance. They are visited by vast numbers of people, they have become tourist attractions and their upkeep engenders a good deal of work. Therefore, in terms of the balance of payments and the creation of jobs, they have an added importance. The latter are

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among the criteria which have led the European Commission to adjudge some items as being worthy of a lower VAT rate.

On behalf of all the major denominations, I strongly urge the Government to make a clear statement that they will now commit themselves to early action along the lines suggested in tonight's debate.

7.50 p.m.

Lord Mountevans: My Lords, I am grateful to the right reverend Prelate for giving us the opportunity to debate VAT in the context of repairs to historic and listed buildings. The tourism industry, in which I declare an interest, would welcome European moves towards more sympathetic treatment.

The built heritage is a major part of our attraction as a tourist destination—70 per cent. of a recent sample of foreign visitors to London said that it was our greatest attraction. In another survey, 65 per cent. of foreign visitors to Britain stated that, in general, our cathedrals, historic houses and sites of historic importance were their main reason for coming here. Anything that we can do to enhance such attractions and their viability must add to our competitiveness in the cut throat world of international tourism.

To that end, the British Tourist Authority has set up a working party of relevant, major trade associations, including the Historic Houses Association, to look at the effects of VAT on our international competitiveness. As I understand it, Touche Ross is in the final stages of a complex study on the subject. The study aims to demonstrate that applying a reduced rate of VAT to a range of tourism products in the United Kingdom—and, in particular, to the built heritage and in line with our European partners—would have a positive or, at the worst, a neutral impact on Exchequer revenues because extra tourism business would be generated.

The working party has also been concerned to see the scope of the EU reduced rate list extended. Discussions are currently in progress in Brussels about this, as part of the moves towards agreeing the final or "definitive" VAT regime. Repairs to listed buildings is one of the items which the working party—and I repeat myself here—would most like to see included.

I very much hope that the Government will study very carefully the final report from the BTA working party and, in the negotiations on the final scope of the reduced rate list, campaign for the list to include repairs, among other things, to our ecclesiastical heritage but also to our built heritage in general. To do so would benefit not only our own lives but also our tourism industry immensely.

7.53 p.m.

Lord Walpole: My Lords, I should like to thank the right reverend Prelate the Bishop of Norwich, in whose diocese I live, for tabling tonight's Unstarred Question. He said that he had about 650 mediaeval churches in his diocese, of which 300 are in the countryside, with populations of less than 300 to look after them. But, incidentally, what he did not say is that there are more mediaeval churches in Norwich than there are in the city of Florence.

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I suppose that I am declaring an interest of some sort when I say that I am a church warden who is responsible for one of those small mediaeval churches which is situated right out in the country and listed Grade II*. Of the seven churches in our group, we have two Grade I and the rest are Grade II or Grade II*. I firmly believe that the lower rate of VAT should be applicable to all listed churches.

My concern is not only for the main structure of the church —indeed, I speak somewhat proudly because we have actually finished our roof and paid VAT on it—but also for the other parts of it which make the church so important, especially when they are listed. I refer to the interior. For example, we are at present trying to restore an organ which dates back to 1820, but VAT makes the bill for restoring it look quite horrible. The other monuments, bells and furnishings, when they are listed, should also qualify for the lower rate of VAT. Again, if one looks outside the church into the churchyard, the walls, gates, monuments and, as I am sure noble Lords will all expect me to say, its archaeological remains, together with the buildings and the tombstones, should also attract the lower rate of VAT when being repaired. Incidentally, those planners among noble Lords present this evening will know what I mean when I say that we had a tombstone which was declared a "building at risk". That was indeed so.

Churchyards are indeed an important part of the ambience of the church. They are havens for wildlife. We all know that that is so in the cities; but that is also the case in the countryside simply because that is one of the few areas where there are no chemicals to be found. They are also havens for people—people of all creeds and denominations. It is all part of our heritage which all taxpayers can support.

7.55 p.m.

Lord Suffield: My Lords, I should like to add my support to that already expressed for the right reverend Prelate the Bishop of Norwich. In Norfolk, in particular, we have inherited many churches built in times when local trade and financial support were more apparent than they are today. Such churches are now dependent on a small body of parishioners who are responsible for finding the quota to help pay the vicar's stipend but sometimes also have to find vast sums of money for repairs. I believe that a lower rate of VAT is fully justified and I urge that that be supported.

7.56 p.m.

Viscount Brentford: My Lords, I thank the right reverend Prelate for introducing the Question. I should like to urge the Government to accept the proposal that we are now considering. Like other speakers, I am most concerned about the listed parish churches which fill our countryside and also our towns. There are two points that I should like to make in that connection, while appreciating the grants that are made both to cathedrals, which I believe take the bulk of the cash, and also to churches from English Heritage.

First, as has been mentioned, those churches are often maintained by very small congregations and also by the local communities. The fact that they are accepted as a

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responsibility by the communities as well as the congregations is, I believe, evidence of the fact that it is the responsibility of the nation.

Secondly, parish churches are not money-making edifices. They are not like the Tower of London which receives a great deal of money from people who pay to visit it. Parish churches cannot afford the high rate of VAT. Therefore, I urge my noble friend the Minister to agree to accept the spirit of the proposal and to reconsider the position of the parish church as far as concerns heritage matters. If my noble friend is prepared to reconsider the latter, I should be most happy to write to him on one or two other factors that make parish churches suffer under the present heritage system.

7.58 p.m.

Lord Chorley: My Lords, I intervene tonight as chairman of the National Trust. The trust does not, in fact, have a serious VAT problem as regards its historic buildings. There is a simple technical reason for that which is not available to most private owners or, for that matter, to the Church. Nevertheless the trust strongly supports any move to reduce the VAT burden on the private owner. The reason is quite simple. Contrary to popular impressions, our sole purpose is to act as a long-stop should all else fail. We are not in the takeover business. We have long taken the view that the right way to preserve our heritage is through private ownership. A healthy private sector is all important to us; and, indeed, I would suggest, to the nation.

We strongly believe that the right way forward is that suggested in tonight's Unstarred Question—through the European Commission. The trust has been working strongly in Brussels over the past several years to that end.

It would be an enormous help to have the active support of the Government, or even merely an assurance that the Government will not oppose any moves by the Commission leading to a reduced rate. For example, a first stage, empowering member state governments to introduce the reduced rate at their discretion—I emphasise at their discretion —would be a great help.

I suggest that a reduced rate concession would be excellent value for the taxpayer's money. I see that as being in the nature of a fruitful partnership between the state and the private owner. After all, the private owner supplies the building which is open to the public. His huge expenditure of time and energy all comes for free.

We should not forget that stately home visiting is a hugely popular recreational activity. Nor should we forget—this point has already been mentioned—the importance of tourism as a foreign exchange earner. By contrast we have the ludicrous situation that in many cases the taxpayer pays the private owner as farmer to do nothing with part of his land—it is called set aside. That is, I suggest, an absurd state of affairs.

8 p.m.

Viscount Massereene and Ferrard: My Lords, the owners of historic buildings already have a heavy burden to carry. Not only are the buildings usually inconvenient and draughty to live in, or if they are not

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dwelling-houses the chances are they are equally inconvenient for the use they are put to. On top of that, anybody unlucky enough to be involved in a Grade I building is today hamstrung as to alterations and repairs. All building work, however trivial, has to be passed by the relevant department and has to be done in traditional materials in the traditional way, which usually costs over double what it would cost if the work was done in the modern way with today's materials.

Of course your Lordships will be aware that there are grants on occasions to help with this work, but in my experience even with the grant, which is usually 50 per cent., the work still costs more than if the owner was given a free hand to do the repairs as he thought fit. I am not necessarily decrying the rules on historic buildings or the grant system. In fact I think we look after our historic buildings very well in the UK, considering the large number that have been left to us. What I do feel most strongly is that charging VAT on repairs, considering all the impositions and disadvantages an owner of an historic building has, is adding insult to injury. I declare an interest in as much as I am chairman of the Friends of St. Ethelburga's, the mediaeval church in Bishopsgate which was blown up by the IRA. We have been quoted £2 million to restore that church. On top of that we have to add a smart £340,000 VAT.

8.2 p.m.

Baroness Strange: My Lords, when the right reverend Prelate suggested I might join in his Unstarred Question, I was delighted to do so, and even more now that I realise my contribution will have to be subliminal. If your Lordships yawn, you will miss it. I endorse entirely what the right reverend Prelate and other noble Lords have said. For some years now the Historic Houses Association has been campaigning for a reduced rate of VAT on essential repairs to historic buildings, houses as well as churches, because being old, like people who are getting on, they are in more need of repair than younger, newer ones.

We live in a beautiful country, and much of that beauty comes from the old houses and churches which punctuate the landscape. We want our grandchildren, and those who come after us, to share this beauty. But it can only be maintained by constant repair. Of course I have an interest to declare, living in a nest of ancient buildings, which all need repairing all the time. This winter for example, the roof of a 19th century dairy fell in in our courtyard, and also the roof of an 18th century gothic garden shed. Last year it was the 18th century wall which ran from the back door to the old laundry which fell down in the middle of the night, much to the dismay of the lady who lived behind it. We built that up. We will probably restore the roofs this year—at least we plan to. But without looking too far ahead, we are wondering what will fall down next year. To reduce the

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rate of VAT on repairs to historic houses, castles and churches, might help to prevent us all living in a countryside punctuated by ruins.

8.4 p.m.

Lord Eatwell: My Lords, it is evident from the debate this evening that there is deep dissatisfaction with the Government's approach to our national heritage. There has been a wealth of evidence presented by noble Lords on all sides of the House that buildings of vital importance to our nation's history and in our nation's cultural life are being allowed to decay, in some cases beyond repair. That is the issue which it is vital for the Minister to address this evening.

A powerful case has been made on all sides of the House for a lower rate of VAT on repairs. Of course the Government will not accede to the right reverend Prelate's request. It is impossible to imagine this Government willingly reducing any rate of VAT. As everyone in this House is well aware, the Government are VAT junkies. Every few years they need a new VAT uprating fix.

I suggest that the future of Grade I buildings is too important to be embroiled in the complexities of European Union tax law. It is all too likely that implicit tax subsidies would end up in many pockets which have little or nothing to do with any nation's heritage. Instead of leading noble Lords astray into the maze of tax legislation, the Minister should this evening be proposing practical steps to deal with Britain's heritage and in particular with the problems of repairs to our mediaeval churches. What new measures is the Minister prepared to announce this evening which will have immediate and practical consequences for the restoration of Britain's Grade I listed buildings? In particular what practical steps will he announce to deal with the problems of church restoration? Is he prepared to back the development of matching funds schemes to encourage those thousands of enthusiastic volunteers who spend so much of their time raising funds to help preserve our national heritage?

As many speakers in this debate have emphasised, the preservation of Grade I listed buildings is an important contribution to the tourist revenues which are one of this country's most important invisible exports. Are the Government, at very least, prepared to acknowledge this fact, and to make a commitment this evening to bring to this House for debate a proper study of the economic benefits which this country derives from our Grade I listed buildings?

Finally, given the obvious importance which Members of your Lordships' House attach to this question, are the Government prepared to provide appropriate time for a thorough debate of the economic and cultural issues involved in deciding upon an appropriate level of investment in the preservation of our national heritage?

8.7 p.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the House is clearly grateful to the right reverend Prelate the Bishop of Norwich for introducing this debate and

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giving your Lordships the chance to have two minutes and a little bit each on the subject. I think I have been subject to what might be considered in another context as short, sharp shock treatment. Certainly the fact that your Lordships' speeches were contained in two minutes did nothing to minimise the message which you were delivering to me and to the Government.

The right reverend Prelate the Bishop of Norwich said—I wrote this down—that in his area there were more mediaeval churches per acre than anywhere else in the world. Perhaps as we are talking about European directives that should have been translated into hectares. Nevertheless the right reverend Prelate will still have more mediaeval churches than anywhere else. That is certainly one of the joys of going to places such as Norfolk, which to a Scot appears pretty flat. However, the one redeeming feature—perhaps there are more than one—and the great beauty of Norfolk is the parish churches. Often they have sadly been left behind in the march of population. One asks oneself who is around in that area to use churches of that size. Clearly when those churches were built the rural areas were heavily populated.

I understand and appreciate the sentiments expressed by all noble Lords this evening that we should indeed preserve our unique heritage for the benefit of both present and future generations, and there is the important commercial need to preserve and enhance our historic buildings for the tourist industry which is so important to the economic health of the country. As my noble friend Lord Dean of Harptree rightly pointed out, we should preserve these buildings for their original purpose of worshipping and glorifying God. We should not omit that purpose from the list.

The Government remain fully committed to promoting a wider understanding of our country's built heritage. We provide considerable support both through tax reliefs and grants, to which I shall refer later.

The main question raised by your Lordships in the debate tonight is the Government's policy on positive reduced rates of VAT. I regret to say to the House that the position that I shall underline is the one that your Lordships probably expect but would prefer not to hear; the House would prefer to hear me say something different. We remain opposed to a variety of reduced rates of VAT as a matter of principle. We believe that they complicate the operation and administration of the tax and inevitably erode the revenue yield.

The Government have made it quite clear—and I have to do so again this evening—that we have no plans to have a reduced rate of VAT on anything other than domestic fuel and power. Our long-standing policy has been to favour a simple rate structure, with a single standard rate and a zero rate.

As noble Lords mentioned, the European Commission has just published a report on the approximation of value added tax rates having regard to the functioning of the internal market. The report also sought to establish whether distortions of competition between member states had arisen as a result of the operation of reduced rates in the single market. The review concluded that in the present circumstances there does not appear to be

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any justification for introducing major modifications in respect of the level and structure of the rate system or in the scope of the reduced rate list.

Turning to the situation in the United Kingdom, the total number of listed buildings is approximately 510,000. In England alone there are approximately 9,000 Grade I listed buildings, of which 4,100 are Anglican or Roman Catholic parish churches, 18,000 Grade II* listed buildings and 416,000 Grade II listed buildings.

The Department of National Heritage receives overall funding from the Treasury. It decides on the distribution of that money to bodies such as English Heritage, which in turn allocate those limited resources to individual projects on the basis of the greatest need. This year English Heritage will receive more than £104 million in government grant. Of that it will provide an estimated £44 million in grant assistance, of which £10.5 million will assist church restoration and £4.3 million will go to cathedrals. Assistance from English Heritage is usually restricted to those buildings which English Heritage considers to be of outstanding historic or architectural interest, which is reflected in their listed status as Grade I or Grade II* buildings.

In addition, Scotland, Northern Ireland and Wales received from the Government a further £18 million in grants, of which a substantial percentage was given to religious buildings. In Scotland, for example, about £12 million has been made available through the responsible agency, Historic Scotland, in the current year under the grant scheme for both secular and ecclesiastical listed buildings. Glasgow Cathedral, where I worship, is very grateful for the work of Historic Scotland in maintaining that building. Fortunately, it is in the ownership of Historic Scotland and not of the congregation, who would find it extremely difficult to maintain a building of that size and importance.

In Wales the grant budget is £4 million. Expenditure up to January this year was £2.25 million, of which approximately £500,000 was for churches. In Northern Ireland the grant for listed buildings amounts to £2.25 million, of which just over £250,000 is allocated to churches.

Local authorities are also empowered to offer grants for the repair of buildings, whether or not they are listed buildings. They give a total of the order of £11 million.


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