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Churches: VAT on Repairs

2.46 p.m.

Lord Boyd-Carpenter asked Her Majesty's Government:

    Whether they will withdraw the charge of VAT on work done on the maintenance and repair of listed buildings, including churches.

Lord Mackay of Ardbrecknish: My Lords, the Government have no intention of withdrawing or reducing VAT charges on the repair and maintenance of listed buildings and churches.

Lord Boyd-Carpenter: My Lords, to begin with, perhaps I may disclose an interest as I am church warden of a very small and beautiful church in Hampshire. With great difficulty we raised sufficient funds to cover necessary repairs to the building but then found an additional heavy load of VAT was imposed. Is it not outrageous that such transactions should be subjected to heavy taxation of a wholly unmeritorious and unnecessary character?

Lord Mackay of Ardbrecknish: My Lords, I am slightly surprised that my noble friend, who was a distinguished Chief Secretary to the Treasury, should think in such terms about taxation. The Government believe that it is wisest to have as broadly based a tax system as possible. In general terms, we are opposed to reduced rates in principle. They erode the revenue yield and lead other people to ask, "Well, if them, why not us?"

The Lord Bishop of Portsmouth: My Lords, does the Minister agree that church buildings have a significance for our society which amounts to far more than being places of worship, providing, as they do, a sense of stability, security and history in a volatile society, especially in those communities where the church is the only remaining public institutional building? Further, does the Minister recognise that, for the small congregation without assured access to outside funding, the difference made to the cost of the restoration of its church by the requirement to pay VAT can determine whether or not the building survives as a facility for the community in the future?

Lord Mackay of Ardbrecknish: My Lords, of course I recognise that fact. The right reverend Prelate is outlining the importance not only of the church buildings but also, I would hope, the importance of the Church in a community, quite separate from the church building. I equally appreciate the difficulties in raising funds. That difficulty is shared by other organisations and institutions looking after buildings which require work to be carried out on them.

However, I am afraid that my position remains what it was when we debated the subject at the end of January. We believe it is sensible that repairs and maintenance should be subject to standard rating and that there should be no exceptions on the kinds of buildings on which the

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standard rating is imposed. The right way to help churches and other such buildings is through the grants paid by organisations like English Heritage.

Lord Jenkins of Putney: My Lords, surely it is not the case that exceptions are impossible. After all, there are (are there not?) already exceptions to VAT. Is it not the position that the Government cannot make the exception proposed without breaching European laws?

Lord Mackay of Ardbrecknish: My Lords, I was not resting on that case. However, the noble Lord is right. Under the directive on value added tax there is a list of those items which can be dealt with in that way. Historic buildings and churches are not part of that list. However, I would not make that my defence. My defence is that the Government do not believe that we should make exceptions in the case of repair and maintenance to buildings.

Lord Boardman: My Lords, can my noble friend explain the apparent illogicality of additions to listed buildings being free of VAT while repairs necessary to preserve listed buildings attract VAT?

Lord Mackay of Ardbrecknish: My Lords, it is a longstanding feature of value added tax and buildings that new build and new construction is zero rated and that alterations are zero rated but that repair and maintenance, which can cover a wide range of items in a building, are not zero rated. My noble friend will remember that these difficult decisions have to be made in every tax system based on expenditure. I think that we do best if we make as few exceptions as we possibly can, and that is why I am not attracted to making another one in this case.

Baroness Robson of Kiddington: My Lords, I express an interest in this matter as secretary of a parish in Oxfordshire. Most parishes have managed to keep their church buildings going, despite the VAT, by raising money. Is there not now the opportunity to remove VAT when every parish is expected to pay for its incumbent as well in the future?

Lord Mackay of Ardbrecknish: My Lords, that takes us down a slightly different avenue. If I have understood the noble Baroness correctly, I should say that I do not believe that money should be rebated from the tax system so that stipends can be paid. There is already an extensive range of direct tax reliefs which help churches and other charities; for example, covenants. I am sure that every church, including the one I belong to in Glasgow, is keen to encourage people to take out covenants. There is also payroll giving for some charities.

Lord Cockfield: My Lords, is not the real trouble that the rate of VAT at 17.5 per cent. is much too high? When the VAT was introduced it was levied at a rate of 10 per cent. Is it not the case that every time you jack up the rate you create problems of this kind?

Lord Mackay of Ardbrecknish: My Lords, my noble friend makes a wider point on the subject of VAT. One has to balance a number of factors; for example, the amount of money the Government need to raise in order to meet the commitments that this House and the other place ask us to undertake. That is one factor. There is also the balance between direct and indirect taxation. It is

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important to try to have as few rates of value added tax as possible. I should point out to the noble Lord—if I need to—that many of our friends in the rest of the European Union have much higher rates of value added tax than we do.

Lord Eatwell: My Lords, in answering this Question the noble Lord has stated with considerable confidence that the scope of VAT is not to be reduced in this case. Can he say with equal confidence that the scope of VAT will not be increased?

Lord Mackay of Ardbrecknish: Yes, my Lords.

Lord Boyd-Carpenter: My Lords, is my noble friend aware that his Answer is a great disappointment to those of us who are struggling to keep churches going? Is he aware that there are exceptions to VAT and that there is no moral or logical reason why care, particularly of churches and ancient buildings, should not be included in the exceptions?

Lord Mackay of Ardbrecknish: My Lords, I understand the problems that my noble friend has raised. I appreciate that they are absolutely real and difficult problems to deal with, especially for churches in the countryside with diminishing congregations. I repeat what I said. There are other ways to seek money, for example, from English Heritage. It may rather depend on the view of his church but perhaps I dare say to my noble friend that there is the National Lottery which can come into play in these matters.

Personal Protective Equipment

2.56 p.m.

The Countess of Mar asked Her Majesty's Government:

    What measures they will take to ensure that farmers observe the amended Personal Protective Equipment (EC Directive) Regulations 1992 (S.I. 1992/3139) when they come into force on 1st July 1995.

Lord Inglewood: My Lords, these regulations apply to manufacturers of personal protective equipment (PPE). Other regulations apply to the use of such equipment, including by farmers. Inspectors from the Health and Safety Executive will always be happy to advise on the use of personal protective equipment.

The Countess of Mar: My Lords, I thank the noble Lord for that reply. Does he accept that under the COSHH regulations a farmer is expected to ensure that both he and his employees are protected from any perceived injuries or other damage to themselves? Does the noble Lord also accept that it is now recognised that OP sheep dips are dangerous to use? Is he aware that I and a number of other people have contacted the Health and Safety Executive and the manufacturers of personal protective equipment? One manufacturer provides equipment with a CE mark, but he will give no guarantee that if it is used for sheep dipping it will protect anyone who is wearing it. Will the noble Lord please say what the legal position is both for the farmer and for an employee if they subsequently suffer ill health from dipping?

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Lord Inglewood: My Lords, the noble Countess has asked an extremely complicated question which is essentially hypothetical. She has described in general terms, with which I would agree, the nature of the system which circumscribes the use of such sheep dips. However, I cannot make any comment on a particular analysis of what might or might not happen in the event of some injury being incurred. It would entirely depend on the circumstances of the case.

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