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VAT (Listed Buildings)

Volume 543: debated on Thursday 26 April 2012

2. What representations the Church Commissioners have made to Her Majesty’s Treasury on the proposed extension of VAT to approved alterations to listed buildings. (105433)

The Bishop of London and I met my right hon. Friend the Chancellor of the Exchequer and my hon. Friend the Exchequer Secretary to the Treasury on Monday. It was a helpful and constructive meeting. We made it clear why we believed it to be in the best interests of the community to continue to exempt alterations to listed places of worship from VAT. We gave the Chancellor a full written submission, a copy of which I have arranged to be placed in the Library. The Chancellor undertook to consider our submission carefully and made clear the Government’s commitment to ensuring that listed places of worship are not adversely affected by the Budget proposal. I anticipate a further meeting with the Chancellor and the Exchequer Secretary in due course.

I am grateful to my hon. Friend for his actions, intervention and report. I have the privilege to be the Member of Parliament for two historic cathedrals—Southwark and St George’s—as well as many churches. Other colleagues share my concerns. Will he ensure that he continues to update us on this matter? I will continue willingly to apply pressure on this point, because it is important that the Government understand that simply extending the scheme’s remit to give money, when the budget has been cut, does not solve the problem, unless the rules are changed.

My right hon. Friend makes an extremely good point. One reason we are keen that the Chancellor maintains the VAT exemption for church alterations is the certainty it brings. However much money is put into the listed places of worship scheme, it has its own inherent volatility and uncertainty, and no one is sure until after the event how much the refund will be. In the last quarter, for example, only just over half of the money for the listed places of worship scheme was refunded.

I appreciate that the hon. Gentleman’s remit applies to the Church of England, but he will be aware that churches throughout the UK, including many in my constituency, will be affected by the VAT changes. Does he agree that if any arrangements are made to assist the churches to meet their extra costs, they should apply to churches throughout the UK? Will he make that point in his discussions with the Chancellor?

Of course. I should make it clear to the hon. Gentleman that the listed places of worship scheme extends to every church, synagogue and meeting house—to every listed place of worship. We are trying to make such buildings as adaptable as possible for wider community use. This is often about humble but important things, such as putting in kitchens and toilets to make such buildings as available as possible to the whole community.

10. I thank my hon. Friend for the representations he has made to Ministers. Will he take note of the objections raised by many members of the Church of England in my constituency, including members of St Peter’s church in Congleton and St Mary’s church in Sandbach? Will he consider two points? First, the Treasury has said that there will be an exemption from the new rules for contracts that have already been signed, but many churches have already undertaken ongoing works. Could there be some flexibility in that respect? Secondly, if the grant scheme is to be reviewed, could it be so over a period of several years, not just one or two years, so that there can be certainty? Works often take many years. (105441)

My hon. Friend makes a good point. It is important to get the transitional relief right. We made it clear to the Chancellor of the Exchequer that if he was not minded to follow us on continuing the exemption, but wanted to increase the grant under the listed places of worship scheme, we would want to see certainty over the sum, not just for this year but for a whole number of years to come.

Quite a number of projects will not go ahead if the proposal stands. The reassurance that the hon. Gentleman has received from the Chancellor is encouraging, but does he accept that that reassurance can be delivered only if the proposal is abandoned altogether?

The right hon. Gentleman is a former Treasury Minister, and I am sure that he will have understood from the substantive answer that I gave at the outset that the Chancellor and his officials are considering carefully the submissions and representations that we put to them. They obviously want to consider the legal implications of a VAT exemption just for alterations to listed places of worship. Discussions with officials are ongoing, and the dialogue is constructive and positive.

7. Of the 312 churches across the diocese of Truro, 56 are carrying out repairs and alterations this year. The proposed VAT changes would add £405,000 to the bill. Does my hon. Friend share my concern that churches such as St John’s in Truro that are making alterations to enable greater use of their facilities by community groups such as the Truro Homeless Action Group might be deterred by the prospect of having to find an extra £5,000 just for the VAT? (105438)

I have visited St John’s; it does excellent work. This is a good example of the kind of alterations involving such humble things as toilets and kitchens that are being carried out to serve the wider community. As every colleague in the House will know, £5,000 is a lot of money to have to raise through jumble sales and coffee mornings, and such funds are all being raised by local people working voluntarily. We should not underestimate the impact of the change on our communities, should it go ahead.

I thank the hon. Gentleman for his work on this matter so far. When the Prime Minister was asked about it at Prime Minister’s questions, he made a rather obscure reference to adding swimming pools to stately homes, but the fact is that nearly half of all grade 1 listed buildings in England and Wales are Church of England churches. Alterations are made to them to facilitate wider community use, and St John’s in Godley, Hyde, has so far raised £47,000 to carry out the work that it wants to do. Should not the Government think again on this?

The Prime Minister said, not so long ago, that the big society was

“the biggest possible opportunity for churches up and down the country to have a real social mission”.

I have no doubt that he appreciates the potential for churches and church buildings to be open not just for a few hours on a Sunday but throughout the whole week, to provide a basis for real social activity.

8. Historic churches across North Wiltshire, such as those at Castle Combe and Hullavington, will be relieved to hear what my hon. Friend has said, in a tentative way, about the possible increase in VAT to 20% on alterations. Does he agree, however, that replacing VAT exemption with a discretionary grant would not do, because it would not go to all churches? It would go only to those churches chosen by commissioners or other individuals, and lots of churches that currently have the exemption would therefore no longer have it. (105439)

I hope I have made it clear to the House that we share those concerns. That is why we are pushing for full exemption. The listed places of worship scheme is welcome, but it is very volatile and uncertain at the moment because people are never quite clear how much they will receive back under the scheme.

6. Does my hon. Friend agree that the benefit to listed places of worship from the planned changes to gift aid next year will be more than outweighed by the proposal to charge them VAT on alterations? I do not know of any listed places of worship that are planning to install a swimming pool, but I know that many churches and cathedrals are planning to carry out alterations. Does he therefore agree that it would be best to leave things as they are and to allow the exemption to continue? (105437)

I entirely agree with my hon. Friend, but, in fairness, so does the Chancellor of the Exchequer. That is why he made clear, at the meeting that the Bishop of London and I had with him on Monday, the Government’s commitment to ensuring that listed places of worship would not be adversely affected by the Budget proposal, and I am sure that he will do everything he can to deliver on that commitment.