HC Deb 11 July 1972 vol 840 cc1522-45

Item No.

1. Fees of architects and quantity surveyors and civil engineers and legal fees incurred in connection with building operations and conveyancing of property'.

Mr. Chapman

It may be helpful if I say that we are discussing those services and items that should be zero-rated, and my Amendment refers specifically to Group 7—"Construction of Buildings, Etc.", Item No. 2: The supply, in the course of the construction, alteration or demolition of any building or of any civil engineering work, of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity. It is appropriate for me to declare a personal and professional interest, as I am an architect, surveyor and town planning consultant. Speaking personally, I much favour VAT to the exclusion of what I consider to be the arbitrary purchase tax and SET. I recognise only too well that the advantages of VAT depend upon its net being as widespread as possible so that the rate can be as low as possible, with the obvious necessary exemptions.

I am grateful to you, Mr. Speaker, for calling the Amendment, as a similar Amendment was not selected in Committee. My right hon. Friend proposes to zero-rate new construction work, not, incidentally, maintenance or repair work, but that can be the subject of another argument and another Amendment. There is a specific exclusion, which I have just read out, not to zero-rate the architect, surveyor or person acting as a consultant or in an advisory capacity. In itself, I feel that is all right; there is no reason why an architect, a surveyor or any other person acting as a consultant should have a prior claim over other and perhaps more worth while claimants. However unfair this proposal may seem to designers and consultants working within the construction industry, it is at least logical. That is to say, it would be logical if it meant all designers and all consultants within the construction industry, but the sad fact remains that it does not.

Design and consultancy services within and part of a construction industry will be zero-rated. To give an example, if any of the leading construction firms have architectural groups working within the firm, as they do, those services are zero-rated. On the other hand, services provided by what I can best describe as independent professionals, where clients go to voluntary consultants outside any construction organisation, are to be subject to VAT, presumably at 10 per cent. I think I can claim support from both sides of the House in saying that that is irrational and unfair.

While it may be true that some clients will not be adversely affected financially, most or many of them will be. It is obvious that local authorities will be able to recoup the tax, and some businesses may have the tax allowable as an input, but for a significant proportion of clients the tax can be avoided only by not employing independent professional services. This significant proportion will include exempt businesses and individual householders.

Examples of exempt businesses are the insurance companies and property developers, which are sponsors of large-scale construction work. These exempt businesses under Schedule 5 of the Bill cannot claim back VAT on their inputs. Incidentally, hospital boards, universities and housing associations which generate important construction work presumably would fall within this category.

9.30 p.m.

The Royal Institute of British Architects, to whose Council I recently had the honour to be elected, estimates that 20 per cent. of all building work falls into this category. It is no exaggeration to say that this significant part of the building work will be less likely to be undertaken by architects, engineers and surveyors and this will put the quality of design in jeopardy. It can be said that we are living in an age when the environment is one of the foremost political issues. Therefore, it is a little peculiar that the Government should seek to propose a fiscal measure which can have only an adverse effect on the quality of the environment.

The second example I want to give is an important and human one and relates to the individual who wishes to build a new house or to improve an existing one. He or she will find the extra cost of VAT a positive disincentive to employing an architect or quantity surveyor or some other private consultant. Again, those clients will be less likely to employ their services.

It may be argued by my hon. Friend that a way round this difficulty is for the builder to employ the architect to undertake this work, but I believe that this would defeat the vitally important rôle of the architect in defending the interests of his client and would prejudice good design. Therefore, I very much hope that my hon. Friend will accept this Amendment.

I make one final plea to him. It is important to realise that the purpose of this Amendment is not to ask for special treatment for a particular category. I appreciate that my hon. Friend must be getting fed up with pleas by people for special consideration. I do not ask for special treatment for designers and consultants allied to the construction industry. All I am asking is that they should not be specifically excluded from Schedule 4, Group7, item 2. If the Government are able to accept the Amendment, which I believe has support on both sides of the House, it will make the operation of collecting VAT in the construction industry simpler, it will get rid of an anomaly, and will also put paid to the justifiable bitterness felt in the professions, particularly by architects, engineers, surveyors and other consultants, who feel that they form an integral and indivisible part of the building process.

Mr. Higgins

We have given a great deal of consideration to the point raised by my hon. Friend and Member for Birmingham, Handsworth (Mr. Sydney Chapman). The Customs and Excise Department has considered this matter in the course of consultations and I have received a deputation on the subject.

We appreciate the arguments which my hon. Friend has put. He moved the Amendment with considerable eloquence. However, the essence of his case is that there is no real problem where the architect or surveyor is employed by a taxable person, because the normal working of the credit mechanism will ensure that the tax is passed forward and that the charge which is made will be deductable. But, as my hon. Friend pointed out, in the case of an exempt trader, it may be argued that the services of architects, surveyors and consultants are an integral part of the construction process and that there is some bias against the use of what he described as independent professionals because some firms, such as property companies and banks, would be more inclined to employarchitects on their own staff or buy design-built packages from builders, so that they would be able to deduct any tax charged to them from the architect and others.

It is important to put the matter into perspective. It must be recognised that a great many factors influence a property company, a bank, other exempt persons or the private individual when they come to decide whether to employ an independent architect. Value added tax cannot be regarded as the decisive factor in that choice. It is a comprehensive tax and it is right that, with such a broadly based tax, professional services should be taxed.

It is true that we have given relief to housing, and my hon. Friend referred to the question of the services of an independent architect. I have considerable doubts whether the operation of VAT will result in the situation he has outlined regarding architects employed by private individuals. In that context, the overwhelming argument, which my right hon. Friend recognised, for zero-rating housing was to avoid the tax being regressive. That argument has less force for those employing independent architects to build their houses.

The kind of extra charge which is likely to be made as a result of VAT when architects are employed by private individuals is not such that it is likely to deter such a person from using an independent architect. It is likely that such a house will be a building of some distinction. It is also true that very often there is a considerable advantage in employing an independent architect or other professionals as a check against the various operations which are being carried out and which may both financially and physically be more complex than is the case when the average person buys a house and has it built to his own custom built specifications.

Of course, there is also the difficult problem of the position of the other professionals. A number of professional services are used in designing and building a house or other type of building. If we were to accept the Amendment, we should soon be besieged by many other professions, including solicitors and no doubt other lawyers, asking to be relieved of the tax as well. This is a problem, and I can understand it in relation to the employment of architects by exempt firms or by private individuals. But we have not come to the conclusion that my hon. Friend seems to have done, that distortion will be such that the independent professional, be he an architect or any other, will find his trade significantly distorted.

I should also point out that the Amendment would cost approximately—it is not easy to make such an estimate—between £2 million and £5 million a year, while the cost of wider relief for the professions which would no doubt feel they had a similar claim would be a great deal more.

That being so, I cannot recommend the House to accept the Amendment. We do not believe that VAT will have the degree of distortion that my hon. Friend suggests. Should there be such distortion, it may be possible to do something to help under Clause 3(6). But I repeat that we do not believe that such distortion will arise.

Mr. Robert Cooke

I know how strongly my hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman) feels on this matter, and I know that there are misgivings in the architectural profession. My hon. Friend the Financial Secretary has gone some way towards saying that if the fears of my hon. Friend the Member for Hands-worth prove justified, he will do something to help, but he has not been very precise. Can he be a little more forthcoming? There could be a good deal of unsupervised work in the building industry if people choose not to employ an architect because they will have to pay more in value added tax, and that would be a bad thing for the country. I hope that my hon. Friend the Financial Secretary will indicate that if distortion takes place the Government will look at the matter again.

Mr. Higgins

Earlier we discussed the provisions in Clause 3(b) and Clause 6. Clause 3 is designed in such a way that the tax on services to a particular firm could be made non-deductible, while under Clause 6 the self-supply of architect's services by property companies which employed their own architects could be taxed. This is one possible way of removing distortion. I do not feel the House feels it to be a satisfactory way, and it is a last ditch resort, but if the Government see that there has been serious distortion of competition they will take action. I would not readily suggest that we would like to resort to it, but it is nevertheless the ultimate safeguard, it would, however, raise many administrative problems and be likely to cause more problems than it solved. I feel that the distortion will not be anywhere near as great as is suggested, particularly in view of the low rate of the tax as a whole. I believe that the reasons why people employ independent architects are such as to be sufficient to outweigh the additional burden which the tax will involve.

9.45 p.m.

Mr. Sheldon

As the hon. Member for Birmingham, Handsworth (Mr. Sydney Chapman) rightly said, there is a certain amount of distortion. It is obviously difficult at this stage to know just how much it will be. There is a strong case for zero-rating architects and surveyors. If the Government zero-rate building construction, they should also zero-rate all those elements which go into the cost of construction. The costs of architects and surveyors are directly attributable to building costs, as are the costs of drainage, site preparation and other essential services.

Since the hon. Gentleman said that if there is to be in his opinion a serious distortion he will not hesitate to come back to this House with suggestions, on behalf of the Opposition I can say that we are prepared to leave the matter there.

Mr. Sydney Chapman

Since I have not received the support from the Opposition benches I had hoped to receive, and in view of the undertakings given by my hon. Friend, which do not satisfy me, although I understand and respect them, and on the strict understanding that I shall raise the matter with my hon. Friend after the value added tax comes into operation and it has been seen to be a hardship to the independent professional people within the construction industry, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Trew

I beg to move Amendment No. 49 in Page 110, line 6, leave out 'does not include any work of repair or maintenance and insert 'includes repair or maintenance to churches and listed buildings but does not include any other work of repair or maintenance'. This Amendment would have the effect of zero-rating repair or maintenance carried out on churches or listed buildings. Before referring specifically to that class of repair or maintenance I should like to say something about the problems of taxing repair or maintenance generally, because that is relevant to the Amendment. I must declare an interest in the construction industry.

As a general principle I agree with levying value added tax on repair or maintenance, if only because there is a considerable amount of revenue involved, between £50 million and £60 million a year. The Department of Customs and Excise will have to work harder to get that revenue than any other class of revenue from value added tax. Administrative problems will arise because of the difficulty in distinguishing between repairs and maintenance, on the one hand, and alterations and improvements, on the other hand. The distinction is often not an easy one to make.

There are two classes of contract where that is not a great problem, namely, those contracts which are either wholly repair or maintenance, and which are therefore taxable, or those which are wholly new construction and therefore zero-rated. There is a large number of contracts which contant both types of work and where a distinction will have to be made, and those repair or maintenance items isolated, so that they can be taxed.

I have carried out some research into the construction industry, on contracts carried out by the group of companies with which I am associated, to identify the extent of the problem. For contracts of over £2,500 in value the problem is not great. But for contracts of under £2,500 in value about one contract in three poses a problem of definition. I cannot claim that that is typical of the construction industry. But if my hon. Friend were to ask the Secretary of State for the Environment for an analysis of contracts sponsored by his Department he would find a broadly similar pattern.

The administrative burden of distinguishing between one type of work and another will fall largely on the small builder, who carries out the smaller contracts. Out of 73,000 building firms in the construction industry, 61,000 employ fewer than13 men, 53,000 employ fewer than seven men and 20,000 firms are one-man firms. This administrative burden will fall on firms which do not have the administrative staff to support it. My hon. Friend will find that that will be a problem.

I understand that the Department of Customs and Excise will produce rules and guidelines supported by typical cases. It will not be easy for the small man to comprehend those. He will often have to make a provisional assessment of the VAT and may often underestimate it and find himself in a position in which he has recovered less VAT from his client than he has to account for to the Department of Customs and Excise. That will be a problem. Wherever my right hon. Friend can relieve certain classes of repair or maintenance from VAT, there is a good administrative case for doing so.

There are five good reasons why my hon. Friend should consider zero-rating repair or maintenance work to churches and listed buildings. The first reason is the administrative one that I have outlined: it would relieve from this administrative burden a clearly defined class of repair or maintenance work. There is little problem of definition. A church, within reason, is a church. A listed building is one which has been listed under Section 32 of the Town and Country Planning Act, 1962.

The second reason is that it would be consistent with the philosophy behind the taxation of repair or maintenance which, as I understand it, is that this type of expenditure is largely discretionary, particularly in the case of decoration. In the case of churches and listed buildings, it is not discretionary expenditure, because the community has placed an obligation on those who administer churches or who own listed buildings to keep them in a good state of repair for the sake of the community as a whole.

The third reason is that the class of skilled craftsman able to repair churches and old buildings is rapidly dwindling. It is becoming increasingly difficult to find the craftsmen to do this work. Consequently, this sort of repair or maintenance is becoming disproportionately expensive year by year. Therefore, to tax it is to add a burden to something which is becoming more expensive anyway.

The fourth reason is that it would go a long way towards the hope aroused by paragraph 4.9 of the Green Paper on Value Added Tax, which states: Consideration could be given to ways of relieving from tax purchases by charities of certain specialised capital assets, for example church buildings … Hon. Members who spoke in the debate on Clause 15 in Committee, while acknowledging the value of the estate duty concessions announced by my right hon. Friend in the Budget, did not regard it as being of great value to the churches, for two reasons—first, because a very small proportion of the churches' funds is derived from bequests and, second, because a large proportion of church expenditure is in respect of repair or maintenance.

We should not prejudge the value of the estate duty provision simply because bequests have not accounted for very much in the way of funds in the past. It may well be that, encouraged by these provisions, the churches will bestir themselves and go out and persuade wealthy parishioners to make provision in their wills for their parish churches. Few bodies are better qualified than the churches to persuade the wealthy of the truth of the dictum, "You cannot take it with you".

That is speculation. What is certain is that at this time the churches have a big repair bill and that an Amendment on these lines would be of great assistance to them.

The last reason why I advocate the Amendment is that it will contribute to the whole concept of conserving our historic heritage. Britain is the only European country which does not provide any State assistance for the upkeep of old churches—that is, while they are still in use as churches. Once a church becomes redundant, a small amount of Government money is available.

I quote from a leading article in The Guardian of 5th May on this subject: Fortunately the Government is beginning to stir, and a private member's bill now before Parliament which would secure the grant of some public money for the preservation of historic churches seems to have the sympathy of the Department of the Environment. It is a matter on which there is no serious political dispute, and the sums involved are not very large, but the money is needed quickly if serious damage and neglect is not to set in. The Private Member's Bill is that of my hon. Friend the Member for Cannock (Mr. Cormack).

I do not know whether this Bill is favoured by the Department of the Environment, and I do not expect my hon. Friend the Chief Secretary to speak for that Department. But I hope that we shall hear from him a clear statement of the Government's concern about the preservation of our old churches and our historic buildings. I hope that my hon. Friend will go even further and give practical effect to that concern by accepting the Amendment.

Mr. Dalyell

If the Chancellor of the Exchequer felt overcome by his work at the Treasury, on his way to this House he might call in at Westminster Abbey. In the Chapter House there is currently an exhibition organised by the Historic Churches Preservation Trust which outlines in dramatic form precisely what is the need of the churches in terms of the vast costs required if we are to maintain let alone improve some of the glories of medieval English and European architecture. I commend to the right hon. Gentleman a publication called "The Historic Churches Preservation Trust" which outlines the acute need.

I do not intend to weary the House with all that I have said on this subject in Committee. I content myself with reminding hon. Members that the latest reckoning is that there are 9,663 medieval churches in England alone. The situation is less acute in Scotland. It may be that we do not have as many of the glories of medieval architecture. Nevertheless there is this acute problem. It was outlined in Committee, and I support the view of the hon. Member for Dartford (Mr. Trew).

Mrs. Fenner

I wish to support my hon. Friend the Member for Dartford (Mr. Trew) and I follow the example of the hon. Member for West Lothian (Mr. Dalyell) by not wearying the House with arguments which were advanced in Committee, save to express the hope that the Government will consider the claim of the churches in this respect.

I have allied churches with charities on the basis of a very worth precedent. They were so allied in paragraph 4(9) of the Green Paper on VAT, which referred to "charities and religious institutions" and expressed the clear statement that my right hon. Friend the Chancellor of the Exchequer would think of these two speciareas especially.

The church's main committee has estimated that the cost of VAT in an Anglican parish will be of the order of £200 a year. That is equivalent to the proceeds of five jumble sales. Anyone who has ever organised a jumble sale will know that the prospect of five such sales is a formidable one to combat the results of VAT. The committee adds: Where, as so often, the church is historic and fine and the repair bill correspondingly heavy, it will be very much more than the order of £200 a year per Anglican parish. The Roman Catholic church has produced a figure specifically related to repairs and furniture alone. It estimates that the net additional cost to each parish will be about £134. If that is multiplied in each parish all over the country, it is a formidable sum.

I hope both for this reason and for the reasons so very explicitly put forward by my hon. Friend the Member for Dart-ford that we shall not be seen in one place in this House to be studying ways in which we may preserve our historic chuches and in another place to be working out a tax on repairs and maintenance. I ask my right hon. and hon. Friends in the Treasury to say that this is one area in which we can help the churches.

10.0 p.m.

Mr. Hamling

I am a non-churchman and, therefore, I can speak objectively about this matter, perhaps unlike other right hon. and hon. Members. I support the Amendment, not only because it proposes to help medieval churches which are part of our English tradition but more particularly because it relates to older buildings and not just churches. It seems rather ridiculous that in this day and age, when we are spending so much time debating the need to preserve many beautiful buildings which are part and parcel of what we choose to call the most civilised community in the world, we should contemplate taxing the repair of such valuable parts of our British institutions.

Mr. Ramsden

I rise as one who is interested in the work of the Historic Buildings Council to say two things. First, I find this an attractive Amendment and I hope that my hon. Friend will consider it seriously. Secondly, if he finds himself unable to accept it, I hope he will give an undertaking to increase the Government grant to the Historic Buildings Council by at least that amount which will be absorbed by the VAT. It should not be too difficult a calculation.

Mr. Robert Cooke

It goes without saying that the money available to the Historic Buildings Council will have to be increased by the amount of the VAT that will fall on its operations. There is no question about that. But will the Minister give a little thought to those private enterprise citizens who, by one means or another, scrape together the money to repair their own listed buildings, because they will have to provide the VAT? It may be kind of the Minister to say that they can ask the HBC for a grant, and no doubt they will get it, but to put themselves to the trouble which accepting a grant from a public body entails in order to get the VAT back is, in the view of many of us, a little unreasonable. I hope the Minister will bear that in mind. There is no question about the Historic Buildings Council, but what about the private citizens who are affected by this?

Mr. Higgins

I am sure that the House listened to the speeches made on this subject with considerable sympathy. My hon. Friend the Member for Bristol, West (Mr. Robert Cooke) appealed for private enterprise and, perhaps rather surprisingly, there was an appeal by the Member for Woolwich, West (Mr. Hamling) with regard to the position of our historic churches. I say "rather surprisingly", not to denigrate in any way what he said but because those of us who served on the Standing Committee upstairs will remember that when the question of special treatment for churches and charities was raised the hon. Gentleman was at some pains to advance an argument in favour of the humanist case. It is therefore true to say that the feeling which is aroused in the House on the question of historic churches goes very wide indeed. It is important that we should consider very carefully exactly what is proposed in the Amendment.

There have been two strands running through the argument both in the Committee upstairs and in the House this evening—the question of VAT and the question of grants. When we were debating VAT on the Floor of the House in Committee, I had occasion to say that we saw nothing inconsistent, on the one hand, in a tax which was a broadly based tax being comprehensive in scope and, on the other hand, in grants being made in a specific way to help those areas which were most in need. However, I feel bound to say that this area, with regard not to listed buildings but to historic churches in use, is one of some controversy, raising many different feelings, and indeed has been over the years.

I will take up first of all the points made by my hon. Friend the Member for Dartford. He raised some rather technical questions on the tax. On the question of repairs and maintenance I have taken a careful note of what he said, but I think it belongs to the overall question of repairs and maintenance for buildings as a whole. I think he mentioned it in order to introduce the main burden of what he wished to convey to the House—the question of the position of listed buildings and particularly of historic churches. He rightly laid stress on the rising cost of employing skilled craftsmen, whose numbers, I am afraid, are undoubtedly diminishing. This is the case whether it is a question of repairing an Oxford or Cambridge college, or a church, or whatever it may be.

There are two main strands in the argument. The first concerns the measures in the Budget. I emphasise again the point made by my right hon. Friend earlier that it is important to take the overall effect of the Budget. It comprises three main elements concerning charities. We have touched on others during the day. The first is value added tax and the others are the provisions regarding gifts for charities and estate duty. I appreciate that at the moment the extent to which the churches will benefit from the provisions regarding gifts, capital gains tax and estate duty may not be all that great.

I again take up the point made in an important intervention by my hon. Friend the Member for Twickenham Mr. Jessel) this afternoon. He said it is important to look not only at what the position was in the past or is now, but at the extent to which my right hon. Friend's provisions may lead to an increase in the flow of funds to charities, whether by way of gifts or bequests. I think hon. Members have been inclined to concentrate rather more on the estate duty provision and to overlook those provisions covering gifts to charities and capital gains tax.

Estate duty relief is estimated at about £15 million. We cannot estimate precisely the figures for gifts and capital gains. I emphasise that the object of these proposals is to increase the flow of funds to charities. I believe that churches will find that here is an area which opens up new avenues for raising revenue.

Mr. David Mitchell

I take the point my hon. Friend is making. However, if it turns out that there is not the increase in the flow of funds which he is anticipating, will he be prepared to look at this matter again?

Mr. Higgins

I certainly should not wish to do anything to deter people taking these new opportunities. This is an important point. It may take some time for advantage to be taken of these provisions. This point has been made quite legitimately by the churches and others.

Mr. Keith Stainton (Sudbury and Woodbridge)

Is my hon. Friend positively forecasting an increased cash flow to the churches on account of these concessions, because the revenue out of the total, which has been analysed carefully by the Churches Council, indicates that this is quite tiny at the moment and that the benefits are insignificant?

Mr. Higgins

I appreciate that point. I certainly anticipate that that would be so. I thought it worth emphasising that there are two new opportunities here which have not previously been exploited. I agree that at the moment the level is small from the churches' point of view. I have gone into this matter in some depth and appreciate how small it is. I am merely saying that there is some opportunity here for the future.

On value added tax I ought to mention two points. First, there has been some degree of protest directed to the effect which VAT will have on the churches. That is understandable. It is worth stressing that purchase tax has always been paid right across the board, and no one has ever suggested that it should be refunded to the churches. However, value added tax will be more broadly based, and to that extent the burden is likely to be higher. Charities have not been liable to SET, but there has been an element of SET on the goods and services purchased. None the less, with a broader based tax there is an additional burden in general. This is something which we recognise and to which I wish to give further thought.

There are real difficulties—I think that my hon. Friend the Member for Dartford will understand this—in accepting the Amendment because if one were to give relief for repair and maintenance of churches and listed buildings, not unnaturally there would be considerable pressure for an extension of this relief to other buildings, perhaps those run by other charities and by other organisations doing good work which are not charities. The scope would be widened considerably, and the cost at the end of the day would be £50 million to £60 million, which is a not inconsiderable amount. There are real difficulties here. This argument is so familiar to the House because of the debates that we have had that I need not emphasise it.

Mr. Healey

The hon. Gentleman said that the cost of the concession would be £50 to £60 million. Is he saying that that is the overall burden falling on the churches?

Mr. Higgins

The right hon. gentleman has not understood what I said. I think that my hon. Friends are clear about what I said. I said that if we were to relieve repair and maintenance of churches it would necessarily give rise to claims for relief for parsonages, and so on.

Mr. Healey

That is another matter.

Mr. Higgins

I have just repeated what I said earlier. My hon. Friends were quite clear about what I said. I was merely seeking to indicate the overall cost if we were to include all repairs and maintenance.

Mr. Trew

I am in no doubt that my hon. Friend was referring to the total tax revenue on repair and maintenance, but has he managed to estimate the revenue from VAT on churches and listed buildings?

Mr. Higgins

I cannot, at this stage, give my hon. Friend that figure, but I shall see whether we can get any indication of what it might be. But this will necessarily be a forecast, because it will depend on precisely what proposals are made for repairs and maintenance.

Mr. Robert Cooke

My hon. Friend can work out the VAT on the money expended by the Historic Buildings Council. It is a simple calculation, be- cause all the money is for repairs, and none for alterations.

Mr. Higgins

I understood that the question asked by my hon. Friend the Member for Dartford referred to churches and listed buildings taken together.

Perhaps I might say something about listed buildings. My understanding is that under Section 54(9) of the Town and Country Planning Act, 1971, there are listed buildings—which I presume is what my hon. Friend is referring to in his Amendment—which include a statutory list compiled and approved by the Secretary of State. There are effectively two grades—one "of special interest", and one in Grade I, a higher standard. The purpose of the statutory list is to aid the planning and conservation processes. "Listed building consent" is needed from the local planning authority, or it can come from the Secretary of State.

These grades are, in practice, effectively a passport for repair and maintenance grants which can be given on the advice of the Historic Buildings Council for buildings of outstanding architectural or historic interest. At present, the commitment to grant to such buildings is £1 million a year in England. Earlier this year the Government announced an increase of 50 per cent. to widen the scope of grant to cover outstanding conservation areas rather than single out listed buildings. They announced an increase of£500,000 for England, £50,000 for Scotland and £21,500 for Wales. The announcement was made in the other place on 1st March, and it was recognised that it might be necessary to increase the amount still further as applications for grant built up. That being so, if one is to devote the help to the areas most in need, here is an area which obviously we shall need to consider very carefully. As I say, it has been announced in another place that there may be further increases later, and if that is so, obviously we shall bear in mind very much the position about value added tax. But it is an indication of our concern for the preservation of listed buildings, though the matter itself is one for my right hon. Friend the Secretary of State for the Environment, and for my right hon. Friends the Secretaries of State for Scotland and Wales.

The House would not expect me to go into details now. I am anxious to convey the fact that we are well aware of the concern felt in this area regarding listed buildings. Obviously the effect of VAT is something we should need to consider in relation to proposals in this area.

10.15 p.m.

Dr. Tom Stuttaford (Norwich, South)

What does my hon. Friend think that this concession would cost the Government and what are the Government now spending by grants?

Mr. Higgins

We went over the question of the cost a moment or two ago. I indicated to my hon. Friend the Member for Dartford that I could not at this moment give a precise estimate of the costs in relation to churches and historic buildings taken together, but I shall certainly do what I can to see whether we can get any idea of them. But this will necessarily involve considering what repairs and maintenance are likely to take place with churches and historic buildings. I do not have a precise figure for the cost. But one must look at this in the context of the tax as a whole and the fact that necessarily other claims would be pressed if one were to accept the Amendment as such.

I am seeking to indicate that help in this area would more appropriately be given by grant, but obviously one would also need to consider the effect of VAT on what we obviously regard as an important public matter.

Mr. Charles Loughlin (Gloucestershire, West)

I should like some clarification of the figure which has been referred to by my right hon. Friend the Member for Leeds, East (Mr. Healey) and hon. Members opposite. The hon. Gentleman will recall that he said that if he made this concession the consequence of making it would be that other organisations and buildings would want a similar concession and the total cost to the Government would be £60 million. When the hon. Gentleman talks about the £60 million, does he mean £60 million related to churches and listed buildings, and other charitable organisations, or is the £60 million a global figure related to repairs and maintenance of all buildings?

Mr. Higgins

I thought that I had made that perfectly clear. It is the overall figure for repairs and maintenance of all buildings. As I have indicated, I do not have a figure for the specific items enquired about by my hon. Friend the Member for Dartford.

I have sought to deal with the question of listed buildings. I turn now to the question of historic churches. I take it that my hon. Friend was concerned primarily with historic churches in use. There is here a difficult area. My hon. Friends who have their names to the Amendment are a great deal more expert, I suspect, than I am about church affairs. I understand that there are already powers under the Local Authorities (Historic Buildings) Act, 1962, which gives local authorities power, but not a duty, to make grants and loans for the repair of historic buildings and some have used this power to assist in the repair of churches. I do not think there is any statutory bar in relation to churches which are of historical architectural interest.

The difficulty there has been that over the years the tendency has been to exclude churches from the provision of public money when it comes to building, for various historical reasons, some of which stem from the origin of the planning Acts and others from the position of the Church. Extensive consideration has been given to the question, and I understand that the whole area of providing financial help for what is, in a sense, a problem of national heritage, is the subject of discussions which are at a comparatively early stage. That being so I do not think it would be proper to say anything specific about grants.

This raises important questions because, as the hon. Member for West Lothian (Mr. Dalyell) has said, the bulk of these churches are in England and, I suppose, the bulk of them are within the scope of the Church of England. The issue raises broader questions of the relationship between Church and State and so on. Difficult questions are involved which I do not believe I can anticipate this evening. I suggest, therefore, that it would not be an appropriate moment to reach a conclusion on the matter but it may be, for the reasons I gave on earlier Clauses, that some action in this area would be more appropriate than changing the base of an indirect tax which would then raise a number of difficult problems on zero-rating and on the treatment of other repairs and maintenance.

I have sought to outline some of the difficulties in this area. They are very real and it is difficult to say anything more definite. I hope my hon. Friend will recognise we are concerned with the problem as it affects both listed buildings and historic churches, and on that basis I hope he will feel prepared to withdraw the Amendment.

Mr. Brian Walden

I will do the Financial Secretary the compliment of saying that I do not believe that he enjoyed that speech any more than the House did. I shall not accuse him of being definite. I have never known it to take so long to be so indefinite. Quite apart from all the other things he did not have, he did not even have an estimate of the cost of the Amendment and I did not follow the reason why. We heard the old argument that if one concession was made everyone else would want a concession too.

We have had some agreeably short speeches tonight and I do not want to break that happy arrangement. I suspect one thing about the Amendment and I know one thing about it. I suspect that the real root cause of the problem, which should not take 25 minutes to explain, is that the Treasury cares much more about theoretical integrity of that fatuous tax than it does about the practical reality of actually having to meet the problems, and every other confusion follows from that.

Money must be put into the pocket from which it must be taken. Of course the Government will have to make up in grants what they take away in tax. The Financial Secretary's answer to that is to say it is a very comprehensive tax, which it is not. He says that it is a non-anomolous tax, which it is not. He says we have to consider the general position of all the other things in the Budget. Why? This is a perfectly simple straightforward Amendment asking the Treasury to do a perfectly straight-forward thing on the value added tax. I suspect that the real reason the Financial Secretary could not do that is because theory has been allowed to obtrude far too far into his brief, and reality does not appear in it anywhere.

That is what I suspect. What I know is that, with all respect to the Financial Secretary, what we received was no answer at all. A lot could be said about SET and the relationship between Church and State, though goodness knows what that means. Why allowing churches to have exemption will raise fundamental issues about Church and State, is beyond me.

The position can be summarised as follows. The Treasury has not considered the matter carefully and is in no position to give any kind of pledge or assurance. It is on the horns of a terrible dilemma, and is very anxious to wriggle off it with a few soft words.

I have not the slightest hesitation in advising my right hon. and hon. Friends that, whatever Conservative Members decide, we should not allow the Amendment to be withdrawn and should divide against it.

Mr. Trew

I, too, am disappointed that my hon. Friend the Financial Secretary has not accepted the Amendment. He has stressed that there are technical difficulties, and there is a certain amount of truth in that. He may be right in saying that the Amendment is premature. But we extracted from him, although I agree that it came slowly, a statement of his concern. We now have on record for the first time that the Treasury is concerned about the problem of old churches and historic buildings, which will be welcomed.

These matters must move slowly. I believe that in any event the whole question of value added tax on repair and maintenance is something that we shall have to consider in a year or two in the light of the administrative problems that will arise. There will have to be a great deal of streamlining. When that happens I think it quite reasonable that we should look again at the question of VAT on the repair and maintenance of churches. In the meanwhile, I welcome the fact that my hon. Friend has stated his concern and that discussions are in progress on ways in which assistance can be given.

It is not my intention to press the matter. I beg to ask leave to withdraw the Amendment.

Hon. Members

No.

Question put, That the Amendment be made:—

The House divided: Ayes 183, Noes 196.

Division No. 286.] AYES [10.30 p.m.
Abse, Leo Ginsburg, David (Dewsbury) Morgan, Elystan (Cardiganshire)
Albu, Austen Golding, John Morris, Alfred (Wythenshawe)
Armstrong, Ernest Gordon Walker, Rt. Hn. P. C. Morris, Charles R. (Openshaw)
Ashton, Joe Gourlay, Harry Morris, Rt. Hn. John (Aberavon)
Atkinson, Norman Grant, George (Morpeth) Moyle, Roland
Bagler, Gordon A. T. Grant, John D. (Islington, E.) Murray, Ronald King
Barnes, Michael Griffiths, Eddie (Brightside) Oakes, Gordon
Barnett, Guy (Greenwich) Hamilton, William (Fife, W.) Ogden, Eric
Barnett, Joel (Heywood and Royton) Hamling, William O'Malley, Brian
Benn, Rt. Hn. Anthony Wedgwood Hannan, William (G'gow, Maryhill) Orbach, Maurice
Blenkinsop, Arthur Hardy, Peter Orme, Stanley
Boardman, H. (Leigh) Harrison, Walter (Wakefield) Oswald, Thomas
Booth, Albert Hart, Rt. Hn. Judith Owen, Dr. David (Plymouth, Sutton)
Boyden, James (Bishop Auckland) Hattersley, Roy Padley, Walter
Broughton, Sir Alfred Healey, Rt. Hn. Denis Palmer, Arthur
Brown, Hugh D. (G'gow, Provan) Heffer, Eric S. Parry, Robert (Liverpool, Exchange)
Buchan, Norman Horam, John Pavitt, Laurie
Buchanan, Richard (G'gow, Sp'burn) Houghton, Rt. Hn. Douglas Peart, Rt. Hn. Fred
Campbell, I. (Dunbartonshire, W.) Howell, Denis (Small Heath) Pentland, Norman
Cant, R. B. Huckfield, Leslie Perry, Ernest G.
Carmichael, Neil Hughes, Mark (Durham) Prentice, Rt. Hn. Reg.
Carter-Jones, Lewis (Eccles) Hughes, Robert (Aberdeen, N.) Price, J. T. (Westhoughton)
Castle, Rt. Hn. Barbara Hughes, Roy (Newport) Probert, Arthur
Clark, David (Colne Valley) Janner, Greville Reed, D. (Sedgefield)
Cocks, Michael (Bristol, S.) Rhodes, Geoffrey
Cohen, Stanley Jay, Rt. Hn. Douglas Roper, John
Coleman, Donald John, Brynmor Ross, Rt. Hn. William (Kilmarnock)
Concannon, J. D. Johnson, James (K'ston-on-Hull, W.) Rowlands, Ted
Conlan, Bernard Jones, Barry (Flint, E.) Sandelson, Neville
Crawshaw, Richard Jones, Dan (Burnley) Sheldon, Robert (Ashton-under-Lyne)
Cronin, John Jones,Rt.Hn.Sir Elwyn(W.Ham,S.) Silkin, Rt. Hn. John (Deptford)
Crosland, Rt. Hn. Anthony Jones, Gwynoro (Carmarthen) Silverman, Julius
Crossman, Rt. Hn. Richard Jones, T. Alec (Rhondda, W.) Skinner, Dennis
Cunningham, G. (Islington, S.W.) Judd, Frank Spriggs, Leslie
Dalyell, Tarn Kaufman, Gerald Stallard, A. W.
Davidson, Arthur Kelley, Richard Stewart, Rt. Hn. Michael (Fulham)
Davies, Denzil (Llanelly) Kerr, Russell Strang, Gavin
Davies, Ifor (Gower) Kinnock, Neil Summerskill, Hn. Dr. Shirley
Davis, Terry (Bromsgrove) Lamond, James Taverne, Dick
Dell, Rt. Hn. Edmund Lawson, George Thomas,Rt.Hn.George (Cardiff, W.)
Dempsey, James Lewis, Ron (Carlisle) Thomas, Jeffrey (Abertillery)
Doig, Peter Lipton, Marcus Tinn, James
Dormand, J. D. Lomas, Kenneth Torney, Tom
Douglas, Dick (Stirlingshire, E.) Loughlin, Charles Tuck, Raphael
Douglas-Mann, Bruce Lyon, Alexander W. (York) Urwin, T. W.
Driberg, Tom Mabon, Dr. J. Dickson Wainwright, Edwin
Duffy, A. E. P. McBride, Neil Walden, Brian (B'm'ham, All Saints)
Dunnett, Jack McCartney, Hugh Walker, Harold (Doncaster)
Eadie, Alex McElhone, Frank Wallace, George
Edelman, Maurice Mackenzie, Gregor Wellbeloved, James
Edwards, Robert (Bilston) Mackintosh, John P. Wells, William (Walsall, N.)
Edwards, William (Merioneth) McNamara, J. Kevin White, James (Glasgow, Pollok)
Ellis, Tom Mallalieu, J. P. W. (Huddersfield, E.) Whitehead, Phillip
Evans, Fred Marquand, David Whitlock, William
Ewing, Harry Mason, Rt. Hn. Roy Willey, Rt. Hn. Frederick
Faulds, Andrew Meacher, Michael Williams, Alan (Swansea, W.)
Fletcher, Ted (Darlington) Mellish, Rt. Hn. Robert Wilson, Rt. Hn. Harold (Huyton)
Foley, Maurice Mendelson, John Woof, Robert
Ford, Ben Mikardo, Ian
Forrester, John Millan, Bruce TELLERS FOR THE AYES:
Fraser, John (Norwood) Milne, Edward Mr. Joseph Harper and
Freeson, Reginald Mitchell, R. C. (S'hampton, Itchen) Mr. James Hamilton
Gilbert, Dr. John Molloy, William
NOES
Adley, Robert Bell, Ronald Bowden, Andrew
Alison, Michael (Barkston Ash) Bennett, Dr. Reginald (Gosport) Bray, Ronald
Allason, James (Hemel Hempstead) Benyon, W. Brinton, Sir Tatton
Amery, Rt. Hn. Julian Biffen, John Brocklebank-Fowler, Christopher
Astor, John Biggs-Davison, John Brown, Sir Edward (Bath)
Atkins, Humphrey Blaker, Peter Bruce-Gardyne, J.
Balniel, Rt. Hn. Lord Boardman, Tom (Leicester, S.W.) Buchanan-Smith, Alick(Angus,N&M)
Barber, Rt. Hn. Anthony Body, Richard Burden, F. A.
Batsford, Brian Boscawen, Robert Butler, Adam (Bosworth)
Carlisle, Mark Hutchison, Michael Clark Peyton, Rt. Hn. John
Chapman, Sydney Iremonger, T. L. Powell, Rt. Hn. J. Enoch
Chichester-Clark, R. Irvine, Bryant Godman (Rye) Price, David (Eastleigh)
Churchill, W. S. James, David Proudfoot, Wilfred
Clark, William (Surrey, E.) Jenkin, Patrick (Woodford) Pym, Rt. Hn. Francis
Clarke, Kenneth (Rushclffe) Jessel, Toby Ramsden, Rt. Hn. James
Clegg, Walter Jones, Arthur (Northants, S.) Redmond, Robert
Cooke, Robert Jopling, Michael Reed, Laurance (Bolton, E.)
Corfield, Rt. Hn. Sir Frederick Joseph, Rt. Hn. Sir Keith Rees, Peter (Dover)
Cormack, Patrick Kaberry, Sir Donald Rees-Davies, W. R.
Costain, A. P. Kellett-Bowman, Mrs. Elaine Rhys Williams, Sir Brandon
Critchley, Julian Kershaw, Anthony Ridley, Hn. Nicholas
Davies, Rt. Hn. John (Knutsford) Kimball, Marcus Roberts, Michael (Cardiff, N.)
d'Avigdor-Goldsmid, Sir Henry King, Evelyn (Dorset, S.) Roberts, Wyn (Conway)
Dean, Paul King, Tom (Bridgwater) Scott, Nicholas
Deedes, Rt. Hn. W. F. Kinsey, J. R. Scott-Hopkins, James
Digby, Simon Wingfield Kirk, Peter
Dixon, Piers Kitson, Timothy Sharples, Sir Richard
Eden, Rt. Hn. Sir John Knight, Mrs. Jill Shaw, Michael (Sc'b'gh & Whitby)
Edwards, Nicholas (Pembroke) Knox, David Simeons, Charles
Elliot, Capt. Walter (Carshalton) Lane, David Sinclair, Sir George
Elliott, R. W. (N'c'tle-upon-Tyne,N.) Le Marchant, Spencer Skeet, T. H. H.
Emery, Peter Longden, Sir Gilbert Soref, Harold
Eyre, Reginald Loveridge, John Speed, Keith
Fell, Anthony McAdden, Sir Stephen Spence, John
Fenner, Mrs. Peggy MacArthur, Ian Sproat, Iain
Fidler, Michael McLaren, Martin Stanbrook, Ivor
Fisher, Nigel (Surbiton) McNair-Wilson, Michael Stokes, John
Fletcher-Cooke, Charles Madel, David Stuttaford, Dr. Tom
Fookes, Miss Janet Marten, Neil Taylor,Edward M.(G'gow,Cathcart)
Fortescue, Tim Mather, Carol Taylor, Frank (Moss Side)
Foster, Sir John Maude, Angus Taylor, Robert (Croydon, N.W.)
Fowler, Norman Mawby, Ray Tebbit, Norman
Fox, Marcus Maxwell Hyslop, R. J. Temple, John M.
Galbraith, Hn. T. G. Mills, Peter (Torrington) Thomas, John Stradling (Monmouth)
Gilmour, Ian (Norfolk, C.) Miscampbell, Norman Thompson, Sir Richard (Croydon, S.)
Glyn, Dr. Alan Mitchell, David (Basingstoke) Trafford, Dr. Anthony
Goodhew, Victor Moate, Roger Tugendhat, Christopher
Gorst, John Money, Ernle Turton, Rt. Hn. Sir Robin
Gower, Raymond Monks, Mrs. Connie van Straubenzee, W. R.
Grant, Anthony (Harrow, C.) Monro, Hector Vaughan, Dr. Gerard
Green, Alan Montgomery, Fergus Vickers, Dame Joan
Griffiths, Eldon (Bury St. Edmunds) More, Jasper Walder, David (Clitheroe)
Gurden, Harold Morgan, Geraint (Denbigh) Walker-Smith, Rt. Hn. Sir Derek
Hall, John (Wycombe) Morrison, Charles Walters, Dennis
Hall-Davis, A. G. F. Mudd, David Ward, Dame Irene
Hamilton, Michael (Salisbury) Murton, Oscar Weatherill, Bernard
Hannam, John (Exeter) Neave, Airey Wells, John (Maidstone)
Harrison, Col. Sir Harwood (Eye) Noble, Rt. Hn. Michael White, Roger (Gravesend)
Hawkins, Paul Normanton, Tom Wilkinson, John
Higgins, Terence L. Nott, John Winterton, Nicholas
Hill, John E. B. (Norfolk, S.) Onslow, Cranley Woodnutt, Mark
Hill, James (Southampton, Test) Oppenheim, Mrs. Sally Wylie, Rt. Hn. N. R.
Holland, Philip Owen, Idris (Stockport, N.) Younger, Hn. George
Hordern, Peter Page, Rt. Hn. Graham
Hornsby-Smith,Rt.Hn.Dame Patricia Page, John (Harrow, W.) TELLERS FOR THE NOES:
Howe, Hn. Sir Geoffrey (Reigate) Parkinson, Cecil Mr. Hugh Rossi and
Howell, David (Guildford) Percival, Ian Mr. Hamish Gray.

Question accordingly negatived.

Further consideration of the Bill, as amended, adjourned.—[Mr. Barber.]

Bill, as amended in the Committee and in the Standing Committee, to be further considered tomorrow.