§ 37. Miss Anne McIntosh (Vale of York)What recent representations the Church Commissioners have made on the charging of VAT on church repairs. [86567]
§ Mr. Stuart Bell (Second Church Estates Commissioner, representing the Church Commissioners)The General Synod, with the full support of the commissioners, has consistently argued that VAT should not be charged, but so far without success. It is estimated that a minimum of £15 million per annum is spent on VAT on repairs to that significant part of the nation's heritage.
§ Miss McIntoshI was hoping that the hon. Gentleman might confirm that he has received representations from me and from my noble Friend Baroness Platt of Writtle asking that once the Council of Ministers has agreed that VAT may be charged at zero rate or at a reduced rate on labour-intensive industries, the hon. Gentleman and the other Church Commissioners will argue forcefully that the Government should apply for that rate to be applied to church repairs.
§ Mr. BellI can confirm that we received those communications. The proposed European directive is a draft that might not pass into law. It relates to labour-intensive services such as hairdressing and hotels, for which the EU may permit a lower rate of VAT. The Church is humble in its origins and beliefs; it does not mind being associated with hairdressers and hotels if that permits a lower rate of VAT. However, we are disappointed by the rejection of any alleviation of that major burden on church-goers in the recent consultation paper on the taxation of charities.
§ Mr. Peter L. Pike (Burnley)Does that £15 million to which my hon. Friend referred relate just to the Church of England? Would the figure not be larger if it included all churches, which are also part of our heritage and also have to pay VAT on repairs? The Churches are hard pressed for money. If we want to preserve those parts of our heritage, which also play an important part in our national life, we need to attend to the problem.
§ Mr. BellThe recent Churches, needs survey, commissioned jointly by English Heritage and the Council for the Care of Churches, shows that the annual cost at 1998 prices of major repairs to Church of England 758 churches was approximately £123.4 million, including fees and VAT. Those figures relate solely to major repairs and exclude routine maintenance and running costs. My hon. Friend's point is well made. We are working with the Treasury on the issue, but so far we have had no success.
§ Mr. Peter Bottomley (Worthing, West)Will the hon. Gentleman confirm that the concession sought by the Anglican Church is needed by other faith groups and denominations? Refurbishment work is required quinquennially in the Church of England. Much of the money for that is raised not only by church-goers but by others in the community who deserve thanks. As most of the work is labour intensive, and with the extra 30 or 40 per cent. tax and national insurance, as well as VAT, nearly half the cost of repairs goes to the Government, not to the Churches.
§ Mr. BellThe hon. Gentleman makes a valid point. One of our major concerns is that the Church of England pays more in VAT than it receives in grants from English Heritage. New churches are zero-rated for VAT, but buildings that are an important part of our national heritage incur 17.5 per cent. VAT. In the past, the Synod has recommended 5 per cent. VAT and it will debate the issue again in July.