HL Deb 18 February 1993 vol 542 cc1247-9

3.21 p.m.

Lord Boyd-Carpenter asked Her Majesty's Government:

Whether they will exempt from the payment of VAT work done on the repair of churches.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, it would be wrong to anticipate the forthcoming Budget Statement in another place.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for what might be an encouraging reply. Is he aware that I must declare an interest as churchwarden of an extremely small and very pretty church in Hampshire which is an example of the harm that the tax can do? Is he aware that in that case a small village raised £5,000 to carry out repairs to a lovely church which were demanded by the diocesan architect and that the tax authorities demanded £850 for VAT? Is he aware that that is a most oppressive use of the tax system? It serves no economic purpose and infuriates people.

The Earl of Caithness

My Lords, I understand the concern in relation to many churches in the country. But repairs to all buildings have been taxed since VAT was introduced in 1972. I beg to differ with my noble friend as to the economic benefits. This is money coming into the Exchequer to be spent in good causes.

Lord Molloy

My Lords, can the Minister say that, if there should be any easing of VAT on Church of England churches, it will apply also to the kirks of Scotland, the chapels of Wales and those other religious organisations which have the equivalent of churches but are in no way concerned with the Church of England? Will they all be treated in exactly the same manner?

The Earl of Caithness

My Lords, I shall certainly pass on the remarks of the noble Lord to my right honourable friend the Chancellor of the Exchequer.

Baroness Robson of Kiddington

My Lords, will the Minister impress upon Her Majesty's Treasury the anomaly that exists in that the building of hospices carries no VAT but the building of hospitals carries the full amount of VAT? It seems to me that they should be treated in the same way, particularly with regard to charitable money raised for building purposes.

The Earl of Caithness

My Lords, the Government are well aware of the difference between hospices and hospitals. But the Question is about churches.

The Lord Bishop of Newcastle

My Lords, will the noble Earl undertake to remind his right honourable friend of the notable contribution made by the Churches in the United Kingdom to the preservation and heritage of our buildings? Will he also remind him that last year roughly £35 million was paid in VAT by the Churches in the United Kingdom, the largest single item being in relation to the repair and maintenance of fabric?

The Earl of Caithness

My Lords, I shall certainly pass on the remarks of the right reverend Prelate to my right honourable friend the Chancellor of the Exchequer.

Lord Elton

My Lords, in case silence should indicate the contrary, does my noble friend appreciate that a large number of us in this House and friends elsewhere are in the same position as my noble friend Lord Boyd-Carpenter? We would greet a favourable Answer to his Question with great enthusiasm.

The Earl of Caithness

My Lords, I hear what my noble friend says.

Lord Stoddart of Swindon

My Lords, does the noble Earl agree that the imposition of VAT on building repairs is an absurd and intolerable tax for everyone, not merely the Churches? Would it not be beneficial for our churches, historical buildings and indeed the houses in which we live for VAT on building repairs to be entirely abolished? Would that not make better housing conditions for millions of people?

The Earl of Caithness

My Lords, I note what the noble Lord says and I shall pass those remarks on to my right honourable friend.

The Earl of Onslow

My Lords, does not the Question raise the whole difficulty of taxing with VAT anything like short-stay resident places for severely handicapped children such as are provided by a body of which I am a patron? Many aspects of charitable activity are taxed by VAT. Will my noble friend indicate that to my right honourable friend and ask him to look into it? It produces major injustices.

The Earl of Caithness

My Lords, my right honourable friend the Chancellor of the Exchequer is considering a number of options for the Budget. I note what my noble friend says.

Lord Richard

My Lords, as the Minister is passing on so many comments to his right honourable friend in this pre-Budget reticence period, will he convey to the Chancellor that, if VAT was imposed on the items now zero-rated in the Budget, about which there seem to be rumours in the press—items such as food, children's clothing, gas, electricity, water and public transport—that would be greeted with outrage in the country?

The Earl of Caithness

My Lords, I hear what the noble Lord says.

Lord Dormand of Easington

My Lords, in support of what my noble friend said, if the tax was not raised through the imposition of VAT, it would have to be raised in another way. There would not be a reduction in the overall tax burden. As my noble friend says, the chances are that it would be imposed on books, newspapers and so forth, which would be deplorable. As so few people in this country now set foot in churches, will the noble Earl tell his right honourable friend that that is a factor which should be taken into consideration?

The Earl of Caithness

My Lords, I recall the first Question on the Order Paper. The noble Lord wanted more money spent on the unemployed. That money must come from somewhere.

Lord Renton

My Lords, as churches are able to obtain a rebate of rates and other taxes, should not they be given the opportunity of reclaiming their VAT, even though they have to pay it?

The Earl of Caithness

My Lords, VAT is under a separate heading and the position has been clear since 1972.

Lord Boyd-Carpenter

My Lords, will my noble friend convey to his right honourable friend the Chancellor of the Exchequer the widespread feeling shown in this House that it is desirable that he should consider a useful step which would cost extremely little in his enormous Budget?

The Earl of Caithness

Yes, my Lords.