Church Repairs and VAT (Hansard, 16 October 1996)

§ Lord Henley
My Lords, the repair and maintenance of churches will continue to be charged at the standard rate of VAT, as has been the case since the start of the tax in 1973.

§ Lord Molloy
My Lords, I thank the Minister for that reply, which I am afraid is not worth a great deal. Is he aware that the congregations of very many churches that are part of our architectural history find it very difficult to carry out repairs, whereas a reduction in VAT of 5 per cent. would make matters much easier? We are not talking about one church in particular, though Lavington church is an excellent example, but of many churches and chapels throughout the country. A reduction of 5 per cent. in VAT would give all those congregations great heart to continue to keep in good order these buildings which are part of our national heritage.

§ Lord Henley
My Lords, I and my noble friend Lord Mackay of Ardbrecknish, who frequently speaks on Treasury matters at this Dispatch Box, are well aware of the concerns expressed in this House on a number of occasions from the Benches behind me, by right reverend Prelates and from the Benches opposite. Nevertheless, VAT is a broad based tax. To offer special treatment for churches would open the question as to whether it should be offered to others. To concede to demands from here, there or wherever for special treatment, would seriously erode the tax base. That revenue would have to be found from elsewhere. However, we are well aware of the concerns. That is why my noble friend made clear on a previous occasion that the Government provide considerable support, particularly through English Heritage, for churches in terms of restoration and repairs.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that country churches are kept in repair largely as a result of contributions by the congregation? Is it not oppressive that people who subscribe, sometimes at considerable personal sacrifice, to keep a country church in repair should be compelled also to pay tax on those contributions when, if they did not make any contribution, they would have no tax liability?

§ Lord Henley
My Lords, the point I was trying to make to the noble Lord, Lord Molloy, is that to concede to a demand from the Churches would open the door to 1687 other demands. The case is the same for all. It would seriously erode the tax base; we should have to consider where money could be raised elsewhere.
Her Majesty's Government recognise the importance of providing support for churches. I do not have the figures for 1995–96, but that is why, for example, in 1994–95 some £14 million was offered towards repairs for churches and chapels. That would include the sort of churches to which my noble friend referred. Similarly, since 1991 some £19.2 million has been allocated to England's 61 cathedrals. We will provide help but it is right to provide that help by means of grant rather than the less efficient method of tax concessions.

§ Lord Taylor of Blackburn
My Lords, will the Minister agree to look at relief on covenants? Surely that would provide a way out of the difficulty if he wishes to be as generous as he advocates.

§ Lord Henley
My Lords, it is not for me to be generous in these matters; I suspect it is a matter for my right honourable friend the Chancellor of the Exchequer. I shall, however, pass that comment to my right honourable friend for consideration. To return to my original point, it is not an efficient use of resources to try to provide help by means of a tax concession. The better way is by means of grant, particularly through English Heritage and other agencies.

§ The Lord Bishop of Birmingham
My Lords, I am amazed by the generosity and devotion of ordinary people in maintaining their churches. Does the Minister believe it is just or fair to such people that the Government should take more than twice as much away from them in VAT than has been contributed through English Heritage? Is he aware that individual organisations such as the National Trust which have responsibility for ancient buildings believe that the Government should make special provision for church buildings? Alternatively, if the Minister holds to his present line, the grants need to be very much larger.

§ Lord Henley
My Lords, on the first point, with all due respect I am not sure I accept the right reverend Prelate's statement that the Government take twice as much as they give by means of grant. As I said, it would not be an efficient use of tax revenues to provide support through tax relief rather than by means of grants. I do not believe that the right reverend Prelate would suggest that we make the individual churches exempt from tax. We will continue to provide as much as possible through English Heritage and other agencies for maintaining the heritage of this country and the fabric of our churches. The amounts made available which I quoted are very large indeed.

§ Lord Marsh
My Lords, is the Minister aware that those people who recently contributed to the tune of some £25 million to the charitable funds for the rebuilding of Guy's Hospital and then received a VAT bill for £2 million would be very upset to find that other charities did not pay VAT?

§ Lord Henley
My Lords, the noble Lord, whether by intent or not, makes my original point; namely, that to 1688 concede the argument for churches would open the door for all the others. I believe the noble Lord will agree that the revenue shortfall would have to be found elsewhere.

§ Lord Peston
My Lords, we have listened very carefully to the Minister. He seems to be saying that so far as the Government and the Treasury are concerned VAT is levied on repairs and there is absolutely no reason to regard the Church or any other body as having priority in the matter. Is that what he is in fact saying? Is he aware that some people might take the view that there is a case for not having this uniform rule? Is he simply saying that the Church has to take its chances when it comes to repairs?

§ Lord Henley
My Lords, that is the point I was trying to make. There are more efficient ways of providing support for what is termed heritage, or churches, than by means of tax concession. I could go through the sixth VAT directive, but I suspect it would bore most Members of the House to do so as this stage. Under that directive reliefs are available for housing. However, housing, sadly, on this occasion does not include the Church.

§ Lord Cledwyn of Penrhos
My Lords, will Welsh churches benefit from the grants made by English Heritage?

§ Lord Henley
My Lords, English Heritage covers England. The appropriate agency in Wales would cover Wales.

§ Lord Elton
My Lords, my noble friend the Minister is clearly concerned that if he were to yield to the Church, he would be assailed by appeals from others. Will he, however, consider that the others from whom he would receive appeals would be freeholders, tenants or corporate bodies, whereas we are talking about groups of private individuals who are none of those but are trustees of a national heritage, and that payments at present given by grant are reduced by the amount of tax that is now paid on them?

§ Lord Henley
My Lords, if, to put it simply, my noble friend suggests that on this occasion the Church should be treated separately from others, I have to tell him that I do not agree.

§ Lord Molloy
My Lords, in view of the support I have received from all sides of the House, will the Minister give an assurance that something will now be done along the lines suggested in my original Question?

§ Lord Henley
My Lords, I am not sure that the support received was quite the 100 per cent. that the noble Lord sought. I believe the noble Lord will accept that I cannot give him the kind of assurances that he 1689 seeks. However, I am sure that my right honourable friend and others will take note of comments made this afternoon.

§ Lord Tebbit
My Lords, will my noble friend say whether it is in the power of this sovereign Parliament to take—

Noble Lords
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