HC Deb 01 May 2001 vol 367 cc208-15WH

1 pm

Mr. David Heath (Somerton and Frome)

It is a privilege to have the opportunity to raise an important issue in the Chamber. I ask the Minister for the Arts to put away his file on stately homes. I do not want to talk about stately homes or large monuments, but the large number of listed buildings that people live in.

I refer to people's normal residences, which they try to maintain at substantial cost with very little support through existing Government structures. I recognise that the Minister's Department understands some of the issues and values the historic, listed buildings in this country. It commissioned the important report, "Power of Place", which says precisely that. However, I ask him to listen to what I have to say and to make even stronger representations to his colleagues in the Treasury and in the Department of the Environment, Transport and the Regions, because it is there that we need to see action to support the fine words that have been said on many occasions.

Part of the idyllic rural scene, almost the epitome of rural England, is the thatched cottage—one in a west country village—with roses around the door. What we must recognise is that the chocolate-box cottage costs a pretty penny to maintain. My interest has been stimulated by the fact that there are a great number of listed and thatched buildings in my constituency. Many of my constituents who live in those buildings have written to me over the years expressing their concern about the difficulty of maintaining their buildings in the way that they would like. I am indebted to Mr. Tregoing, a constituent from Long Sutton, who came to my surgery and clearly set out his concerns. He had had to look again at thatching half of his property and realised how expensive that would be. It has to be done every few years, using top-grade materials—that is required by the authorities—in order to maintain it. He cannot go for a cheap alternative. He cannot even use a cheaper material for thatching. In our area, reed thatching is not acceptable, so he has to use traditional thatch materials and that makes it an expensive job.

What Mr. Tregoing finds extraordinary is that first, he does not have access to any support—there are no local authority or other grants—and secondly, he has to pay what I think is the iniquitous imposition of 17.5 per cent. VAT. The majority of people to whom I have spoken who live in that sort of property consider it a great privilege to live in their houses. They love living in historic buildings. They recognise that in many cases not only are those buildings very beautiful in themselves, but they add beauty and value to the village or town in which they are located. The building might not even have been listed when they first lived there, and they find it difficult to understand that the value added tax system penalises them for maintaining it to an acceptable standard for the public good, although they obviously have an interest in doing so.

The Minister will be familiar with the facts, but I will set them out for the record. Since 1973, the standard VAT rate of 17.5 per cent. has applied to repairs and refurbishments of buildings, including listed and historic buildings. The difference is that newly constructed buildings carry a zero rate of VAT. At first sight, that seems totally anomalous; it flies in the face of everything that the Government have argued otherwise—and which Liberal Democrats have always argued—as regards sustainability and the proper balance between using existing buildings and allowing new buildings. However, there we are.

The regulations were amended slightly in 1994 to extend the zero rating to approved alteration work on protected buildings. If one applies for listed-building consent for an alteration to a listed building, the zero rate applies. Of course, that makes the situation even more anomalous. The extraordinary thing is that someone who builds an extension or undertakes a major alteration to his thatched cottage is not liable for VAT; however, someone who simply tries to maintain it in the historic form in which it has always existed is. Many people find that difficult to understand.

There has been a long-running campaign on the issue, and different concerns have been expressed. As regards churches, the Government have listened. It was announced in this year's Budget that the Treasury has devised a mechanism whereby listed buildings that are places of worship will benefit from a reduction in VAT. That has not yet been agreed with the European Commission, and discussion is still going on. There will be a general review in 2003, when it is hoped that the matter will be resolved.

The Government cannot hide behind the smokescreen of European rules, which I understand are restrictive in this regard. There is no scope under the current agreement for new—I emphasise new—zero rates of VAT for goods or services unless that is decided by general agreement. However, there is scope for introducing a 5 per cent. rate of VAT. Annexe H of the sixth VAT directive lists the goods and services to which Governments can apply a 5 per cent. rate. Item 9 refers to the supply, construction, renovation and alteration of housing provided as part of a social policy. It is a matter of interpretation as to whether an historic building can be construed as part of a social policy, and I understand that difficulty.

In October 1999, a further qualification extended to member states an option to apply an experimental reduction to a 5 per cent. rate for three years on services including the renovation and repairing of private dwellings, excluding materials which form a significant part of the value of the supply. That seems to many of us to offer the Government a much more realistic opportunity to do something significant. However, there is no indication that they intend to take any action whatever. I am disappointed by that, because the Government are failing to act in a way that would be of enormous benefit to a great many people in this country, as well as to our built heritage, and in a way that would meet the objectives—the core beliefs—of the Department for Culture, Media and Sport. We will have the wrong end of the stick if we are not prepared to entertain a saner taxation system that encourages what we want, such as conservation and sustainability, but instead have a system that does the reverse—that provides a fiscal stimulus to build new buildings and allows old buildings to fall into disrepair.

Another aspect of the problem is the absence of grants for maintenance of listed buildings, which compounds the difficulties that individual householders face with respect to VAT costs. Local authority grants for maintenance are now almost non-existent. There was a time when local authorities had a little more spare cash and were relatively generous and when, perhaps, fewer people knew about the grants and asked for them, but times have changed. I checked with the two district councils in my constituency. Mendip district council does not have a great number of thatched cottages—that is not a vernacular style for that area—but it does have many historic buildings. It has offered no grants for the past two years. It still receives applications, which are kept on file, but there is no indication that grant aid will be available. At one time, it had funds of £25,000 for maintenance grants and £40,000 for buildings at risk. At present, it cannot deal effectively with grant applications for maintenance or for buildings at risk. That worries me enormously.

South Somerset district council, in the other half of my constituency, has 6,000 listed buildings in an enormous range of styles. The area contains the second highest number of listed buildings in the country. Even uneducated laymen would recognise many of them as historic, beautiful and worthy of conservation. The district council's fund, which is now down to £24,000, is targeted at buildings at risk. It is used almost exclusively for unoccupied buildings that otherwise would be in danger of dereliction, and not for occupied buildings. I understand that priority, but I also recognise that it leaves many people without the support that they would like.

The only other alternative is the heritage lottery grant. It currently allocates £86 million for historic buildings and townscapes, but I understand that that is set to fall to £53 million in the coming year. Those funds are oversubscribed by a factor of five to one and are clearly inadequate to the task. They are targeted largely at major buildings rather than the individual dwelling places that are, cumulatively, of as much historic importance.

We are in a very serious position. Mr. Colin Johns, a gentleman with whom I have had dealings, is a founder trustee and the honorary treasurer of the UK Association of Preservation Trusts. As an architect, planner and former head of conservation at Wiltshire county council, he knows a great deal about the matter.

He has said: Access to the Heritage Lottery Fund is now the lifeline for many conservation projects, which without grant aid will simply fail. Until recently it was often possible to obtain funding from Cadw, English Heritage or Historic Scotland but these opportunities have been severely curtailed for most projects and the political pledges made in the past that lottery funding would be additional to existing funding, not a replacement for it look decidedly tarnished. I agree with that comment.

Returning to the subject of VAT, many organisations take the view that it is an anomaly that must be corrected. A number of them have come together as the Joint Committee of the National Amenity Societies, which has produced a report entitled "VAT and the Built Heritage". Its foreword states: Charging VAT at standard rate on repairs to listed buildings whilst charging nothing on alterations to them flies in the face of government advice on conservation. The present system is also at odds with the ideas of sustainability which lie at the heart of recent thinking by the Department of Environment, Transport and the Regions and which underpin the report of the Urban Task Force. I agree entirely with those comments, and something must be done now.

The crux of the argument is that doing something about VAT and making grants more widely available would be good for the country. Compared with the alternatives, such measures make economic sense and are good in terms of sustainability. In keeping with the argument that I have already advanced, there is no sense in adopting a fiscal policy that encourages new building and is detrimental to older buildings that we want desperately to preserve. Such measures would also be good for employment. They would help to maintain a craft base and the artisans and craftsmen who carry out such work, and to ensure that the materials that they use are kept in use in this country. Such measures would also undoubtedly be good for tourism. Part of the image that we in the west country sell is that of the traditional townscape or village, of which older buildings form an integral and essential part. Without them, it will be even more difficult to bring back to the glories of the west country the visitors whom we have lost through current events.

Finally, such measures would be good for the residents themselves. They would be freed from the serious concern of maintaining a roof over their heads— literally so, for those who live in thatched cottages—and would be able to preserve their properties in the manner that they prefer. It is true that that would be to their benefit, but it would benefit everyone to whom the listed building process is relevant. Without such measures, the entire system for protecting historic buildings will remain a nonsense. Instead of paying lip service and offering pious hopes, this Government should reform the system so that it can make a real difference to those who live in historic buildings.

1.17 pm
The Minister for the Arts (Mr. Alan Howarth)

I thank the hon. Member for Somerton and Frome (Mr. Heath) and congratulate him on securing today's debate. He makes a gentle and seductive case, and I should like to respond to it as fully as time will allow. He and I are certainly in agreement, inasmuch as historic buildings and other survivals of the past give profound pleasure. They stand as a record of artistic and technical achievement in many different fields, and we have a proud tradition of protecting and preserving important buildings. The listing of buildings of special architectural or historic interest began after the war, when planners in blitzed towns and cities desperately needed guidance on which surviving buildings were worthy of retention. Protection is now given to some 500,000 listed buildings, and a wide variety of structures are included—from castles and cathedrals, to thatched cottages, milestones and village pumps.

The Government are advised on which buildings to list by English Heritage, which conducts thematic studies such as those recently carried out on cinemas and military and railway structures. It also advises us on specific proposals for listing buildings that are, for example, under a perceived threat. Legislation is backed up by planning policy guidance note No. 15, which provides solid guidance on identifying and protecting the historic environment, and includes advice on the upkeep and repair of historic buildings. The guidance is directed not just at local authorities, but at other public authorities, historic building owners, developers, amenity societies and other members of the public.

As the hon. Gentleman noted, many owners are pleased that their properties have been listed, and therefore officially recognised, as part of our heritage. However, we realise that some owners may be uncertain or apprehensive about what listing will mean for them. My Department's publication, "What Listing Means: a Guide for Owners and Occupiers", deals with general queries. Local authorities and English Heritage are available to answer more detailed questions, and often best placed to do so. Many listed buildings are in public ownership. The Government are aware of their responsibilities and we are considering how best to give guidance to local authorities on best practice in the care of their buildings.

That a building is listed does not necessarily mean that it must be preserved intact for all time. The main purpose of listing is to ensure that care will be taken with decisions affecting the building's future, that any alterations respect its particular character and interest, and that the case for its preservation is taken fully into account in considering any redevelopment proposals.

Owners of listed buildings who wish to carry out works affecting the character of the building must first obtain listed-building planning consent from the local planning authority. When considering applications for consent, planning authorities must ensure that the terms on which consent is granted relate fairly and reasonably to the circumstances of the building and its conservation needs. Planning authorities must therefore ensure that conditions are necessary, relevant, enforceable and reasonable, and they should have access to the appropriate expertise. If an applicant is aggrieved by the terms on which consent is granted, he or she has a right of appeal to my right hon. Friend the Secretary of State for the Environment, Transport and the Regions.

Although owning a listed building can result in additional costs for owners, it can also bring benefits. In many areas, the cachet of listing can add to the value of residential property. As the hon. Gentleman said, many people regard owning a listed building as a privilege and accept it as a responsibility. We are aware of and appreciate the efforts made by the vast majority of listed building owners to maintain their properties in sound condition. PPG15 states that regular maintenance and repair are key to the preservation of historic buildings, that routine expenditure on repairs keeps a building weather-tight and that regular maintenance—especially roof repairs and clearance of gutters and downpipes—can prevent more expensive work becoming necessary later.

The lifespan of an historic building may be all but indefinite, provided that it is regularly maintained and that any major repairs are undertaken promptly. Major problems are often the result of neglect. If tackled earlier, they can be prevented or at least reduced in scale. PPG15 also encourages owners of listed buildings to seek expert advice on maintenance and the best way of carrying out works. The Government hope that local planning authorities will give owners informal advice when they can or guide them to other sources.

English Heritage is a national source of information and expertise on matters relating to the historic environment. It provides much specialist advice on the care of historic buildings and can sometimes advise on individual cases, especially when there are unusual problems. Its learned and fascinating publication, "Thatch and Thatching", for example, provides valuable guidance on thatched cottages. It says that local authorities' policies should be based on a thorough knowledge of local traditions of thatching and take account of regional diversity, the preservation of materials and technologies and the maintenance of the area's character.

The hon. Gentleman made important points about the wider benefits to the economy, our craft tradition, tourism and heritage of ensuring that our heritage buildings are kept in good repair. He also said much about funding. I do not think that we dispute that local authorities have powers to give grants to owners of buildings of special architectural or historic interest, regardless of whether they are listed. The allocation of funds is, however, for local authorities to decide. I appreciate that there is not, in practice, great scope for authorities to grant funds, but it must be a matter for their priorities and a decision for them.

Grants for the repair of buildings of outstanding architectural or historic interest, which usually means grade 1 and grade 2* buildings—approximately the top 6 per cent. of listed buildings—may also be available though English Heritage provided that the application is made prior to the work being carried out. All applications for grant assistance are judged on their merits. English Heritage takes into account the importance of the building, the urgency of the proposed repairs and the need for financial support. In addition, the Ministry of Agriculture, Fisheries and Food has grant schemes for the repair and reinstatement of traditional farm buildings, which includes listed buildings. The directory of grant-making trusts also lists a number of charitable trusts that make grants towards the preservation and upkeep of historic buildings.

The Government have long been aware of the concern that repairs to listed buildings attract the full rate of VAT. The Chancellor's approach to the European Commission last year to seek to lower the VAT burden to 5 per cent. on repairs to listed places of worship is wholly representative of the Government's willingness to play their part in sustaining that inheritance. The Commission has said that it will look carefully at the VAT treatment of heritage buildings when the VAT directive is reviewed in 2003. We shall continue to work with the Commission towards a positive conclusion.

Mr. David Heath

Will the Minister give way?

Mr. Howarth

Will the hon. Gentleman excuse me, as I have very little time?

That is not to say that we are content to let the matter rest there. My Department, following the undertaking given by the Chancellor in his Budget statement, is working urgently on developing a system to administer grant payments to listed places of worship, which will effectively reduce the rate of VAT to 5 per cent. That new policy will mean a very substantial increase in public support for the repair of listed places of worship. The measure has already received widespread and enthusiastic response by all faiths nationally and locally, and we shall make an announcement as soon as possible on introduction of the scheme. Indisputably the nation's places of worship play a huge part in creating our sense of common heritage, but they also play a critical role at the centre of individual communities. It is partly for that reason that my right hon. Friend the Chancellor, with whom the responsibility for VAT rests, chose to concentrate the benefits on those particular buildings.

A responsible Government must be circumspect and selective in targeting reliefs. All of us understand that a relief introduced in one area costs revenue that has to be made up from elsewhere. Of course we fully recognise the importance of the conservation of secular buildings and the important role that individual owners play in achieving that. We greatly appreciate what they do, and we do not underestimate the burden and difficulty for many of them. We play our own part in their preservation through the provision of the grant assistance to which I have already referred. I cannot hold out the prospect of asking taxpayers to provide grant to support the general cost of repairs to grade 2 listed buildings. As the hon. Member for Somerton and Frome said, there are 6,000 listed buildings in south Somerset alone. The allocation of heritage lottery funding must be a matter for the trustees.

We have set in train a wide-ranging review of policies on the historic environment, leading to a major statement of policy on the historic environment later this summer. That is a Government initiative. As a first stage, I asked English Heritage to address a number of specific issues and to submit a report to the Government. Its report, "Power of Place", to which the hon. Gentleman referred, was published in December last year, and we are currently considering it very carefully. I am grateful to the hon. Gentleman for what he had to say about it.

The report contained a number of recommendations aimed not just at Government, but at the heritage sector and owners generally. The Joint Committee of the National Amenity Societies, to which the hon. Gentleman referred, was among those who participated in that process. The document also addressed the issue of the VAT burden, which was so central to the hon. Gentleman's argument. One of its recommendations was for an equalising of work that is new build or alterations, with work that is repair and maintenance. The Government understand the force of that plea and will consider the proposition carefully. Determination of the matter lies with the European Union, but these matters are not set in concrete. The Government have shown that they are willing to use the flexibility available. The overall system will be reviewed in 2003 at European level.

Another message was the need for the heritage sector to promote a shift from cure to prevention, by encouraging regular condition surveys and planned maintenance and by piloting self-help initiatives and low-cost insurance schemes, and for owners to carry out routine maintenance and regular condition surveys. That backs up the message in PPGl5, and we are looking forward to seeing how the heritage bodies respond to it as well as the other recommendations. I know that many of them have already seized the initiative and are actively considering future patterns of collaboration.

The Government are very much aware of the problems faced by those who own and live in listed buildings and the special responsibility that they carry for the maintenance and repair of those buildings. We pay the warmest tribute to owners for the work that they do in caring for their properties and ensuring that they retain their place within our national heritage. The proper upkeep of listed buildings is an integral part of our policy for protecting the historic environment, which matters greatly to the vast majority of people and is something about which we can be rightly proud. Our forthcoming policy statement will set out in full our vision for sustaining that policy.