The Heritage Alliance responds to the Chancellor’s announcement of an extra £30m for Listed Places of Worship Grant Scheme

The Chancellor’s announcement of an extra £30m for the Listed Places of Worship Grant Scheme is very welcome news for listed churches. But this announcement does nothing to address the ‘bigger picture’ of the Government’s decision to levy VAT on approved alterations to all listed buildings, and will leave communities across the UK unsure of the future.

Churches are a very important part of the historic environment and they face acute challenges, but secular listed buildings – such as community centres and village halls – face similar challenges in raising money to alter their buildings to give them a viable twenty first century lease of life. Levying VAT on these alterations will inevitably sound the death knell for plans to revive cherished buildings, as construction projects are mothballed or lost – damaging local economies, streetscapes and community services. The heritage movement is not a preservationist lobby – sympathetic adaptation is the primary strategy for securing the future of our listed buildings. Rather than curtailing an anomaly that allows wealthy owners to avoid tax on alterations to their listed homes, this ‘heritage tax’ will hit the far greater majority of modest owners and community groups working hard to reuse listed buildings, by adding an extra 20 per cent to the cost of keeping them going.

Chief Executive of The Heritage Alliance, Kate Pugh, said: “Listed buildings are by definition public goods. They’re valuable for the unique character they bring to our cities, towns and villages, and their economic contribution – through the fast-growing tourism industry and the construction sector – is significant.

 “Whilst an extra £30m for listed churches is of course good news, it does not address the big picture of the potentially disastrous impact of the Government’s VAT proposals on all listed buildings. Failure properly to address this issue threatens to undermine the positive initiatives in the Penfold Review and the National Planning Policy Framework, and leaves a question mark hanging over a range of Government initiatives, from the asset transfer programme and the philanthropy drive to the Big Society agenda.

“The Heritage Alliance will continue to call on Government to reverse entirely this misguided proposal for all listed buildings, irrespective of type or ownership. I believe a proper review of the policy objectives behind the measure, using an adequate evidence base, is vital before such an important change – which is irreversible under EU law. I look forward to discussing with Government how they intend to address the needs of all listed buildings.”

The Alliance argues that sympathetic adaptation is now the primary strategy for securing the future of listed buildings as a living, working resource; but this VAT change threatens to push that strategy into reverse. The zero rating, the Alliance continues,  is an extremely rare concession allowed under EU rules: once lost it cannot be reinstated.

The Heritage Alliance considers the removal of the zero rating of VAT on approved alterations to listed buildings will have substantially more negative and unintended effects on our historic buildings, as well as discouraging responsible ownership.  Such a move deserves far better evidence than is given in the impact summary.

The Alliance is calling for the EU exemption to be retained irrespective of building type or ownership.

Round-up of responses

The Heritage Alliance

The Country Land and Business Association

The Historic Houses Association

The National Trust

Built Environment Forum Scotland

Joint response from the the Historic Towns Forum, the Campaign to Protect Rural England, the Electrical Contractors’ Association, the Federation of Master Builders, the Glass and Glazing Federation, House Beautiful magazine, the Institute of Historic Building Conservation, the National Federation of Builders, the National Federation of Roofing Contractors, the National Home Improvement Council and The Bathroom Manufacturers Association.

English Heritage

MPs briefing 9 5 12 

Our response to the HMRC consultation will  be uploaded shortly. Do let Kate Pugh have copies of your submissions  to upload as a resource for others to use – kate.pugh@theheritagealliance.org.uk

Organised by the Federation of Master Builders, the seventeen signatories to the letter include The Heritage Alliance and several of its Members – the Campaign to Protect Rural England, the Country Land and Business Association, the Historic Houses Association, the Institute of Historic Building Conservation, and the Society for the Protection of Ancient Buildings.

Click here for the full text of the joint letter and the FMB’s press release.

“The decision to withdraw VAT relief from approved alterations to listed buildings may not just change the face of Britain by sounding the death knell for hundreds of cherished buildings, but also damage local economies and community services.

Listed buildings – only three per cent of all buildings – are protected as the best surviving examples of our rich architectural tapestry. They’re valuable for the unique beauty they bring to streetscapes, and their economic contribution is significant. Every pound invested in the historic environment directly contributes, on average, an additional £1.60 to the economy over ten years. Local construction firms and architects often rely on heritage building projects to support their businesses. The tourism sector, driven by our heritage, is Britain’s third largest export earner, worth around £115bn a year and supports around 2.6m jobs. With such an obvious connection between the historic environment, local communities and economic prosperity, it is puzzling that the government has failed to make the connection between the maintenance of the historic environment and its own growth and civil society policies.

Rather than curtailing an anomaly that allows wealthy owners to avoid tax on alterations to their listed homes, this tax will hit the greater majority of modest owners and community groups, working hard to reuse listed buildings. An estimated 35,000 to 50,000 listed buildings are owned by businesses or charities. With many unable to reclaim the VAT incurred in making alterations, the heritage tax will add an extra 20 per cent to the cost of keeping these buildings going.

This extra burden will likely lead to the mothballing of many building projects. A typical community project at risk is a town hall renovation in the Shropshire market town of Bishop’s Castle. Project manager Sam Hine warns, “We’ve already been seeking to raise tens of thousands through local fundraising and donations. To now go back for twenty per cent more is demoralising and will put our project in jeopardy.”

It will be cheaper to demolish a listed building and rebuild anew (at 0 per cent VAT), than renovate the existing building at 20 per cent VAT. This runs contrary to so many government initiatives, from the Big Society to the Asset Transfer agenda. If government is serious about supporting economic growth and cutting carbon it should focus on measures to encourage people to reuse existing buildings. With this ill-considered proposal, a golden opportunity to rationalise VAT in a way that would have benefitted jobs, the economy and the environment has been missed. We are left with a regime that penalises sympathetic, low-carbon, often community-led building projects. I hope government will reconsider this tax on our heritage.”

Loyd Grossman OBE FSA, Chairman of The Heritage Alliance

Click here for the full issue of City AM.

The issue:

This unexpected announcement came as a shock to the heritage sector, which is now grappling with the devastating implications of this change for our irreplaceable protected buildings.

Due to come into force on 1 October 2012, this measure would add 20 per cent to the cost of alterations approved under listed building consent. This change could have a devastating impact on the future of listed community buildings, village halls, community spaces and places of worship across the UK, as it raises significantly the fundraising targets for communities working to give them a new lease of life for the 21^st century through alterations such as adding toilet facilities, disabled access or kitchenettes. Where heritage buildings are the catalyst for wider regeneration, the adverse effects will be felt even more widely.

How you can support the campaign:

Members of The Heritage Alliance and anyone at all who’s concerned about the impact of this proposal on our unique historic environment can support the campaign in three easy steps:

Step 1: Write to your MP

Writing your own letter, however brief, is much more powerful than sending in a template letter. For help with the content of your letter see our concerns listed below and here, look at our Chairman’s letter to the Chancellor, or email us for advice: mail@theheritagealliance.org.uk

If in your letter you’re able to reference projects in your local constituency area which you believe would be affected by this VAT change please do so, as case studies will really aid the campaign.

Get started: click here to find your local MP’s contact details. Explain your concerns in your own words and be clear what you are asking for. Include your full contact details so that your MP knows you are their constituent and can contact you with a reply.

Step 2: Sign the e-petition

You can also support the campaign by signing the e-petition entitled ‘Save our heritage: say no to VAT on work on listed buildings’ here. This e-petition was initiated by Wakefield Cathedral, but the reversal it calls for applies to all listed buildings.

Step 3: Respond to the consultation, challenging the principle instead of commenting on the implementation

If you feel able please respond to the consultation, which is open until 18 May, here and do copy your response to us for information. Numbers count!

Do note that the formal questions refer only to implementation, whereas we are calling into question the very principle in order to challenge the rationale for this change.

The Heritage Alliance will also be responding, and we will post our full submission on this page shortly.

Our concerns:

1. Viability

The withdrawal of this VAT concession will act as a sharp disincentive to just the sort of sympathetic adaptation of historic buildings that is so often necessary to secure a viable use for these buildings for the future.

As direct public funding for heritage declines, it is all the more important for Government to promote – not remove – any leverage that encourages the charitable and private sector to take on responsibility for our heritage. This measure will have severe consequences for our listed buildings where the financial viability is often marginal

2. Sustainable development

This proposal runs counter to the Government’s policies on re-use of materials to minimise greenhouse gas emissions. There is much evidence that re-using existing buildings is much more positive for the environment than new construction, but instead of putting right an anomaly this measure exacerbates the differential

Making the best use of existing resources avoids the loss of embodied energy, prevents landfill associated with demolition and waste and avoids the high levels of carbon emissions and energy involved in new development.

3. Economic context

Our listed buildings (some 400,000 in England) are the heart of our outstanding national heritage, the backbone of our tourism industry and essential to many working in the creative industries – two of the sectors acknowledged by Government to be fastest-growing. Our heritage is one of the drivers for economic recovery, not a brake on it[1]

We believe the withdrawal will have a hugely negative effect on our heritage. HMRC says the consultation is intended to ‘address some of the loopholes and anomalies in our VAT system’, but this is a rare fiscal incentive to help our historic environment earn its own keep. This anomaly remains firmly in place, creating a disincentive to invest in historic buildings and promote sustainable development.

Distinctive historic buildings are often the centrepiece of regeneration schemes, which generate income for HMRC in different forms.

The measure threatens to undermine the positive initiatives in the Penfold Review and the newly published National Planning Policy Framework to encourage the economic use of historic buildings and to realise the potential of these buildings to support economic growth.

What we’ve been doing:

The Alliance has been busy writing to Ministers and officials, briefing MPs and liaising with a wide range of colleagues across the heritage, voluntary and construction sectors. We’re also working on our full response to the consultation, and planning our communications around this issue. You can keep up-to-date with our work on Listed Building VAT via Twitter: @Heritage_NGOs and #LBVAT, via our fortnightly e-bulletin Heritage Update, or on this webpage. To get in touch with the team, email mail@theheritagealliance.org.uk

Sir, In our letter (“Planning for a sustainable future”, Mar 14), we anticipated the publication of the Government’s proposals for planning reform, and called for these to move away from the sterile and misleading debate that pits growth against the environment. We set out a number of yardsticks for success, which would make the difference between a strong, sound and sustainable planning policy and one that would open the way for rancour, dispute and the degradation of our priceless natural and historic environments.

We are therefore pleased that the Government has listened to many of our concerns. The definition of sustainable development has been strengthened, protection for designated sites is retained, there is recognition for local wildlife sites and the intrinsic character and beauty of the countryside, and a new emphasis on environmental enhancement and restoration. The importance of development taking place on previously developed (brownfield) sites, provided they are not of high environmental value, is recognised, alongside strengthened policies to bolster town centres.

The ultimate proof of the framework will be how it works in practice, and whether it allows for the sustainable development the Government wants while protecting what Greg Clark, the Planning Minister, rightly described as “what we hold dear in our matchless countryside and in the fabric of our history”. Our organisations will work across the country to try to ensure that it does.

Peter Waine
Campaign to Protect RuralEngland

Paula Ridley
Civic Voice

Loyd Grossman
The HeritageAlliance

Simon Jenkins
National Trust

Ian Darling
RSPB

Paul Wickham
The Wildlife Trusts

This measure appears in the 2012 Budget under the heading ‘VAT: addressing borderline anomalies’. Due to come into force on 1 October 2012, it would add 20 per cent to the cost of alterations approved under listed building consent.

The Government alleges that “the majority of the work covered by the relief consists of extension work which is not necessary for heritage purposes” and that “the current rules give a perverse incentive for change as opposed to repair”.

The Alliance argues:

1. The measure is too blunt a tool to prevent unnecessary alterations, which are in any case controlled by the need for Listed Building Consent.
2. It will act as a sharp disincentive to just the sort of sympathetic adaptation of historic buildings that is so often necessary to secure a viable use for these buildings for the future.
3. This latest proposal to withdraw the zero rate for alterations to listed buildings will have a negative impact on smaller property owners and businesses.
4. The measure threatens to undercut the positive initiatives taken in the Penfold Review and the newly published National Planning Policy Framework to encourage the economic use of historic buildings and to realise the potential of these buildings to support economic growth.

Since 1984 VAT has been levied at the full rate on repairs and maintenance across our entire building stock, compared with a zero rate on new build. This zero rating on approved alterations is a small acknowledgement of the national importance of our listed buildings, which comprise around 2.5 per cent of our built environment. Most importantly, the zero rating is extremely precious. Once the zero rating for alterations is lost, there is no legal device for reintroducing any other form of zero rating, so once lost it’s lost for ever.

It will affect dwellings, residential buildings and buildings used by charities for non-business purposes such as a place of worship or as a village hall or similar. The impact on private owners, community groups and parishioners is wide reaching, affecting our national heritage. The Alliance does not consider any one group should look for special exemption.  

The Alliance calls on the Government to retain the zero rate for approved alterations to all listed buildings regardless of building type or ownership.

In addition to retaining this important zero rating on alterations, the Alliance will continue to campaign for a 5 per cent rate for repairs, maintenance and improvement to all residential property, as allowed under the 2009 EU Directive.  The Alliance will continue to campaign in the UK and in Europe to achieve its long term objective – namely an EU option to remove the 20 per cent rate from repairs and maintenance work on all historic buildings.  

The Heritage Alliance: 12 April 2012

Whilst the Government has suggested that it will work with the charity sector and philanthropists on this, there is widespread concern that this measure will prove to be a disincentive to charitable giving for the 8 per cent of donors who are responsible for a great deal of the giving in the UK. The measure seems to be at odds with the wider government philanthropy agenda and the concept of supporting the ‘Big Society’.

On 29 March, Alliance Chairman Loyd Grossman wrote to the Chancellor to raise these concerns and highlight the danger that a loss or reduction of charitable income could have on the future of some of the protected historic buildings and sites in the care of our members. Keep an eye on our website and future Heritage Updates for developments on this issue.

Responses from Alliance members are coming in all the time, but the general consensus so far is that the membership broadly welcomes the changes, affirms the importance of local plans, and is now looking to the future and the implementation of the framework. Links to Members’ full responses can be found below.

 Loyd Grossman OBE FSA, Chairman of The Heritage Alliance, commented:

 “The improved final document shows that the Government has listened to ordinary people, heritage campaigners, the Select Committees and fellow Parliamentarians, having addressed many of their concerns.

 We’re reassured that the NPPF recognises the purpose of planning is to balance short-term demands and interests with long-term public benefit – protecting the historic and natural assets so valued by the public, whilst providing the homes we need.

The next steps will be key to ensuring the implementation of the NPPF meets the expectations of all those who will be using it: during the one-year transition period Government must do all it can to establish strong support structures and adequate resources for neighbourhood planning. The Heritage Alliance looks forward to continuing to work with colleagues to produce clear guidance for the Historic Environment aspects of the NPPF, and seeking endorsement of this by Government.”

The Alliance welcomes:

• The explicit recognition that the historic environment makes a positive contribution to society, the economy, our culture and our environment
• The fact more weight has been placed on the individual  policy areas, such as that covering the historic environment. Heritage assets are recognised as an being “irreplacable” resource, and the conservation of heritage assets is a now a core planning principle
• A stronger historic environment chapter with added protection for heritage assets where proposals may cause less than substantial harm; however undesignated assets are afforded less protection (see below)
• The replacement of the Brundtland definition of sustainable development (in the draft NPPF) with a reference to the UK Sustainable Development Strategy 2005 (in the final NPPF). However this is rather confusingly referred to in a box, which is not a numbered policy paragraph, so its status in the NPPF is not clear
• The statement that social, economic and environmental gains should be sought jointly through the planning system – a recognition that economic objectives can work hand-in-hand with social and environmental objectives
• The removal of the worrying ‘default answer is yes’ to development where there is no plan, which was contained in the draft NPPF
• The modification of the presumption in favour of sustainable development, which now creates more balance between social, economic and environmental objectives
• The primacy of the Plan. Local planning authorities are strongly encouraged to set out a positive strategy for conservation of the historic environment in local plans, which includes drawing on the contribution of the historic environment to the character of a place
• The stronger focus on ‘town centre first’ regeneration, the commitment to building on brownfield land beforegreenfieldand the emphasis on good design
• Recognition of the ‘intrinsic character and beauty of the countryside’, highlighting the importance of ordinary countryside outside designated areas
• The fact that Historic Environment Records (HERs) retain a central place in the information base for planning
• Transitional arrangements in Annex 1 to ensure that there is adequate local plan coverage.

However, concerns remain over:

• The loss of the Government’s policy objective for planning in PPS5 and the draft NPPF “to contribute to knowledge and understanding of our past by capturing evidence from the historic environment”
• The loss of separate archaeological guidance within the planning system, first through PPG16 and latterly through PPS5
• Whether Government will endorse the sector’s Practice Guide, designed to support the Historic Environment chapter
• The capacity of local authorities without the services of professional historic environment advisors to provide an adequate level of advice on heritage matters
• The length of the transition period, which at 12 months may prove challenging to many local authorities to get their Plans in place
• The level of support that will be available to support local people in neighbourhood planning

Round-up of some of our Members’ reactions so far:

• Campaign to Protect Rural England
• The Council for British Archaeology
• The National Trust
• The Historic Houses Association
• Institute for Archaeologists
• The Theatres Trust
• Rescue: the British Archaeological Trust
• Country Land and Business Association
• Federation of Archaeological Managers and Employers
• Civic Voice
• Historic Towns Forum
• The Institute of Historic Building Conservation

If you’re an Alliance member with a response for inclusion in this round-up, please email Emma Robinson.