Autumn statement: implications for the heritage sector
Autumn statement: implications for the heritage sector
The Chancellor of the Exchequer, Phillip Hammond, has presented his first (and last) Autumn Statement to the House of Commons. The Alliance welcomes the fact that the Government will expand the new museums and galleries tax relief to include permanent exhibitions and the funding announced for the restoration of Grade I listed Wentworth Woodhouse and for the Royal Society of the Arts to pilot a project to promote cultural education in schools. This will be the last Autumn statement as, in future, Budgets will be given in the autumn with a Spring Statement providing analysis rather than substantive policy changes.
The documents relating to the 2016 Autumn Statement can be viewed here.
Impact of Brexit
The Office for Budget Responsibility (OBR) has found that UK economic activity grew 2.3% in the year to Q3 2016. Following Brexit, the OBR has forecast that GDP growth will slow to 1.4% in 2017 before recovering to 1.7% in 2018, 2.1% in both 2019 and 2020, and 2.0% in 2021. In the near term the OBR expects lower business investment and household spending to weigh on GDP. However, the OBR highlights that there is a higher than usual degree of uncertainty in these forecasts.
New fiscal rules
The Government will no longer seek to deliver a surplus in 2019-20 and will instead return the public finances to balance ‘as soon as possible in the next Parliament’. The Chancellor stated that a new draft Charter for Budget Responsibility would be published, with three new fiscal rules:
- the public finances should be returned to balance as early as possible in the next Parliament, and, in the interim, cyclically-adjusted borrowing should be below 2% by the end of this Parliament,
- that public sector net debt as a share of GDP must be falling by the end of this Parliament, and
- that welfare spending must be within a cap, set by the government and monitored by the OBR.
Museums and galleries tax relief
The Alliance welcomes the Government’s decision to broaden the scope of the museums and galleries tax relief announced at Budget 2016 to include permanent exhibitions so that it is accessible to a wider range of institutions across the country. The Heritage Alliance responded to the Government’s consultation on Museums and Galleries Tax Relief to request this change.
The rates of relief will be set at 25% for touring exhibitions and 20% for non-touring exhibitions and the relief will be capped at £500,000 of qualifying expenditure per exhibition. The relief will take effect from 1 April 2017, with a sunset clause which means that the relief will expire in April 2022 if not renewed. The Government will review the tax relief, in 2020, and set out plans beyond 2022.
Support for culture and heritage projects
The Government has committed over £10 million to support culture and heritage projects. £7.6 million will cover urgent and essential repairs to the Grade I- listed Wentworth Woodhouse in South Yorkshire – subject to approval of a sustainable business case. SAVE [Alliance member] has been instrumental in the campaign to save the building and announced in February that the property will be purchased by the Wentworth Woodhouse Preservation Trust (WWPT). The Historic Houses Association [Alliance member] has also published a statement welcoming the move.
Other cultural projects to benefit from funding include and a Royal Society of the Arts pilot to promote cultural education in schools and a new creative media centre in Plymouth.
As announced at Budget 2016, the Government will simplify the Gift Aid process for donors making digital donations – giving intermediaries a greater role in administering Gift Aid. Following the review announced at Autumn Statement 2015, the government is amending the Gift Aid Small Donations Scheme to make it more accessible and flexible, and to ensure fairer treatment between charities that are structured in different ways. The Small Charitable Donations and Childcare Payments Bill, which will make these changes, had its Third Reading in the House of Commons on 15 November 2016.
The Bill would make a number of amendments to the legislation which underpins the Gift Aid Small Donations Scheme (GASDS), introduced in April 2013 which allowed Gift Aid to be claimed on small donations, up to a total of £5,000 a year per charity, without the need for donors to fill in any forms. This was increased to £8,000 from April 2016.
Buckingham Palace restoration
The Autumn Statement has confirmed that, as a result of the Sovereign Grant Review 2016, the percentage used to determine the Sovereign Grant will increase temporarily from 15% to 25% of the Crown Estate annual profits from 2 years previously, to allow for the significant re-servicing work of Buckingham Palace. The restoration work on Buckingham Palace, combined with the restoration of the Houses of Parliament should provide a significant boost to the heritage sector.
From April 2017, inheritance tax will be charged on UK residential property when it is held indirectly by a non-domiciled individual through an offshore structure, such as a company or a trust. This is intended to close a loophole that has been used by non-domiciled individuals to avoid paying inheritance tax on their UK residential property. This change may affect non-domiciled owners of large historic houses and other heritage buildings – if these are deemed to be residential rather than businesses.
The Government will also change the rules for the Business Investment Relief (BIR) scheme from April 2017 to make it easier for non-domiciled individuals who are taxed on the remittance basis to bring offshore money into the UK for the purpose of investing in UK businesses. The Government will continue to consider further improvements to the rules for the scheme to attract more capital investment in British businesses by non-domiciled individuals. This is source of funding which the heritage sector could consider taking advantage of.
The Government will provide additional support through UK Export Finance (UKEF) to ensure that no viable UK export should fail for lack of finance or insurance from the private sector. This should help England’s heritage sector be better placed to expand into new markets.
All Alliance members that employ staff will be affected by the following increases. The National Living Wage for those aged 25 and over will increase from £7.20 per hour to £7.50 per hour. The National Minimum Wage will also increase:
- for 21 to 24 year olds – from £6.95 per hour to £7.05
- for 18 to 20 year olds – from £5.55 per hour to £5.60
- for 16 to 17 year olds – from £4.00 per hour to £4.05
- for apprentices – from £3.40 per hour to £3.50
Fuel duty will remain frozen in 2017 for the seventh successive year. The Government believes that this will save drivers £130 a year on average.
National Productivity Investment Fund (NPIF)
The fund will provide £23 billion of additional spending in areas that are key to boosting productivity:
- digital communications,
- research and development (R&D),
- and housing.
On rail the NPIF will allocate an additional £450 million to trial digital signalling technology, to expand capacity, and improve reliability. The Minister of State for Transport, John Hayes’ recent speech to the Independent Transport Commission in which he heaped praise on heritage transport buildings combined with this funding, provide opportunities for the sector to enhance or save heritage transport structures.
The government will invest over £1 billion by 2020-21, including £740 million through the NPIF, to support the market to roll out full-fibre connections and future 5G communications. This will especially benefit members in rural areas or with limited internet connectivity.
The NPIF will also provide an additional £4.7 billion by 2020-21 in Research and Development funding.
The Government reiterated its plans to publish a Housing White Paper shortly, ‘setting out a comprehensive package of reform to increase housing supply and halt the decline in housing affordability’. The Alliance will seek that ensure that the Housing White Paper best outcomes for the sector.
Shale Wealth Fund
Following a consultation to ensure local communities share in the benefits of shale production, the Shale Wealth Fund will provide up to £1 billion of additional resources to local communities, over and above industry schemes and other sources of government funding. Local communities will determine how the money is spent in their area. This could provide a significant source of funding for heritage projects in affected areas. The Alliance’s Historic Religious Buildings group recently responded to the consultation on how best to allocate funds.