As the Member of Parliament for a historic Cathedral City, I have been well aware of considerable concern in Lincoln and Lincolnshire, which I am entirely sympathetic to, at the proposal in the recent Budget to abolish zero rated VAT for alterations to listed buildings. As a supporter of The National Trust, English Heritage and Society for the Protection of Ancient Buildings, I am also very much aware of the Cathedral and Churches of the diocese’s role as buildings of beauty and worship within their communities and therefore concerned at the effects such an all encompassing change to the tax regime may have.
Understandably, the Government is addressing certain longstanding anomalies and loopholes in the VAT system, where similar products are taxed differently, or where current rules are open to abuse or misunderstanding. Currently, approved alterations to listed buildings are zero rated, while repairs and maintenance to all buildings, and alterations to non-listed buildings, are taxable. These anomalies are in a general sense, the Government feel, inconsistent and unfair. As a result of these changes approved alterations to listed buildings will now be taxable.
A number of constituents, not least our two leading spiritual leaders in Lincoln, The Rt Revd Christopher Lowson, the Bishop of Lincoln, and The Very Revd Philip Buckler, the Dean of Lincoln, and almost 100 parishioners at The Parish of St Nicholas with St John in Newport, amongst a number of others, have written to me recently to express their disapproval at the proposal to charge VAT on Alterations to Listed Buildings. I and many of my fellow Members of Parliament have shared these concerns with Ministers in both correspondence and in person.
Having listened to our representations, the Chancellor of the Exchequer has decided not to reverse his decision to abolish zero rating VAT for alterations to listed buildings, but has generously decided to increase the amount available to the Listed Places of Worship Grant Scheme (LPWGS) by a further £30 million a year. This is in addition to the £12 million already being made available to LPWGS, making a total of £42 million a year, which will in future be ring-fenced and will be paid each year for the life of this Parliament. The Chancellor has also guaranteed that this payment will be made by the HM Treasury and not by any other Departmental budget.
Of course, there are those who would have preferred to maintain the VAT exemption, but this significantly increased grant should enable listed churches of all denominations to meet the costs of alterations to their listed buildings, and is a further contribution to the costs on repairs on listed buildings.
The Chancellor and the Treasury have also agreed a number of improvements to the LPWGS so that from now on the aim is that churches and cathedrals will be able to claim back a sum equivalent to the full VAT on all repairs on a monthly basis. From October, when the transition period on zero rated VAT for alterations is completed, churches and cathedrals will be able to also claim back a similar sum on all alterations.
I am reassured and grateful to the Chancellor for having made good his commitment to ensure that listed Places of Worship are not adversely affected by the Budget proposal to abolish zero rating VAT for alterations to listed buildings. I am in no doubt that this is the right policy for our City, County and Country.