Church Repairs (VAT)

Oral Answers to Questions — Church Commissioners – in the House of Commons at 2:30 pm on 26 March 2001.

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Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Environment, Food and Rural Affairs) 2:30, 26 March 2001

What estimate he has made of the annual savings to the Church of England of a reduction of VAT on repairs to churches to 5 per cent.

Photo of Stuart Bell Stuart Bell Second Church Estates Commissioner

It is too early to give precise figures for the Church of England's savings on VAT which will arise following the significant announcement made by my right hon. Friend the Chancellor in his Budget statement earlier this month.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Environment, Food and Rural Affairs)

I am sure that the hon. Gentleman is aware of a written answer in which the Paymaster General said:

"the VAT paid by all churches, including listed churches, for repairs and maintenance is £38 million per year."--[Hansard, 25 January 2001; Vol. 361, c. 706W.]

VAT is levied at 17.5 per cent. I calculate that if it were reduced to 5 per cent., the reduction would result in a saving of £10.85 million a year for the combined churches.

On Budget day, the Secretary of State for Culture, Media and Sport said that he would consult urgently in order to produce a grant scheme to replace the lost VAT early in the new financial year. The new financial year is nearly upon us, but the earliest the Europeans are likely to consider a reduction in VAT is 2003. Does the hon. Gentleman not think that the Government have a strong moral obligation to replace the £10.85 million that will be lost in VAT over each of the next two years, until the European Union can introduce its reduction scheme?

Photo of Stuart Bell Stuart Bell Second Church Estates Commissioner

I am somewhat surprised by the hon. Gentleman's question, as he is well informed on these matters. He surely noted that, in his Budget statement, the Chancellor indicated that a grant amounting to the equivalent of a reduction from 17.5 per cent. to 5 per cent. would be provided. That would cover all repairs for listed churches from 1 April this year. We therefore need not wait for the European Commission: from 1 April this year, the VAT will effectively be reduced from 17.5 per cent. to 5 per cent. As for the Commission, we will continue to work towards achieving what the hon. Gentleman desires.

Photo of Brian Iddon Brian Iddon Labour, Bolton South East

When my hon. Friend proffers the estimate for which Mr. Clifton-Brown has asked, will he also tell us how much 18 years of Conservative government cost the churches, when the Conservatives could have enacted a policy about which they have been bleating for the past four years?

Photo of Stuart Bell Stuart Bell Second Church Estates Commissioner

I am grateful to my hon. Friend for reminding the House that VAT was doubled in 1979 to 7.5 per cent., which imposed an onerous burden on the churches. My right hon. Friend the Chancellor of the Exchequer is the only Chancellor in 20 years who, as well as taking steps to reduce VAT on church repairs, has introduced a grant scheme, which will operate from 1 April.