Update April 2004

Good news!

In his budget speech on 17 March, 2004, the Chancellor said:

Churches and sacred places are not just an essential part of our religious life but an important part of the history and the fabric of our country.  Before 2000 churches paid 17.5 per cent VAT on all church repairs. Since 2000 grants have covered 12.5 per cent of their VAT bill. I can announce that until March 2006 churches and sacred places will be able to reclaim not 12.5 per cent of their VAT bill but all 17.5 per cent of VAT, wiping out their liability in full.

This is excellent news

There are, however, two questions still lurking at the back of my mind.

• First, will English Heritage be asked to cough up the additional money from their grant fund, thus robbing Peter to pay Paul, and leading to no net gain to churches? One hopes not; but this is what happened when the VAT scheme started.

• Secondly, how will negotiations with the European Union resolve themselves, and if they go the wrong way, will this constrain the Chancellor's freedom of action for future VAT reclaim grant schemes?

By the way, I'm told that the EU and our MPs received floods of letters on the topic, and that no-one was in any doubt that this was a hot potato.

End of update. The rest of this page is the original campaign material.

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You letter or email or fax could be the one that tips the balance, and allows churches to claim six million pounds a year of VAT spent on repairing their buildings.

Piloti (Private Eye) summarises . . . . (2 October 2003)

On this page:

• What's going on
• What can you do
• Some facts and figures
• Contact details - email and postal addresses and fax numbers

For a long time, listed churches (some 13,000 of them) have not paid VAT when doing new building (extensions etc) - but they have paid VAT on repairs, at the full 17.5%.

The government wants to reduce or get rid of this VAT on repairs for listed churches. Unfortunately, they cannot do this without permission from the European Commission in Brussels. So they asked Brussels if they could lower the rate permanently, for both repairs and extensions. (If you want to explore this further, look at the Church of England's summary, or detailed explanation, or the submission to Europe made by the Churches Main Committee.)

However, while waiting for permission from Brussels, the government set up a grant scheme, so that an individual listed church doing repairs could obtain a grant back from the Government, which repaid some of the VAT, and made the effective rate of VAT only 5%, not the full 17.5%. So far so good, though the government made it very clear that this is only a temporary measure, until Brussels agreed to permanent arrangements.

Now Brussels has spoken. The answer is a resounding 'Non'. What's more, Brussels are suggesting strongly that church extensions ought to pay VAT as well! - thus making the situation worse than at present. (If you want more details, there is a short report in the Daily Telegraph of 9 September 2003; a brief comment from the Church of England made earlier in the summer 2003 when it became clear which way the wind was blowing; and the full text of the Brussels proposal is here.)

Fortunately all this has to be agreed by ministers of the EU countries, and there will certainly be some horse-trading before a final decision, probably early next year (2004). But the decision could easily go the wrong way.

So a campaign of letters NOW will make a difference. You could always leave it a day or two, and then forget it . . . . but if you think this is important, please write NOW.

What you can do

Write (by letter, or email) to the relevant person in the European Commission, Ms Christa Randzio-Plath. All the contact details are at the bottom of this page. A letter is best, but if you are really pushed for time, send an email. Or you could send a very short email to say a letter is following (make sure you do send the letter!).

Say that for work on churches, you believe the rate of VAT for both repairs and new building should be substantially lower than the standard rate, or zero. You can limit yourself to listed churches, or widen it to include all churches - up to you.

Please copy the letter or email to the UK government's man at the Treasury, John Healey (details below), to encourage him to fight for this when the time comes. It would be good also to copy your MEP (member of the European Parliament), and (if you have the energy) copy your MP.

• Be polite.
• Keep it short (unless you have expert knowledge).
• Use your own words.
• Ask for a reply - one way is to ask a question, for example about timing of the next steps
• If you have first-hand experience of church repairs or of church new build, mention those, emphasising that much of the money comes from the congregation..
• Brussels is probably more interested in economics than in religion. So perhaps mention one of the following: tourism, heritage, regional diversity, maintaining demand for scarce skills. Below are some detailed facts - you might like to include one or two of them, in your own words.

The UK has approximately 14,000 churches of special or exceptional heritage interest. They are all maintained by volunteer congregations. The government does not have a role in their upkeep - there is no church tax (as in Germany) or state-support of the church-buildings (as in France).

Heritage Tourism generates an estimated 37 million pounds of income annual, and supporting more than one million jobs. Historic churches form an integral part of the heritage environment.

Limited grants are available, but nowhere near enough to pay for upkeep. It has been estimated that 87% of the money is raised locally. Eight thousand churches, many of them medieval, are in rural areas, often poor. Others are in deprived inner city area, the legacy of Victorian construction of new churches of great architectural merit and historic importance.

Falling numbers worshipping (a fall of 17% in ten years), rising public expectations as to the quality of repairs and conservation, and a growing shortage of craft skills is threatening these buildings, and future employment generation.

Maintenance of places of worship falls on the local congregation. Grants have been estimated to average no more than one sixth of the total cost of maintenance and repairs to historic churches. Although maintenance of places of worship is well-regulated with regular fabric surveys and architect-supervised remedial works, the lack of funds inevitably means that buildings do not receive the level of repair they need. Over a period, this can result in the deterioration of an important part of our national heritage.

VAT on repairs and maintenance is largely irrecoverable, because churches for the most part carry on no business activity, so that there is no output VAT against which the input can be set. As is the case with other charities, the VAT is effectively borne by the body which incurs the expenditure and cannot, as in the case of commercial concerns, be passed on to the consumer.

Work on the repair and maintenance of these buildings generates significant employment, much of it in specialist sectors of the industry which are in danger of dying out. The heritage building repair industry preserves scarce and dying skills in trades such as thatching, flint knapping and stone masonry. The current shortage of skills provides an excellent opportunity to create sustainable employment, often in rural or deprived areas.

Pollution and associated building decay is significant, and leads to the need to undertake frequent and expensive repairs to stonework.

Churches exist to serve their communities, as well as providing centres for worship and mission. In very many rural and deprived inner city areas, th;is often reduces central and local social and welfare expenditure by providing key services free of charge. This valuable community work is threatened by the substantial burden of maintaining the buildings, which is increased substantially by the imposition of VAT.

In many rural communities, the church building is the only public building. At least one half of rural churches are used for public purposes. Many of these churches are supported by tiny communities, with no state aid. For example, 2000 church buildings are supported by communities with an average population of 200 people. The number of people accepting responsibility for these buildings (church 'membership') is, on average, about 3% of the population, and attendance for worship about 2%.

Contact details

Write to: Ms Christa Randzio-Plath, MEP
Chairman and Rapporteur on Lower Rate VAT
Batiment Altiero Spinelli
12G306
Wiertzstraat 60
B-1047 Brussels
Belgium
email: crandzio@europarl.eu.int
fax: 0032 2 2849443

Copy to: John Healey Esq, MP
Economic Secretary to the Treasury
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
email: healeyj@parliament.uk
fax 01709 874207

Copy your Member of the European Parliament (MEP):
to find your MEP's name and address: http://www.europarl.org.uk/uk_meps/txukmeps/txmain.html

Copy your MP:
to find your MP's name and address and email address: http://www.locata.co.uk/commons/
(or use www.faxyourMP.com)