Lord Hurd attacks church renovation VAT plan

Lord Hurd spoke to the Sunday Telegraph

Former foreign secretary Lord (Douglas) Hurd has attacked government plans to introduce VAT on church renovations, claiming the religious institution already has "a raw deal".

From October this year the Treasury will charge VAT at 20% on approved alterations to listed buildings - work which is currently exempt from the tax.

Church leaders are due to meet ministers at the Treasury on Monday.

They are expected to warn the tax move will penalise church benefactors.

The Church of England, which thinks the change will cost it £20m a year, has also warned the plan could mean renovations projects are scrapped.

The Treasury said it needed to take steps to correct "significant anomalies" in the VAT system.

A spokeswoman said the government had extended the scope of the Listed Places of Worship grant scheme, which makes grants towards the VAT incurred in making repairs to listed buildings mainly used for public worship.

Alterations and repairs and maintenance are already liable for VAT on all non-listed buildings.

Lord Hurd's rare intervention follows a series of criticisms directed at Chancellor George Osborne in the wake of his Budget.

The government has faced censure over plans to end age-related tax allowances for pensioners and to impose VAT on pasties, as well as plans to curb tax relief on charity donations.

'Vaguely sympathetic'

VAT is already levied on repairs to churches, cathedrals and other listed buildings, but under the new plans outlined in the Budget "approved alterations", such as new disabled access, plumbing systems and structural changes, will also be subject to the 20% tax.

Lord Hurd <link> <caption>told the Sunday Telegraph</caption> <url href="http://www.telegraph.co.uk/news/politics/9218868/Renovation-tax-will-harm-our-churches-warns-Hurd.html" platform="highweb"/> </link> : "I think it needs to be looked at in the light of the whole scheme of relations between the Church and the state.

"The Church has, on the whole, a pretty raw deal and this is just one example of it."

The peer, who served in the Conservative governments of Baroness Thatcher and Sir John Major, added: "We are governed by people who are vaguely sympathetic to the Church and would be horrified if it started to disintegrate, but don't quite understand that in order to keep it all going it needs a bit of effort and a bit of sympathy.

"It is taken for granted and that, I think, is a pity."

''Happy to pay more'

The Department for Culture, Media and Sport (DCMS), which administers the Listed Places of Worship grant scheme, says its budget for claims in 2012/13 is £12.35m.

The Treasury said an extra £5m would be added to the budget but it could offer more.

A spokeswoman said: "This (£5m figure) is based on a church report but is not set in stone - we are talking to the churches and if there is good evidence that more is needed we'll be happy to provide it," she said.

"It is not right that a church already pays VAT on repairs but a millionaire can install a swimming pool in his listed mansion, VAT free.

"This simply corrects this anomaly in the VAT system."