Leader: Another raid on church finances

18 April 2012

MID-TERM Budgets are generally tough, as the Chancellor of the Exchequer prepares to build up revenue for pre-Election concessions. Despite early impressions, last month’s Budget conformed to this pattern. What has become known as the Granny Tax was spotted pretty quickly; but it took a few days for the public to appreciate the full implications of two other innovations, concerning large charitable donations and VAT on listed-building alterations. The effects of the first are impossible to gauge: the Church relies overwhelmingly on thousands of weekly contributions from churchgoers of modest means, and large donations from wealthy individuals are, regrettably per­haps, rare. Far more costly will be the imposition of VAT on alterations to listed buildings. The figure we gave of an extra £20 million a year (News, 30 March) is now said to be on the low side. But even that figure, assuming that each raises an average of £80, is an additional quarter-of-a-million coffee mornings just to stand still.

It is understood that this was just one of a number of measures to remove VAT anomalies. The Church has been lobby­ing for such a move for some time, but in a different direction. It has been anomalous to exempt alterations from VAT and yet charge VAT on repairs. The fixed sum made available to remedy this discrepancy through the Listed Places of Worship (LPW) scheme has proved inadequate to the task, and churches routinely discover that they must cover half the VAT costs. And now there is a suggestion that alterations must be covered in the same way, by a slightly increased sum.

When a Government springs such a surprise, it can be shamed into allowing a period of consultation, and there is a small win­dow, until 4 May, to make representations to the Treasury on this matter. We understand that the Bishop of London and the Church Commissioners will be making an approach, but it will help the Church’s cause if MPs tell the Treasury that they are being lobbied. The list is straightforward:

• a 100-per-cent exemption for ecclesiastical buildings from the imposition of VAT on listed alterations;

• an acknowledgement that almost all church alterations are to improve the building for community use;

• an acknowledgement, too, that donations to church building projects have already been taxed;

• a recognition that the LPW scheme, far from being a solution to the new alterations tax, is not fit for its existing purpose of com­pensating churches for VAT on repairs, and needs urgent reform;

• and a recognition that unlisted church buildings face similar challenges and costs, and should be treated in the same way as listed churches.

There is, of course, the perennially pressing matter of state funding for church buildings. The present provision is hopelessly inadequate; but that can (as it usually is) be set on one side for the moment. This is not about taking government money, but persuading the Government not to take ours.

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