Written evidence submitted by the
Churches’ Legislation Advisory Service

Summary

Historic religious buildings are an extremely important part of the built heritage; however, they are under great pressure because of increasing maintenance costs and falling congregations. There are several bodies which grant-aid the care and maintenance of historic places of worship, but grant-aid is a patchwork which is difficult to navigate for those seeking assistance. Probably the most important source of Government funding is the Listed Places of Worship Grant Scheme; we welcome the recent announcement confirming its continuation for a further year but on a smaller scale, but it is vitally important that it be continued. There are also issues around the relative weights given by the Planning Inspectorate to aesthetic considerations and issues relating to climate change, and we believe that this is in need of reassessment.

About us

1. The Churches’ Legislation Advisory Service, which began life in 1941 as the Churches Main Committee, is an ecumenical body which brings together the interests of most of the major Christian denominations in the UK and the United Synagogue in their dealings with Government. Its interests cover subjects ranging from taxation, heritage grants and charity law to marriage law, immigration rules, planning and building regulations and water charges. Its primary function is to monitor policy developments and the progress of legislation on issues of particular interest to its members. A secondary but no less important function is to provide information on the likely impact of those developments on members and, as appropriate, to make representations to Government on possible anomalies and unintended consequences.

2. We welcome this opportunity to submit evidence to the Culture, Media and Sport Committee, though we cannot usefully respond to all the questions raised by the Committee.

Background

The ecclesiastical built heritage

3. The National Churches Trust estimates that there are some 38,000 churches, chapels and meeting houses across the UK.[1] There are about 20,000 listed places of worship of all faiths in the United Kingdom – about 4 per cent of the total of listed buildings – and the vast majority of those in England and Wales belong to the Church of England or the Church in Wales.

4. The most accurate figures that we can assemble for listed places of worship are as follows:[2]

45 per cent of all Grade I listed buildings in England are in the care of the Church of England; and the Committee will no doubt have noticed the recent fundraising appeal by Peterborough Cathedral for £300,000 by the end of March 2025 – without which, say the Dean and Chapter, it may no longer be possible to keep the cathedral’s doors open seven days a week.[3]

5. It should be noted that the denominations in England and Wales which are exempt from listed building controls exercise rigorous oversight of their church buildings; in the case of the Church of England and the Church in Wales the faculty jurisdiction, which governs alterations to a church, extends to all their churches, not merely to the listed ones.

The Listed Places of Worship Grant Scheme

6. Commercial organisations that are registered for VAT can recover the VAT that they pay on their inputs when charging VAT on their goods and services to their customers. The vast majority of charities, however – including places of worship – cannot do so because they do not have “customers” whom they can charge for goods or services. The result is that the voluntary sector as a whole pays a large amount of irrecoverable VAT on its charitable supplies.

7. To mitigate at least part of that burden, in the 2001 Budget the then Chancellor, Gordon Brown, announced what became the Listed Places of Worship Grant Scheme, as follows:

“Grants for listed places of worship

6.88 The Pre-Budget Report announced that the Government was attracted to the idea of a reduced rate of VAT for the repair and maintenance of listed buildings which are used as places of worship and would be approaching the European Commission to make clear its priorities. The Commission has indicated that this will be considered in their general review of reduced rates for VAT which will take place in 2003, and the Government will continue its discussions with the Commission on this issue.

6.89 However, in the interim period, the Government is introducing a UK-wide grant scheme to help congregations with these costs. The Department for Culture, Media and Sport will be consulting on the details but the effect of the grant will be to reduce the VAT cost to 5 per cent for new work undertaken from 1 April 2001.”[4]

8. In the event, the Commission never agreed an EU-wide reduced rate for repairs to listed places of worship so, instead, the Government continued the Scheme, though with additions and variations.

9. Since 2010, the Scheme has returned over £350 million in VAT to listed places of worship[5] and we cannot overemphasise the importance of that funding. However, since its inception it has been subject to renewal, either as part of a Spending Review (which is typically for a triennium) or towards the end of a financial year.

10. We welcome the ministerial statement on 22 January that the Scheme will be extended until 31 March 2026. We note with disappointment, however, that there will be an annual cap on grants to individual places of worship of £25,000 and that an overall limit of £23 million has been placed on the fund. Last year, it returned £29 million in VAT refunds.

The exemption from business rates

11. A property in England and Wales that is a “place of public religious worship” is wholly exempt from business rates under Schedule 5 of the Local Government Finance Act 1988 as amended. Such properties are exempt if the property belongs to the Church of England or the Church in Wales or is registered as a place of worship under the Places of Worship Registration Act 1855. The exemption also applies to church halls and similar buildings used in connection with places of worship.

12. Because such properties are not rated, there are no valuation figures that can be consulted to calculate the worth of the exemption. In Scotland, however, places of worship are valued for business rates even though business rates are not levied on them. A brief look at the valuation rolls on the Scottish Assessors’ website[6] revealed the following examples of rateable values (with business rates levied at a rate of between 49.8 and 55.9 pence per pound of rateable value):

• Alloa St Mungo’s: £21,750.
• Edinburgh Central Mosque: £121,500.
• Glasgow Cathedral: £62,500.
• Portree Free Presbyterian church and hall: £5,750.
• Selkirk Roman Catholic church: £9,200.

13. Supposing for the sake of argument that churches and their associated buildings across the UK were each valued at a very modest £2,000, without the current exemptions the annual total business rates burden on them would be some £76m, based on the National Churches Trust’s estimate of 38,000 Christian churches as noted above. The real figure would almost certainly be considerably higher than that. It is therefore very important that the existing exemption from business rates be maintained.

Sources of income for the ecclesiastical built heritage

14. The National Lottery was established by the National Lottery Act 1992. According to its website, since its inception the National Lottery Heritage Fund has awarded “over £1bn to more than 8,200 places of worship projects across the UK”.[7] It hopes to give grants to places of worship totalling £100m over the next three years.[8] A few denominations have not sought funding from the National Lottery as a matter of principle, on the basis that its funds are the proceeds of gambling.

15. The National Churches Trust makes grants to places of worship across the UK towards repair, maintenance and facilities projects: in 2023, it gave over £2m in funding.[9]

16. The Churches Conservation Trust is the national charity for Church of England churches at risk. It cares for 357 historic former parish churches vested in it by the Church Commissioners of the Church of England. Its core funding is from the Department for Culture Media and Sport and the Church Commissioners for England. Its statutory objective, as defined principally in section 44(4) of the Mission and Pastoral Measure 2011, is:

"the preservation, in the interests of the nation and the Church of England, of churches and parts of churches of historic and archaeological interest or of architectural quality vested in the Trust by this Part, together with their contents so vested."

But, of course, it only funds Church of England churches in its care and, in any case, it is severely underfunded for the level of demand made on it.

17. The Historic Chapels Trust, established in 1996, has been the only national charity in England to save and protect significant non-Church of England places of worship no longer used by their congregations. It took responsibility for 20 of the most important Grade I and Grade II* listed places of worship in England which, at the time, were in need of a new owner because no other viable alternative use had been found for them. Unfortunately, however, its grant aid has declined over recent years; and though it has been fortunate to obtain funding to assist in carrying out some urgently needed repairs to some of the chapels that have yet to be fully restored, it is currently seeking new owners for its chapels. Because there is no depository for redundant Nonconformist chapels of high significance, such buildings are at serious risk of harm, either through failure to find new owners or through adaptation to new and unsympathetic uses.

18. The Friends of Friendless Churches and, for Wales, Addoldai Cymru, though not sources of funding, maintain a relatively small number of historic places of worship that are no longer needed for their original use. Both operate as charities relying largely on voluntary fundraising but receive some funding from Christian denominations and trusts. Demand for their services currently vastly outstrips their available resources.

19. Historic England's Heritage At Risk grants support certain religious buildings in England, such as cathedrals, on the Heritage at Risk register, though the grants are very small.[10]  Currently, there are 4,891 buildings on the Register of which 969 are places of worship.[11]

The most significant challenges facing owners and operators of built heritage assets

20. Probably the most significant challenge facing places of worship is the constant need for repairs and maintenance, coupled with a loss of revenue in real terms because of the overall decline in the number of worshippers. The declining number of worshippers also means that there are fewer people looking after the buildings, with less local support and, often, an inability to fill key leadership roles. The Church of Scotland, for example, is currently in the process of deciding which parish churches it will have to close, given its declining membership and the fact that the number of Sunday worshippers, post-COVID, has fallen from about 88,000 to 60,000. The Report of the Assembly Trustees presented to the 2024 General Assembly put the position very starkly:

“What we see is a Church facing multiple challenges, the problem of an ageing and declining membership, linked to the need to unite parishes and dispose of surplus church buildings, part of a wider problem relating to the financial position of the Church.”[12]

Other longstanding Christian denominations in the UK which own listed places of worship have experienced a similar decline in numbers of worshippers. Some newer Christian denominations are growing, but they possess few listed buildings.

The effectiveness of current funding and finance models for built heritage and long-term public funding

21. So far as places of worship are concerned, the current funding and finance models for the religious built heritage are crucial to the sector but their lack of permanence is a serious cause for concern, as are the uncertainties around capital works. In relation specifically to the Church of England, the Government-sponsored Taylor Review of 2017 recommended that, while the Church should aspire to reach a position where its buildings could so far as possible be financed sustainably with reduced Government funding, there would always be some buildings that would require additional funding if they were to be preserved. It recommended that

“a more strategic approach to funding can ensure that public funding serves as a safety net; that any available funding is deployed in a considered way to those buildings and projects most in need, of most heritage value, or of most benefit to their communities; and that best value is delivered from any investment made”

and that sustained funding would be needed beyond 2020.[13]

22. A further issue is the increased dependency on external funding. Funding major projects requires a skill set that often has to be commissioned because it is beyond the capacity of local church volunteers, particularly in deprived areas. For example, the Methodist churches in Truro and Ashbourne have benefited from Levelling Up funding in their creation of community hubs, but that still has to be supplemented by funding from the Lottery and multiple other smaller funders. An issue with any one source of funding can put the whole project into jeopardy, and the application processes themselves are often complex. Finding funding can be a very lengthy process: precarious, stressful, and competitive with other churches and charities in the same locale. One of our members suggests that the funding landscape has improved in terms of maintenance issues such as roofs and gutters, but funding for major repairs remains very difficult indeed.

23. For some denominations, match funding is often found through the sale of buildings and merger of church congregations, with listed churches often chosen to release the denomination of a so-called “burden” – but this is not a sustainable model for the future.

Increasing energy efficiency and contributing to the Government’s net zero targets

24. Historic places of worship are facing new challenges as a result of climate change and are striving with their communities to achieve net zero carbon, while also providing emergency shelter and sanctuary for those most affected by extreme weather conditions. The Methodist Church, for example, notes that there have been problems in securing funding both for capital works to improve energy efficiency and/or to carry out the initial energy audits.

25. Installations of energy saving materials (ESMs) in residential accommodation currently benefit from a temporary VAT zero rate until 31 March 2027, after which they will revert to the reduced rate of VAT at 5%. The stated policy objective of the measure, introduced under the previous Government is “to incentivise the installation of ESMs across the UK to improve energy efficiency and reduce carbon emissions”.

26. It would both support the built heritage and contribute to the Government’s net zero targets if the current zero rate were extended, at the least, to listed non-residential buildings and, preferably, continued beyond 31 March 2027.

27. It would also be helpful if planning authorities and the Planning Inspectorate were to take a more balanced approach between aesthetic/heritage considerations and the need to achieve net zero emissions when adjudicating applications for the installation of energy saving measures on buildings within their boundaries.

28. A recent planning decision in relation to a Grade II* Georgian church, St Anne’s Ings, in Cumbria, is a case in point. The Parochial Church Council wished to install solar panels on the south side of the church roof. Although Historic England and the amenity societies did not support the proposal, there were no formal objectors to the petition for a faculty. The Diocesan Chancellor was prepared to grant a faculty for the works conditional on planning permission being given;[14] however, permission was refused by the Lake District National Park Authority and, on appeal, by the Planning Inspector.[15]

29. The Inspector agreed that the proposal would “reduce the environmental impact of the Church, with the appellants setting out their estimation that 86% of the Church's energy use would be carbon neutral [at para 28] and that installing the panels would help secure the church’s finances via an annual saving of £2,000 [at 29]. He was also in no doubt that “the arguments relating to public benefits are compelling” [at 31] and that “the proposal would assist in meeting Government targets in relation to addressing the causes of climate change, albeit at a modest level” [at 32]. Nevertheless, he concluded [at 34] that “the significance of the designated heritage assets would not be outweighed by the public benefits of the proposal.  The proposal is therefore in conflict with the statutory duty to have special regard to the preservation of listed buildings”.
30. All of this leads us to ask whether the current statutory duty strikes the right balance between aesthetic/heritage/landscape considerations and more general environmental concerns such as climate change.

The role of the ecclesiastical built heritage in contributing to economic growth and community identity

31. Individual places of worship between them raise more than £1bn annually, much through voluntary contributions. In addition to funding running costs, considerably more than £100m is spent each year on maintenance, repair and new building work.

32. In addition, listed places of worship are important for tourism. As noted above, 45 per cent of all Grade I listed buildings in England are in the care of the Church of England, and we would argue that listed places of worship are an important tourist attraction. This is most obviously true for cathedrals and major churches such as Canterbury, St Paul’s and Westminster Abbey and York Minister – the Abbey, for example, had 3m visitors in 2021 and 6.8m visitors in 2022[16] – but churches and chapels all over the UK help “make” the townscapes that visitors come to see. In 2023, VisitBritain forecast 38.7m inbound visits for 2024 and £32.5bn in spending by visitors.

33. Further, the extent to which historic places of worship contribute to our sense of place cannot be overestimated. They tell the story of the United Kingdom in a way that no other set of buildings can; they contain the ever-evolving histories of our communities and the people in them from Saxon times to the 21st century. Taken together, they house what is probably the greatest collection of cultural artefacts in the country, giving unparalleled free access to art, sculpture, music and craft skills of the highest quality across the UK.

34. The other issue of importance is the role of places of worship in their local communities. The National Churches Trust’s report The House of Good: Health,[17] for example, estimates that churches in the UK save the NHS £8.4bn a year through the provision of foodbanks, drug- and alcohol-addiction support, mental health counselling and youth groups. Furthermore, especially in rural areas the local church or chapel is often an important venue in the village for events such as public meetings and concerts.

35. The National Churches Trust estimates that “For every pound invested in a church, there is a social return on investment of £16”.[18] We acknowledge that such figures need to be treated with considerable caution, but there is certainly sufficient evidence to suggest that places of worship make a serious economic and social contribution to the public good in their localities.

Making it easier for communities or local businesses to take ownership of historic buildings

36. From a community perspective, the Government’s Community Ownership Fund – which has now closed – seemed to be a good solution in terms of helping communities purchase redundant places of ownership. The Methodist Church notes that the Fund went some way to providing local community groups with a means of addressing the issue caused by the requirement for the Church to obtain best price under the Methodist Church Act and finding suitable new uses.

Policy changes to make restoring historic buildings easier and less expensive

37. As noted above, the Listed Places of Worship Grant Scheme currently operates for from one to three financial years at a time. We welcome the recent announcement that it will continue for FY 2025-26, albeit with a cap on individual grants and on the Scheme as a whole. Unfortunately, however, the fundraising, planning and execution of larger restoration or repair projects, especially, can easily extend over many years, with long-term contractual commitments relying on certainty of funding. We do not underestimate the pressures on the public purse; nevertheless, it would greatly assist the care and maintenance of listed places for worship and encourage those volunteers who are responsible for them if the Scheme could be given some degree of permanence.

38. Alternatively, since the UK is no longer bound by the terms of the EU’s Principal VAT Directive 2006/112 which banned the introduction of any further reduced rates of VAT the Scheme could be replaced (and the system made administratively simpler, and possibly cheaper) by zero-rating repairs to listed places of worship.

Conclusion

39. In brief:

• The religious built heritage is enormously important, both as a community resource and as a national repository of history, art and culture.
• We welcome the announcement that the Listed Places of Worship Grant Scheme will be renewed for FY 2025/26 but believe that VAT relief needs to be placed on a permanent footing, either by a firm commitment from Government that the LPWGS will be renewed annually – or, preferably, triennially – or by the introduction of a zero rate on materials and works for the repair and maintenance of listed places of worship.
• We cannot stress too strongly how important it is that the present exemption from business rates for places of worship in England and Wales should continue.
• We believe that, in light of the need to pursue the Government’s net zero carbon target, the time has come to reconsider the relative weightings to be given to the various elements in assessing planning applications for alterations to listed buildings.

40. Finally, it should be borne in mind that the vast majority of places of worship – many of which are rural churches and chapels with small, ageing congregations – are cared for and maintained by volunteers. If the task of maintaining them proves too overwhelming or becomes financially unsustainable, they may simply walk away.

Frank Cranmer

Secretary, Churches’ Legislation Advisory Service

29 January 2025