Written evidence submitted by Historic Housesistoric Houses | Johnson Banks



DCMS Inquiry: Promoting Britain Abroad

Historic Houses Submission of Evidence

January 2022



About Us


Historic Houses represents the UK’s largest collection of independently owned historic houses, castles, and gardens open to the public. Our association includes nearly 1,500 unique places, which – in normal times – welcome over 26 million visits every year and generate £1 billion for the UK economy. Heritage is the bedrock of the UK’s international tourism industry, and our member properties will be central to its recovery, leading the way in attracting millions of visitors, businesses, and investors to Britain.




1.1   What needs to be done to re-establish the UK as a holiday destination for international travellers? 


First and foremost, the tourism industry must be supported through 2022 as the pandemic continues. Recovery remains far on the horizon for many tourism businesses, who are now facing doubts over operations this Spring, given the development of the Omicron variant. Many of these businesses are still in survival mode and will not benefit from the return of inbound tourism next year if they cannot survive the next six months.


To protect our sector, the government must consider what investments it can make now to ensure Britain poses an attractive prospect to visitors in Summer 2022. This includes looking at restarting the Job Retention Scheme if restrictions continue in the first quarter of 2022 and extending the 12.5% VAT rate beyond March 2022 or re-introducing the emergency 5% rate if conditions worsen. As set out in the Heritage Recovery Plan, reducing the VAT on tickets to heritage visitor attractions would also help to boost international visits to vulnerable heritage sites which have been affected by the lack of such trade in the pandemic.


It is also essential to maintain coherent, consistent, and clear messaging on Covid requirements for tourism and hospitality businesses. Businesses need sufficient lead-in time to make the necessary Covid-safe adjustments to their operations when new measures are announced, and in the past, this has come at critically short notice, often forcing events to be cancelled. Changing Test and Trace rules have proved especially difficult for many visitor attractions in the past 18 months, and this system needs to be streamlined and standardised, especially for large events.


It is equally important that the government provides consistent, fair, and clear rules on international travel and testing requirements for international tourists. Complex and inconsistent rules will dissuade visitors and slow down inbound tourism recovery. Coach tour operators were particularly affected by group travel rules in 2021, which unfairly targeted private transport operators who ran at similar capacity to public transport. Coach tours are a crucial avenue of inbound tourism business for many heritage sites which are otherwise not easily accessible by public transport, and especially for sites away from London. Once inbound tourism is ready to recover, international marketing campaigns should be utilised to promote the safety of UK tourism attractions – which throughout the pandemic have shown immense caution for their visitors’ wellbeing



1.2   What should Government and the tourism boards be doing to support the inbound tourism industry in its recovery? 


The Government have a unique opportunity to support the tourism industry of the nations and regions of the UK by making it easier for inbound tourists to travel beyond London and the South East. Given the expansion of the number of worldwide tourist destinations, it is increasingly hard for destinations which are not already established global brands (like London) to increase their market share. To counterbalance this effect, it will be important to develop strong brands elsewhere in the UK and actively promote tourism outside London, in line with the objectives of the Tourism Action Plan. 


There is also a pressing need to make travelling to heritage destinations by public transport simpler – in particular, tackling the issue of ‘the final mile’ - the distance from the closest train station or bus stop to a tourist site that may not be very far but, with no public transport provision, can dissuade tourists from visiting. Improving overall connectivity through air links, rail, roads and online are important for the entire economy, but for the tourism sector, spread to every corner of the country, its critical to understand the key needs and current issues that need to be fixed to unlock future potential. 


A lack of digital connectivity is one of the largest barriers to rural commercial development. Our 2021 survey found that 55% of our member houses had no access to fibre optic broadband, 44% had no 4G connection, and 38% still have no mobile signal at all. Covid has accelerated the need for rural businesses to connect with audiences remotely, especially tourism and hospitality businesses which rely on visitor engagement. We recommend that to help rural tourism businesses develop, the USO ought to entitle users to a minimum of 20Mbps download speed and 2Mbps upload speed. It is also essential that the government fast track the delivery of the Shared Rural Network to level up rural ‘notspots’ as soon as possible. These measures will deliver the digital infrastructure that rural businesses desperately need to remain competitive.


Much of the UK international tourism offer is seasonal, and that is especially true of independently owned heritage. Yet a significant number of Historic Houses members are already working to create year-round offers, by organising special one-off events such as short seasonal openings (snowdrop walks in the spring, dressing the house for Christmas in December) or other events, such as music festivals and antiques markets, on top of the traditional high season opening between June and August. Increased connectivity in rural areas would improve the economic viability of our members, helping owners to preserve their historically important properties as well as leading to increased regional prosperity thanks to the resulting job growth and increased secondary spend.  


We support the recommendations of the Destination Management Organisation review which suggested that DMOs are grouped at a regional level through a lead organisation and provided with central funding, and that the Tourism Minister is elevated to a Minister of State position with reallocated responsibilities and resources to provide greater policy support. We also support the Tourism Alliance’s campaign for statutory registration, provided that the system is low cost and does not create an administrative burden for businesses. This would help DMOs identify newer and smaller tourism businesses in their region (70% of tourism businesses employ fewer than 10 people, and many of these are not members of trade associations) and reach out to them with business support.


DMOs could deliver new research and insights into the effects of Covid on inbound tourism, including visitor confidence data and new trends to help tourism and hospitality businesses recover and adapt. They could also provide comprehensive business advice for operating safely under Covid conditions, alongside reassurance and guidance for visitors to the region. DMOs should also aim to develop new regional tourism strategies which feed into national priorities inbound tourism recovery. In doing this, they must commit to a more collaborative strategy which strives to engage every tourism business - particularly small, independent, and rural businesses.



1.3   What will the impact on the UK’s hospitality, cultural and heritage sectors be if inbound tourism is slow to recover to pre-pandemic levels?


A thriving inbound tourism market is strongly linked to a buoyant domestic tourism recovery. Businesses will only have the freedom to promote, invest in and expand their operations if visitor numbers and events across the board can be restored to pre-pandemic levels.


The pandemic has brought the importance of heritage to the fore, with historic sites playing a vital role in providing safe places for people to engage with each other and connect with their local environment, helping to reduce the negative impact on their wellbeing. Heritage sites are also vital to local economies – 75% of the expenditure generated by our members is spent off site in local towns and villages, supporting rural supply chains, small businesses, and jobs. These social and economic benefits are at risk if heritage tourism is slow to recover, with significant knock-on effects for fragile rural economies.


Covid restrictions have already had a devastating impact on heritage businesses and caused severe damage to the fragile rural economies that depend on historic house visitor attractions, businesses, and events venues. On average, the 1,500 historic houses and gardens we represent saw visitor numbers drop by 75 per cent in the course of 2020, and turnover was halved. With losses of over £280 million in 2020 alone, 44% of our members were unable to carry out essential repair and maintenance work, 22% needed to borrow capital and 14% were forced to sell of land, buildings or collections to survive. Around 13 per cent of the 14,780 FTE staff our member houses directly employ were made permanently redundant in 2020, and 40% of our members have now made permanent cuts to their staff hours.


Government support measures such as the Job Retention Scheme, the Culture Recovery Fund for Heritage and the VAT reduction provided temporary reprieve and have given many historic house businesses a fighting chance of survival. But not all have been able to benefit, with 36% of our members having received no government backed loans or grants at all since March 2020. 1 in 7 members say that the end of VAT relief, business rates relief and the furlough scheme will also compromise their ability to continue running their business. Moreover, we note that the National Lottery Heritage Fund imposed new restrictions on the ability of privately owned heritage to apply for support from the Culture Recovery Fund during the third round of grants (private owners now had to show that public access meant that “the focus of the day is sharing the heritage you care for” – a condition that was not imposed on applicants from the public sector or charities). We need Government support to stretch further if these irreplaceable historic places are to survive and contribute to our national recovery.


Independent heritage sites are reliant on viable income streams to fund urgent repairs and conservation work. Most of our members receive no government funding and are often not eligible for Arts Council and Lottery Fund grant schemes, which routinely exclude independent heritage or relegate their applications to lower funding streams. Yet on average our members foot a £60,000 annual repairs and maintenance bill each year, with a further £850,000 of long-term repairs outstanding at each house. Without reliable income from tourism, hospitality and events these urgent repairs will go uncompleted, ultimately threatening the future of public access to the site.



2.1   Does the Tourism Recovery Plan go far enough to support the industry’s recovery from the Covid-19 pandemic?  


While we support many measures in the Tourism Recovery Plan, we recommend that it is revisited to incorporate elements of the heritage recovery plan, as few of its projected outcomes will directly address the needs of heritage tourism sites.

These include extending the current temporary VAT reduction (12.5%) beyond March 2022, or reducing further to a 5% rate in the event of further Covid restrictions coming into place. VAT relief has been an absolute lifeline for heritage attractions, and would make the difference between survival and collapse for many struggling sites.

Owning an historic house and caring for its heritage for posterity is a great responsibility. In most cases, to ensure a historic house can continue to open to the public and remain well-preserved, it must support a viable income. Governments have stated repeatedly that the most cost-effective method of maintaining the heritage is through private sector stewardship. A combination of tax and financial issues, however, hinders privately-owned heritage attractions from fulfilling their full potential, including: the 2013 cap on Sideways Loss Relief; increased competition from visitor attractions in charitable ownership, which are exempt from Income and Inheritance Tax; VAT on repairs and maintenance; and increased costs of conservation and compliance with regulation.


The independent study commissioned by Historic Houses showed that many privately-owned historic houses and gardens are vulnerable. Despite private owners of historic houses spending £85 million annually on repairs between them, the current total backlog stands at just under £1.5billion. Unless something is done this backlog of urgent repairs will only go up; with each passing year there will be new demands, repairs will become more difficult practically and costs will rise. We are approaching a tipping point, and within five years 70 historic house businesses – generating the many and varied benefits outlined in this submission – are expected to fail.


The National Trust has spent £300 million on repairs and refurbishment over ten years; English Heritage has been given £80 million to do the same in a shorter period. Historic Houses members – which represent more heritage attractions and welcome more visitors than the National Trust – are unable to keep up with repairs at the same level without the same income tax and gift aid reliefs. For many houses, especially those committed to public opening but without the national or international reach of our greatest stately homes, the situation was already severe before the pandemic.


Now, after two devastating years for tourism and hospitality, urgent repairs are going uncompleted, ultimately threatening the future of public access to the site. Eliminating VAT on the repair, maintenance and alteration of listed buildings would give many thousands of rural businesses based in historic buildings the extra cash and confidence they need to get on top of repair and maintenance backlogs and put repair on par with new build.

Reducing the income tax levied on Heritage Maintenance Funds, from 45% to 20%, would similarly stimulate private sector investment in repair projects at heritage tourism sites. This targeted change would provide a net benefit to rural economies of £85.5 million by 2023, open up more heritage to the public, and allow historic houses to improve their sustainability and support the government’s “build back greener” agenda.


There are significantly more privately owned historic houses and gardens open to the public across the UK than those in charitable or institutional ownership, and throughout the pandemic these places have proven how essential they are to local communities and the national economy. The current £100,000 cap on applications by privately owned heritage sites to the National Lottery Heritage Fund should be lifted, at least to £250,000. Since Lottery money is not scored as Government expenditure this change would be at zero cost to DCMS, and would help to create the level playing field that privately-owned heritage deserves.


It’s important that the Government is alive to just how acutely the survival of our country’s world-famous heritage sector is dependent on a supportive fiscal framework. Changes in this framework (for example around Capital Gains Tax or Inheritance Tax) can have a devastating impact on fragile historic houses and can make the difference between a viable visitor attraction and an insolvent business forced to close its doors. HM Treasury should ensure it considers the potential impact on heritage – and consults with the sector – when considering changes to the fiscal framework. Supportive fiscal changes such as these would help to support hundreds of historic house businesses to bring back valued staff, get on top of repair and maintenance backlogs, generate supply chain activity, and welcome visitors back to rebounding rural economies.

Finally, tourism recovery efforts should recognise that many attractions rely on diverse income streams. In the case of many heritage businesses this includes weddings as a vital source of income, indeed, the weddings industry itself is a source of domestic and international tourism. Government must think holistically about how the survival of regional economies and businesses directly allows the UK to attract inbound tourism and project soft power abroad.



2.2 What are the biggest challenges to delivering the Tourism Recovery plan? 


During lockdown periods, most attractions were fully closed, with workforces depleted and income streams substantially reduced. Government support packages have helped some to bridge the gap, but human and capital deficits still threaten to overwhelm many heritage sites. Staff shortages have plagued the tourism and hospitality sectors in 2021, but the Tourism Recovery Plan proposes skills and training programmes which will take years to come to fruition in the workforce and will not address the loss of EU workers in the sector.


Even though heritage attractions have been able to safely open in the summers of 2020 and 2021, visitor confidence remains a limiting factor. Some international visitors may not feel safe enough to visit some heritage attractions because of concerns about access via public transport and safety, even where social distancing can be maintained.


The ongoing uncertainty of Covid and corresponding public health restrictions limits the level of recovery planning tourist businesses can undertake. Many heritage attractions run complex businesses which require weeks and months of fore-planning, with events typically requiring a minimum lead-in time of 2 months. Most heritage sites rely upon earning 70% of their income in the main visitor season (April to September) and need this to support themselves in 2022 and beyond. With the ongoing threat of last-minute cancellations and closures, many tourism businesses are unwilling to invest and engage in recovery programmes whilst the pandemic is ongoing.



3.1   What should the UK be doing to maintain its status as a ‘soft power superpower’ and further promote its culture and heritage on the global stage?  


A soft power strategy that aims to maintain and cultivate our world-leading historic visitor attractions must, first, provide practical fiscal and regulatory support to heritage tourism. Targeted support from government could enable our iconic historic houses to develop their role as magnets and multipliers for international tourists, investors, and partners.


We know the Government recognises the huge soft power impact of historic houses; what we need now is practical support to protect their viability and unleash the full potential of the sector. If nothing is done to tackle the growing conservation backlog facing independent historic houses, we risk irreversible damage to the product that drives our tourism industry. We therefore call on government to reduce income tax on Heritage Maintenance Funds to 20%, so these important tourist attractions can continue to grow their key contribution to the UK’s soft power agenda. The independent analysis we commissioned indicates that a ‘do nothing scenario’ could cost the UK economy £25.5 million in lost tourism spending and £9.3 million in lost Exchequer revenue by 2025; and in the worst-case scenario, some historic houses could be forced to close their doors to visitors.


We would also recommend a ‘heritage audit’ to see where the use of heritage venues such as historic houses (one of Britain’s main competitive advantages) can be promoted beyond the culture sector. Establishing a biannual meeting of heritage organisations’ marketing staff with GREAT campaign and Culture Diary staff to share forward programming and highlight any upcoming opportunities for partnership working.


Separately, Britain’s arts and entertainment sectors punch above their weight and encourage huge numbers of international visitors. Television dramas such as Downton Abbey, The Crown and Bridgerton are today some of Britain’s most widely consumed exports, and perfectly exemplify the importance of putting heritage centre stage within the UK’s tourism offer. Not only do such programmes generate vital streams of inbound visitors, but their very existence is owed to the thriving independent heritage assets open to filming (all Historic House members in the examples above). Clearly, the health of our entertainment and tourism sectors are fundamentally linked, and we wholeheartedly welcome the raft of dedicated government support to encourage film and television production in the UK. It is only right however that dedicated support for heritage accompanies this.


Independent historic houses have the potential to do much more on a global stage, and there is an opportunity in this Parliament to unleash the energy of our heritage sector to boost the recovery of British tourism. The Levelling Up agenda presents the opportunity to rebalance in rural and urban areas and support the ‘Northern Powerhouse’, drawing international visitors away from London and into our vibrant regional tourism hotspots. What we need now is Government’s support to catalyse the full potential of the sector, to ensure historic houses can play their part in cementing the power of Global Britain.



Case Study: Highclere Castle and the ‘Downton Effect’

Appearing in television shows and commercial films has been hugely beneficial to numerous historical houses, but perhaps none more so than at Highclere Castle. The enormous success of Downton Abbey, filmed at Highclere, illustrates how historic buildings and stories have captivated the imaginations of audiences. Since providing the location for the hit TV series, which first aired 2010 before being made into a full-length feature film in 2019, Highclere Castle has seen its annual visitor numbers quadruple; a welcome result of the so called ‘Downton effect’.

The Downton effect is part of the ‘media pilgrims’ movement, where tourists seek to visit heritage sites and destinations they recognise from films or television shows. VisitBritain claims that almost a half of foreign visitors have expressed an interest in visiting a ‘set’ location. It is therefore unsurprising that castles and historic houses are important features in the travel itineraries for overseas visitors, with almost 27 million people visiting our member sites annually.

Capitalising on the show’s popularity, Highclere have diversified their business model to include new events, accommodation, launching a gin brand and creating weekly blogs and podcasts to boost interest from across the globe. The income generated from this renewed interest has been reinvested into multiple restoration projects within the castle, highlighting the value of film and TV projects for heritage conservation.

The ‘Downton effect’ has also had a positive impact on the wider community. Local restaurants, pubs and hotels have also benefited from new business through extended stays from cast and crew, as well as visits from fans eager to catch a glimpse of the set. It is estimated that these visits and stays generate over £8m annually for the local economy, demonstrating how historic houses can be drivers of rural prosperity in their communities.




3.2 How can the UK capitalise on its exit from the European Union? 


The UK is the eighth largest tourism destination in the world, and our exit from the EU provides an opportunity to review and build on our successes. It should also allow us to target inbound tourists with greater precision.


At present, the UK’s visa system can be complex and expensive for international visitors. Lower visa costs and a simpler application system would give the UK a tourism boost by making us a more attractive choice. For example, a UK Visa for a Chinese visitor costs considerably more than an EU Schengen Visa that provides access to 26 countries. We also support making the UK’s visa application process more streamlined and accessible. We support the Tourism Alliance in its proposal to develop innovative visa products that stimulate demand from other countries. Research by the Tourism Alliance has shown that the UK’s share of outbound travel from BRIC countries that require visas has almost halved over the last 10 years despite significant improvements in the product and services provided by the Home Office during this period. As such, we would support a thorough review of the UK visa offering and a cross-government strategy developed for regaining the UK’s share of key overseas markets. 


There is an opportunity to develop new funding streams which boost British tourism businesses. CAP funding, LEADER funding and EU structural funds were important sources of funding for rural tourism businesses prior to Brexit. Now that they are being phased out, there is a chance for non-EU funding sources such as the Coastal Communities Fund, and the Heritage Lottery Fund to take a lead in supporting British rural heritage attractions. Crucially, these new funds must acknowledge the major role of independent heritage in the UK tourism industry, and not exclude independent heritage sites from their funding streams.


As important as funding, however, is the question of taxation. The UK is uncompetitive in terms of taxation in relation to most of its European competitors when it comes to VAT. Government could support growth in the tourism sector in the regions by cutting the rate of VAT on tourism attractions in rural areas and on hotel and Bed & Breakfast accommodation, as is the case in France. Additionally, the rate of VAT on repairs and alterations to historic buildings should be reduced. The current regime, which incentivises new build (0%) over the repair, maintenance, and alteration of older buildings (20%), creates a perverse tax on conservation and maintenance that subsidises the demolition and rebuilding of the heritage assets that drive our tourism industry.



3.3 What are the biggest threats to the status of ‘soft power superpower’?


Historic visitor attractions – which encompass some of the world’s most unique architectural and artistic treasures - are the bedrock of British soft power abroadBefore the pandemic, 60% of our most visited tourism attractions were heritage sites – demonstrating their centrality to Britain’s appeal in the global tourism industry.


It is clear that Britain’s heritage must be protected if we are to retain our status as a soft power superpower. Unfortunately, there is a very real threat that independent heritage businesses will be unable to support their own upkeep as the effects of the pandemic continue to take their toll, with potentially devastating consequences for inbound tourism.


As the UK looks to seize the opportunities of a post-Brexit landscape it is vital that, as far as possible, the benefits that EU membership delivered for Britain’s tourism attractions are recognised and replicated. The European visitor market remains an extremely important one for the sector, and it is important that this inbound investment is not jeopardised by inadvertent policy decisions. The tourism sector is not immune from issues generated by lengthened customs checks, HGV supply chain changes, and new visa requirements. Government and its agencies should do all they can to encourage visitors from the continent who previously benefited from relatively frictionless travel to the UK to choose once again to holiday and spend in Britain, in what is a highly competitive global market.