Learned Societies at Burlington House

(Limited Text - Ministerial Extracts only)

Tuesday 8th June 2021 Westminster Hall

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Eddie Hughes)]

It is a pleasure to serve under your chairmanship, Ms Rees. Like others, I commend my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) on securing this debate. We have heard fantastic contributions from right hon. and hon. Members from across the House. I note the silent contribution from my hon. Friend the Member for Brentwood and Ongar (Alex Burghart), whose presence in the Gallery signifies a strong interest in the subject matter under discussion.

I am grateful for the contributions, but take issue with the idea that responsibility for the problem needs to sit with DCMS because they are more cultural. That is unfounded. Within MCHLG we have a strong appreciation of the cultural and scientific elements that are being discussed. We fully appreciate that heritage, and for that reason we all want to see the future of the five learned societies secured, not just in the short term but for many years to come, at a venue befitting their enormous scientific and cultural contribution.

I believe, as do the Government, that the right venue is New Burlington House. In deference to my hon. Friend the Member for Stroud (Siobhan Baillie), unfortunately there will still be some faffing about. We are in the early stages of negotiation; we have just pitched our offer to them and are now awaiting a response, so there will be faffing. Hopefully, with a Minister who is keenly engaged in the subject, we will be able to make some headway.

I echo the comments made by hon. Members who recognise the incredible work done by the Geological Society, the Linnean Society, the Royal Astronomical Society and the Society of Antiquaries, which seems to be well represented by Members, and the Royal Society of Chemistry. I will temper any praise with the caveat that many of the wonderful collections housed by those societies are not usually open to the public. We heard a fine outline of some of the things that are available, and I am looking forward to seeing those works myself. The Government recognise their contribution, but we need to support them to survive and adapt in a post-covid world to become, dare I say, modern and accessible institutions for all. Others have quoted Charles Darwin, as one of the Linnean Society’s most notable past fellows: it is not the strongest of the species that survives, or the most intelligent; it is the one most adaptable to change.

The legal position is that in 2005 the High Court confirmed that a landlord and tenant relationship existed between MHCLG and the five learned societies. Both parties openly negotiated and agreed an 80-year lease, which would protect the learned societies from paying full market rent until 2085. This agreement, which included a £1 million contribution to repairs from my Department, remains in place today, with MHCLG acting as a supportive landlord, working with its tenants to help the societies deliver their mandates.

Here is, unfortunately, where we get to the faffing. Under the current rental agreement, the rent set for each year is determined by a valuation designed to bring rents gradually to market value by 2085, when the lease expires. The market value is determined by market evidence from comparable properties being used for education or cultural purposes. Given the references to a posh merchandise that might be available locally, it is important to stress that market value in this context does not mean the same value attributed to office tenants or luxury retailers on Piccadilly. Both the learned societies’ and my Department’s valuers agreed the evidence that determines value, and I think we can all agree that that reflects the terms settled upon by the learned societies.

[Chris Bryant]

I want to return to the point that the Minister made about what the learned societies do. I would dearly love them to be able to take some of their experience and knowledge around the country more, but it is very difficult to do that if all the money is spent on paying rent to the Government. I wonder what a sensible assessment of, say, £150,000 a year could do for one of the learned societies, as opposed to what it can do for Government. That might be a sensible part of trying to assess a way forward.

[Eddie Hughes]

I am sure I will repeat this later on, but we have made our pitch to the learned societies and we are awaiting their response. Given the commercial sensitivity of those negotiations, it important that we wait to hear from the learned societies themselves about what they think the way forward will be.

We must acknowledge that the growth in annual rent under the lease contract has been unpredictable. UK rents have grown significantly since 2005, causing a significant challenge for the learned societies. Achieving a rent that represents value for money to the taxpayer while giving security and certainty for the learned societies is the Department’s goal, and we hope to achieve that in collaboration with the learned societies.

Rent for 2020-21 financial year is £15.35 per square foot, which was agreed through the formula and is some 70% lower than the £50 per square foot that is the current market value for similar use—as I said, for educational purposes, not compared with the much more expensive commercial properties. That was agreed by both parties. However, we have heard the real financial concerns of the five learned societies, and the issue has received significant media coverage. In 2019, the societies sought a grant from our Department that would allow them to purchase a 125-year lease from us at a peppercorn rent. We assessed the proposal and of course considered the benefits, which are incredibly difficult to put a value on, of keeping the learned societies at Burlington House.

The Treasury’s Green Book rules require us to assume that if a learned society vacated Burlington House, it could be replaced by a similar tenant who would meet the cost of the rent at the market rate. So, it is not in our Department’s gift to grant that peppercorn lease. I fully appreciate that others have said that different options might be available to the Treasury, but considering such options is clearly way above my pay grade.

[James Gray]

Will the Minister not accept that he is missing the point? We are saying that this cannot be done—this building cannot be leased at a commercial rent. We want the Government to assess the building as having cultural value and preferably to give it entirely free of charge to these learned societies. And the notion that somehow or other, over 85 years, the rent may rise to the market rate is ludicrous. It cannot do so—these societies will go broke, these collections will be ruined and the Government will be to blame. We want the Government to renegotiate fundamentally and to charge them nothing.

[Eddie Hughes]

I thank my hon. Friend for his contribution; the suggestion that he has made is clearly one for the Treasury to consider. However, in the meantime—as I said at the outset—it is the Department’s starting position that we are determined to try to keep the learned societies at Burlington House. So, as we enter into negotiations with them, I am sure that we will have the opportunity to discuss options further.

In January last year, we explained that we could not proceed with a peppercorn rent arrangement and proposed a simplified agreement, which involved slow convergence to the market rent by 2085. We subsequently held further discussions and recently we have put forward the proposal that I referred to, in order to provide security and guarantee predictable future rents for the learned societies, protecting them from market volatility while ensuring that they only have to pay market rent at the end of the lease.

This proposal is predicated on what I believe is a fair and reasonable condition that the learned societies should work with the Department for Digital, Culture, Media and Sport and its arm’s length bodies to become more accessible to the wider public and to advance their cultural and educational agenda, so that the societies’ work continues to benefit as many communities as possible. The societies’ future must also reflect a more open and commercial existence, in order to identify and deliver alternative sources of income.

In his opening speech, my hon. Friend the Member for East Worthing and Shoreham mentioned the fact that there would be a restriction stopping the societies from having, for example, a coffee shop. I am sure that restriction is in place now, but it would be open to us to enter into discussions as to whether we could make changes of use, or to see whether there are other opportunities that could be pursued for commercial purposes. It is important to engender a conversation and get that discussion under way.

I hope that hon. Members will forgive me for saying that I cannot refer in detail to the negotiations that are under way. However, what I can say at the moment is that both parties are in the early stages of the negotiations, and I very much hope that a constructive and positive dialogue will result in the learned societies remaining in Burlington House for the foreseeable future.

In conclusion, I thank my hon. Friend again for raising this issue today and I thank the other Members who have made pertinent and important contributions to the debate. The Government want to continue working closely with the five learned societies and indeed with MPs from all parties in the House, following their valuable contributions today, to ensure that the outcome of our negotiations is a positive one and that we make sure that the learned societies remain in Burlington House for the future, safe in the nation’s capital, where they can continue for generations to come.