Historic Homes

Tony Baldry Excerpts

Tuesday 25th January 2011 Westminster Hall

[Tony Baldry (Banbury) (Con)]

In a speech recently, my right hon. Friend the Prime Minister rightly observed that one of the generators of new jobs in the UK would be tourism. Tourists come to the UK for many reasons. I am glad to report that Bicester village in my constituency is now the most popular destination for Chinese tourists coming to the UK. However, the fact is that many tourists and visitors to the UK, while they are here, want to appreciate and experience our heritage, and of course heritage is also important for all of us, because historic heritage has helped to shape what each of us thinks and feels about where we live—our sense of place.

An important part of our heritage in England is our historic houses. Historic houses provide character and distinctiveness, and help to create pride in the places where people live. When people talk about heritage properties or historic houses, they understandably immediately think of the National Trust and English Heritage, which are in charitable and public ownership respectively. What many of us fail to realise fully is that, out of the historic houses open to the public, those that are privately owned, managed, and funded outnumber the total of those belonging to the National Trust and English Heritage put together.

My particular interest in initiating the debate is because, just outside Banbury, we have Broughton castle, which is a moated castle of considerable history that has been lived in by numerous successive generations of the Fiennes family. Something that most people—indeed, people from all corners of the world—know about my constituency is the traditional nursery rhyme:

“Ride a cock horse to Banbury Cross,

To see a fine lady on a white horse”.

It is generally believed locally that the “fine” lady was, indeed, a “Fiennes” lady and that the nursery rhyme relates to the Fiennes family at Broughton castle, otherwise known as the Saye and Seles.

Broughton castle has been a distinctive part of the history of north Oxfordshire throughout the centuries and was a parliamentarian stronghold during the civil war. Numerous Fiennes were, on different occasions, my predecessors as Members of Parliament for Banbury. The present Lord and Lady Saye and Sele have been exemplary over the years in their commitment to the community in which they live. Both have been very active deputy lord lieutenants and have always been incredibly generous in allowing the community to use the castle and grounds at Broughton for community events. There has been everything from traditional church fêtes to charity fund raising pop concerts. Broughton castle is a local jewel. The whole community benefits not simply from the public access that is afforded to Broughton, but from the numerous and various spin-off benefits the castle provides to my constituency more widely.

Nat and Mariette Saye and Sele have been extremely generous to the extent that they have allowed Broughton to be used in aid of many local charitable and community purposes. However, the stewardship of a building as large and as old as Broughton must be a struggle. I sometimes think that there must be a risk that owners of historic houses become something of a captive of the house in which they live. For a stretch of nearly 15 years, one part or another of Broughton castle has been shrouded in scaffolding as the Saye and Seles have methodically maintained and repaired the castle. Indeed, any such historic house requires constant maintenance that never ends. Although the Saye and Seles at Broughton are exemplary stewards of an historic house, they are clearly not alone in what they do. Across the country, many such privately owned houses play a pivotal role in contributing to the local economy and supporting the local community.

The economic and social benefits of historic houses are considerable and quantifiable. Recently, the Heritage Lottery Fund published a report entitled, “Investing in Success: Heritage and the UK Tourism Economy.” That report made clear the scale of the heritage tourism industry in the UK, estimating that its gross domestic product contributed some £20.6 billion to the UK economy. Indeed, the research established that the sector makes a bigger contribution to the UK GDP than, perhaps surprisingly, the advertising or film industries or even car manufacturing. Indeed, the heritage tourism sector directly supports an estimated 195,000 full-time equivalent jobs. Four in 10 incoming visitors or tourists to the UK cited heritage as the primary motivation for their trip to Britain, which was more than any other single factor. Of course, a considerable amount of spending on UK heritage comes from UK residents on holidays and day trips. It is not surprising that the most recent report of the Historic Houses Association shows that the possibilities provided by historic houses are endless and range from ghost hunts to sculpture gardens, from art exhibitions to music festivals and from bat walks to an international jesters’ competition.

So why have I initiated the debate? Simply because, as I have indicated, it is a continuous struggle to find the money to ensure that many historic houses are properly maintained and repaired. The owners of historic houses in no way wish to be rentiers on the state, but in consideration of the fact that they continue to provide public access to their homes, and of the broader community and national benefit of historic houses, we all have an interest in trying to get the balance right.

I emphasise that what I am talking about here are historic houses that are open to the public and are regularly open to the public. For example, Broughton castle is advertised as being open to the public 50 days a year. In addition, it has booked groups on a further 50-plus days. Moreover, schools and other groups can book by appointment on pretty much any day of the year. These are historic houses that are regularly and frequently open to the general public.

Over the years, successive Governments have made honest attempts to provide support for historic houses. Heritage maintenance funds have been developed, the thinking behind which is straightforward and sound. The proposition is that it is not sufficient to protect designated heritage property from capital taxation if the supporting assets that are essential to maintain that heritage property are themselves whittled away by successive bites of capital tax.

The Finance Act 1976 provided that assets dedicated to supporting a designated heritage property, both in terms of maintenance and of the provision of public access to it, could be ring-fenced and settled in a heritage maintenance fund, which would itself be conditionally exempt from inheritance tax.

Comparatively few—135 or so—heritage maintenance funds have been set up over the past 30 years. The problem is that very few of them provide income and capital proceeds to support the maintenance and repair of historic buildings and land designated by the Treasury as being of national importance and usually with a public access condition. Very few are actively being used, and very few new HMFs are being created.

That is because income generated within HMFs is taxed at the trust rate, which is now 50%; capital gains generated within HMFs are subject to capital gains tax and there is now no indexation; and, as an unintended result of drafting of tax legislation in 2006, the active use of HMFs is effectively frozen for six to seven years every time there is a resettlement of the HMF. For every HMF in which the historic house is taxed as a business under case 1, schedule D, a resettlement is needed each time there is a transfer of ownership. It is estimated that about a third of HMFs are currently caught in this trap and many more will be sooner or later.

HMFs are not working as they were intended to work. That matters because HMFs were designed to help owners of nationally important heritage to maintain that heritage in the public interest. It is estimated that the owners of historic houses as a whole are putting £139 million into the maintenance of their own houses every year. That is a considerable amount of money, but not enough to stop the build-up of a backlog of urgent repairs worth some £390 million. An additional £20 million of maintenance a year is necessary just to keep up. All that happens is that the backlog of urgent repairs continues to grow, which is unsustainable.

The Historic Houses Association estimates that with some fairly modest improvements in the tax treatment of HMFs, one could generate an additional £12 million in maintenance each year, thus making significant inroads into the annual maintenance shortfall. Such a scheme would cost the Exchequer only about £6 million a year. The suggestions are to reduce the tax on income generated in HMFs to the basic rate, currently 20%, recognising that HMFs can be used only in support of the maintenance of the designated historic property; to exempt disposals of assets within HMFs from CGT so long as the proceeds are used for maintenance of the historic property, or reinvested in assets within the HMF; and to correct the drafting of the tax legislation so that HMFs would not be frozen each time there was a resettlement.

The cost to the Exchequer of the first two would be no more than £6 million per year, and the third— the technical correction—would be cost free. No CGT is being collected from HMFs caught in the trap because no disposals are being made.

Put shortly, HMFs have been on the statute book for more than 30 years. They need to be made workable and to fulfil the purpose for which they were intended—to provide a reasonable mechanism to enable owners of historic houses to maintain their houses and keep them open to the public. I hope that my hon. Friend the Minister’s Department, as the sponsor Department for heritage and tourism, will work with officials in the Treasury and Her Majesty’s Revenue and Customs to ensure that HMFs are made to work properly.

Will the Minister’s Department have an overall look at how it is possible to reduce the regulatory burden and red tape on historic houses? Indeed, shortly after coming to office the coalition Government pledged to review and reduce regulation. Five areas have been highlighted in which action would be relatively simple to take at little or no cost to the Exchequer, and which would bring worthwhile benefits not only to those promoting historic houses and tourism, but to the wider economy. The first is licensing and the implementation of the 2006 Elton review recommendations, which called for changes to the fee structures for larger events; permission for historic rural venues to host occasional events; and for a de minimis approach when the licence or activity is small in relation to the overall activity taking place.

The second area is tourism signage and the hope that it would be possible to develop a policy to encourage the use of brown signs not just to manage traffic, but to promote tourism. Even under the current policy, there are inconsistencies in Highways Agency and local authority interpretation, resulting in some historic houses not being allowed tourism signs, or even losing their signs.

Thirdly, on planning, we need to promote a more flexible approach to the way in which planning applications for temporary structures, such as marquees, are handled. Marquees house special events that can significantly enrich the experience of visitors to historic places without compromising the historic value of the site. Indeed, the Palace of Westminster has had temporary permanent marquees on the Terrace for as long as I can recall, but they are, by definition, temporary and reversible. For some reason, some local authorities treat marquees as though they are permanent developments.

The fourth area is the application of fire safety rules to listed bed and breakfast accommodation. While recognising that fire safety is, of course, paramount, one needs to ensure that the application of fire safety regulations recognises the peculiarities and realities of historic buildings. Finally, we need to rethink the application of health and safety regulations in circumstances involving natural hazards, because, at present, it is undermining voluntary efforts to open the countryside for public access.

Historic houses are not just stone and mortar. They should be living places. The soul of a historic house is the family who live there. Those families are the most committed, responsible and, dare I say, cheapest curators of these parts of our national heritage. May I therefore urge the Minister to note that modest changes to heritage maintenance funds can bring long-term benefits at a relatively tiny annual cost to the Exchequer? Moreover, will his Department please do what it can to tackle excessive regulation?

Historic houses are inspirational places. They brighten our lives, whether through a day out, an educational visit, attending a wedding or a concert, or even through enjoying the setting of “Downton Abbey”. Historic houses are there to be enjoyed, but they require constant maintenance and repair, which are heavy costs. It is only fair that there should be some sensible compact between the community as a whole and the curators of such houses for the provision that they make of them to the community.