Another unfortunate oversight in the budget relates to universities and their capacity to maintain the listed buildings on their campuses. The proposed removal of zero rated VAT for alterations to listed buildings will have a severe impact on universities in the UK. Not just Oxford and Cambridge – Loughborough, Reading, Leeds, Leicester, Manchester, Bangor, Keele, Bristol, Sheffield, to name but a few more.
It has been calculated that the university sector as a whole will pay £150m in additional tax over the next five years as they repair their buildings. This may be an unintended consequence as it appears that the Treasury has done scant research into the implications of the change; an FOI request from the Heritage Alliance revealed that HMRC had looked at only 105 cases out of 29,000 listed consents last year, and may therefore have formed the impression, quite wrongly, that the zero rate benefited only the wealthy and was an inducement to alter, as well as maintain listed buildings.
With a spending rule of 4% pa, UK universities will have to find in excess of £780m of additional endowment to fund this extra tax in perpetuity, an impossible sum in these straitened times. This quantum of additional expense will require economies and not only in buildings budgets. New and desirable initiatives on the part of universities, such as the access agenda as well as core teaching and research budgets will be seriously affected. This is a bad time to present inferior facilities to home students paying the new level of fees and overseas students paying even higher fees. Listed buildings must not be allowed to fall into disrepair.
Although the government has made some concessions under the Listed Places of Worship Scheme to help churches, university and college chapels usually do not qualify for such grants. A simple alternative is proposed to rectify the situation – limit zero rating to buildings owned and occupied by charities. Otherwise universities will suffer considerably, while the gain to the Treasury is relatively small.
The attitude of EU law to this zero rating is yet to be tested.