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Baroness Seear: My Lords, what were the qualifications of the people who made those criticisms? We need to know whether they were professionally qualified to criticise professionally qualified people.

Earl Ferrers: My Lords, I do not believe that one has to be professionally qualified to criticise a professionally qualified person. The fact is that it is part of the duty of the Home Office to undertake scrutinies of organisations in order to see whether the right thing is being done. It happens all over the place.

We propose to remove that basic requirement that one has to have the diploma before one can become a probation officer. That does not mean, of course, that a person who has a Diploma in Social Work could not be recruited into the probation service. It merely means that that particular monopoly of training can no longer be justified.

I now come to a point which the noble Viscount, Lord Tenby, dismissed but which I believe to be perfectly valid, as did my noble friend Lady Seccombe. Those who are employed as local authority social workers are not required to have a social work qualification. Therefore it is very difficult to see why probation officers should be required to have such a qualification. That does not mean that there is not a social dimension to probation work. Of course there is. But it merely highlights the fact that social work is not the only discipline which is relevant.

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Probation work is, of course, special and distinct work, but we have to recognise that, as well as trying to rehabilitate offenders and addressing offending behaviour, community sentences are a punishment which involve significant restriction of liberty. I make no apology for that.

Of course, community sentences do, and must, involve a restriction of liberty. But the fact is that how to look after people serving a more punitive sentence, in which the freedom of the individual is restricted, does not fall happily, if at all, within what we might describe as the caring and enabling roles for which social work training prepares people. The work of probation officers needs specialised training. And it must combine practical skills as well as appropriate knowledge.

The competencies for probation officers, which were published in May 1994, include the skills, knowledge and understanding which are required. But there is no direct match between those competencies and any existing academic qualification. Many social work skills are relevant to probation work but they are not uniquely so and they do not provide a guarantee of competence so that it can be assured that the holder of those skills will be, in practice, an effective and competent probation officer. We think that there are advantages in relating recruitment and training directly to the required competencies, rather than trying to find a new or modified academic qualification which would of itself indicate that that person has the competence to practise as a probation officer. This should enable the intake to the service to be broadened, and it should enable people who wanted to pursue second careers to be able to apply to join the probation service. They may well have valuable experience and potential, but they may be people who were unable to spend two years at university or who may already be working as probation service officers.

I accept that the proposal not to rely on a new or modified qualification would, of course, be more radical than the scrutiny report suggests. But the link to competencies should ensure that the training which is given would be directly related to the work which they would have to undertake as probation officers.

The noble Viscount, Lord Tenby, and the noble Lord, Lord Merlyn-Rees, were concerned about the balance of mature and young people. I agree that the number of mature candidates is unusual. But there has been an increase in the percentage of under-25 year-olds from 1 per cent. to 25 per cent. of the intake in the past three years and that is a worrying trend if we look ahead towards a balance of the workforce.

The noble Lord, Lord Walpole, sought validated qualifications. Would the qualifications be recognised in this country and in the European Union? Probation officers can qualify as social workers but the Home Office will not pay for that. Social workers are not to be debarred from the probation service if they meet the standards of the competencies. There is no direct equivalent in the European Union. Therefore there is now no impediment, and none is intended.

My noble friend Lord Carr wanted to know the details of what we are doing. The proposed changes include the abolition of the requirement for a person to hold a

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Diploma in Social Work, or its equivalent, before he or she could be appointed as a probation officer; and a new scheme under which probation services recruit trainees directly, following a regional selection procedure and an initial training period for up to two years. Probation services would have to maintain very high standards, but they would be able to draw on a variety of backgrounds, skills and disciplines in order to provide a well-balanced workforce. Individual training should be undertaken within an area probation service. Programmes would have to be used which combine practical teaching and theory with the disciplines of analysing and presenting complex information. Before achieving qualified probation officer status, trainees would have to demonstrate that they had the competence to practise on the basis of a thorough assessment of their knowledge and practical skills.

The central funds which are presently allocated to the sponsorship scheme would be devolved to probation services for the operation of the new scheme. Recruitment would have to be directly related to the central needs of the services. The sponsorship by the Government of new students on Diploma in Social Work courses at universities should cease after the intake for the academic year 1995-96. Those changes would be implemented without adversely affecting the employment prospects of existing sponsored students or those who will start courses in the coming academic year.

The abolition of what one might describe as a unique requirement does not mean that relevant qualifications—including social work qualifications—will not be welcomed. Of course, they will be. But the Government would like to see probation committees encouraging officers to acquire academic and vocational qualifications as part of their in-service development where these will be able to improve their competence and professional ability. I would not wish to rule out the establishment of a national vocational qualification at the proper level in order to recognise the competence and development of individual probation officers.

I stated at the beginning that there is a three months' consultation period. I can assure the House that the views that your Lordships have put forward today will form part of that consultation and that the Government will take note of what has been said. I can assure the noble Lord, Lord Rodgers of Quarry Bank, that my noble friend Lady Blatch will also take note of what your Lordships have said.

6.45 p.m.

Viscount Tenby: My Lords, I thank all noble Lords who have taken part in this topical debate. In particular, I congratulate the right reverend Prelate the Bishop of Birmingham on his maiden speech. I am sure that it has made Oliver Twists of us all—wanting more. I hope that we may have more soon.

We have had some distinguished and, I hope the Government will feel, constructive contributions. It is perhaps a measure of the importance of the subject that the House has benefited from the thoughts and presence of no fewer than three former Home Secretaries. I am

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very glad to be tussling again with the Minister in, I hope, a civilised way. He has defended a difficult section of the line with his customary courtesy, thoroughness and pluck. (I think that pluck is the right word in this context.) The military analogy is not a random one. As the noble Lord, Lord Donaldson, said, whenever the going gets rough or the proposals are unpopular, it is the noble Earl who stands the Government's ground, to the applause, if not the general agreement, of the whole House.

I very much hope that the noble Earl and his colleagues will take careful note of what has been said today. There is a genuine and widespread feeling that what is being suggested in respect of the probation service is as a response to outside and ill-informed pressures and that the proposals, if I may be frank, owe more to the four-ale bar philosophers and tabloid leader writers than to rationality and experience.

The House will be relieved to know that I shall not weary it with a reiteration of the many points made. An important debate is waiting in the wings. But I am glad of the noble Earl's assurance that this debate will form an important part of the consultation period. If the views expressed today are anything to go by, the battle might be thought to be won. But that, alas, has not always been the case in recent months.

I beg the Minister to take these points to his colleagues for earnest consideration so that the seven-week period can see a genuine exchange of constructive views and so that the Government ultimately do not go down a turning they will later regret. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

Arts and Heritage Funding

6.48 p.m.

Lord Palmer rose to call attention to the general funding of the arts and in particular the architectural heritage, including historic houses; and to move for Papers.

The noble Lord said: My Lords, it is over a year since we last had the opportunity to debate the arts and the architectural heritage, and I am grateful to all noble Lords who have put their names down to speak and indeed to those who scratched at the last moment and/or indeed resisted the temptation to put their names down in order to allow a few more moments for others to speak. I am delighted that the noble Viscount, Lord Gage, the noble Earl, Lord Hardwicke, and my noble friend Lord Rothschild have chosen this debate in which to make their maiden speeches. Three maiden speeches in a debate must be something near to a record.

I am grateful to my fellow Cross-Bench Peers for choosing this debate and I am proud to have the chance of introducing this important subject, as my family title was one of the very first which had an arts connection. The London Gazette of 23rd June 1933 cites my great-grandfather as being created a Peer for services to music. I hope that that now puts paid to the general

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assumption that our title was given for baking biscuits. His obituary in The Times of 10th December 1948 stated that he was,

    "the first man to be created a Peer for services to music".

He was very largely instrumental in founding the Royal College of Music; and it is with music and the Royal College in particular that I wish to start.

Before doing so, I should like to say how fortunate we are to have the noble Viscount the Minister winding up for the Government tonight. I know how important he believes the arts and the architectural heritage are to this country. He was brought up in one of the finest houses in England with a magnificent art collection. Indeed, he was a distinguished artist himself. Few people are better qualified to wind up what I am sure will be a wide-ranging and fascinating debate.

For centuries the arts and architectural heritage have given enormous pleasure to the inhabitants of these islands and now, with air travel in the grasp of the masses, to people from all over the world. The vast majority of the 19 million visitors each year to this country come here to visit our great buildings and to enjoy our wide variety of arts. That in turn brings in £33 billion per annum. It is for that reason that the arts and architectural heritage must operate at a high level of performance and for that they need funding. The Government are constantly trying to encourage partnerships between the public and private sectors. I believe that the private sector is doing its bit and it is now time for the Government to do their bit a bit more.

When the Royal College of Music was founded in 1888, there were just 92 students. Today there are 517 undergraduate and postgraduate students. The majority of those students need an instrument of professional quality and many have to scrimp, save, beg and/or borrow to find the appropriate funds. Good string instruments now cost upwards of £10,000 and more.

Nowadays, the vast number of committed students, certainly in music, recognise the need to continue their studies at postgraduate level. At the moment, there is no logical system of postgraduate awards. The funding system has simply not caught up with educational developments. Postgraduates are dependent on local authority discretionary awards in order to cover their further tuition fees. Very few are fortunate in obtaining them. Postgraduate students have to find tuition fees of around £1,000 a year and a further £4,500 maintenance. That is a large sum of money for full-time students to have to find.

Britain's musicians are among the best in the world. As the recent document Overseas Earnings has shown, they contribute significantly to the British economy. Adequate funding for the education and training of musicians is not only a valuable investment in terms of what these musicians can bring to society as a whole but also a way of ensuring that this aspect of the British economy can continue to thrive. Net overseas earnings by the United Kingdom music industry in 1993 were £571 million—I repeat, £571 million. I ask the noble Viscount to look most carefully to see what he can do, particularly with regard to the funding of postgraduate students.

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Since its inception, the Royal College has produced many famous musicians, such as Walford Davis, Vaughan Williams, Clara Butt, Benjamin Britten, the Lloyd Webber brothers, James Galway and John Lill, to name but a few. If we are to go on producing such talented people, funding must be kept at a high level.

Music is not the only form of art being starved of funds. It is depressing to read the latest available figures, which compare the percentage of gross domestic product spent on the arts in different countries. In France it is 0.22 per cent.; in Germany 0.21 per cent.; and here in the United Kingdom a miserable 0.14 per cent. Expenditure on the arts in the United Kingdom as a percentage of total public expenditure is therefore very nearly half what it is in France and Germany. Central government spending on the United Kingdom arts is half per capita to that of the Netherlands.

When one looks at the planned budget for the Arts Council this year, we are spending less per capita per annum than the price of two large gin and tonics. Viewed like that, it is surely pathetic. I also find it depressing and sad that the planned amount of money that the Department of National Heritage aims to spend this year is some £13 million less in actual terms than was spent in the years 1992-93. I do so hope that the Minister will be able to give us some cheer tonight.

I turn to the second part of the Motion. Here I must declare an interest as a director of the Historic Houses Association, a member of its executive council and chairman of its Scottish region; I also live in a Grade A listed house which is exempt from inheritance tax and has attached to it the country's very first maintenance fund.

Maintenance funds received Treasury approval back in 1978. Since then, only some 60 have been set up. Some have huge reserves and others, like my own, have minute amounts. The reason that more have not been set up will, I hope, become obvious. All maintenance funds serve the same purpose and that is to help to maintain the historic property with which they are connected. They are unable to carry out any form of commercial operation, which is right and proper. However, what is wrong is the tax treatment they receive. At present, the annual income from a maintenance fund is taxed at the basic rate plus 10 per cent. additional trustees' rate.

The noble Viscount said on 10th June 1992 (Hansard, col. 1298) that he would "study carefully" this point when it was raised by the noble Lord, Lord Cobbold and myself. I believe that it is now time for him to take action. In an ideal world maintenance funds ought to be completely income tax free and, indeed, where investment gains are made and devoted to heritage purposes, they should be free of capital gains tax. If the Government cannot go that far in one fell swoop, they must at least remove the additional trustees' rate. I would urge the Minister most strongly to look at that again. With so few maintenance funds in existence, we must be talking about a very insignificant amount of revenue to the Treasury. I am only sorry that such figures, for various, obvious reasons, are not available.

It must not be forgotten that the settlors of maintenance funds have given away their own money, land and/or chattels in order to finance those

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maintenance funds to help maintain their properties for the good of the visiting public. Even to have that extra 10 per cent. would be a major boost.

Where grant aid is offered and exemption agreed, there is often talk of personal gain to the owner of an historic house. Here there is no argument. Many, if not all, owners of listed buildings over the years have pumped a vast proportion of their own money into their properties for the enjoyment of the visiting public. They suffer great discomfort by trying to live in them, especially in the winter—I do speak from experience. We must not forget that most owners of open houses are heavily out of pocket at the end of the year.

There is no doubt that the visiting public do prefer visiting a house which is actually lived in. I shall never forget one visitor we had at home tripping over my wife's slippers in her bedroom, which was then open to the public. This visitor then had the gall to ask if we actually lived in the house.

The grant-aiding policy from English Heritage and Historic Scotland is difficult to follow and indeed at a rate of only 40 per cent. is derisory. Section 3A grants offered by English Heritage—and here I emphasise offered—to the private sector were just £1.7 million in the last year for which figures were available, which was 1991-92. To avoid any doubt at all I stress that this figure was provided by English Heritage. That £1.7 million offered is equivalent to 530 yards of motorway construction.

The Government's attitude to the privately-owned heritage is puzzling. Contrary to their privatisation plans, where the private heritage sector is concerned, the Government seem to favour public ownership. If the leader of the Labour Party favours dropping Clause 4 from its manifesto, surely this Government can be persuaded to treat the private sector in a less hostile manner.

The mechanics of capital taxation are indeed more favourable than they were. Some credit should go to Her Majesty's Opposition, who, when in government, implemented some of the Historic Houses Association's suggestions. Since this Government came to power they have indeed improved the heritage legislation in some respects, but in more recent years they have seemed reluctant to undertake measures that are now necessary to meet the high running repair costs of maintaining these great buildings.

I do so hope that the noble Viscount the Minister will give the private sector the help it so desperately needs and deserves. He has a great opportunity tonight at so little cost to the Treasury and I just hope that he will grasp that opportunity. I beg to move my Motion for Papers.

7.2 p.m.

The Earl of Gowrie: My Lords, I am profoundly grateful to the noble Lord, Lord Palmer, for giving us the opportunity tonight to debate arts funding and architectural heritage, as well as for his magnificent and closely reasoned speech, with nearly all of which I

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agree. I look forward to the maiden speeches, including that by my fellow distributor of the National Lottery funds, the noble Lord, Lord Rothschild.

The noble Lord, Lord Palmer, has got his timing absolutely on the button. The publicly-funded arts organisations are in considerable difficulty. But they are also on the threshold of a great opportunity. It is of course my job to dwell on the difficulties, but that does not mean that I am not immensely excited, enthusiastic and grateful for the opportunities. Perhaps the most exciting thing of all is that, in spite of the difficulties, the arts in this country are in rude health; creative, competitive, winning fame and often fortune for their practitioners and for this whole country around the world.

Allowing for the contribution to tourism, the arts are the second or third most successful industry. They are perhaps the first in being the best known. While Britain was always influential in terms of literature and drama, today she is —to borrow a Foreign Office phrase—boxing beyond her weight in music, opera, dance, architecture and the visual arts as well. If one includes the British element in American-backed movies, we should also include film.

Culture, like agriculture, depends on the soil and the weather. I am not too gloomy about the weather. I believe that the arts are moving up the political agenda of both the major political parties. The Government have delivered the lottery to the statute books with all-party support. They deserve credit, the Prime Minister especially, for doing so. Others, including myself 10 years ago, tried and failed. The Treasury was hostile. Its First Lord has now got it through. It is my experience from travelling throughout the country that even the fiercest political opponents recognise that achievement and welcome it. The Arts Council of England, even allowing for what some of its members must feel is the dubious political past of its present chairman, certainly does so. And the lottery is not just about buildings; it is about musical instruments, artistic commissions, films and many other things.

Then again, all my own contacts with Her Majesty's Opposition in this House and in another place, on the council itself and among the predominantly Labour-controlled local authorities, make me confident that Labour is serious in its intention and is looking at our industry right outside the context of electoral politics. So the outlook is in general good from both perspectives.

I shall now bite the hand that I know will make an effort to feed me better. Confident about the weather, as I have just said, I am extremely worried about the soil. As the noble Lord, Lord Palmer, said, the discretionary grant system at local authority level is in chaos. Investing in our artistic future through the educational system is vital. The Secretary of State for Education has been kind enough to see me and I am confident that she will do her best.

The Secretary of State for National Heritage was rightly praised for refusing to accept the commitment to stand-still funding which he inherited on taking office. He refused to say, as it were, with the Duke of Wellington, "They have their lottery; pass the port".

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He fought for and won a £5 million increase in the Arts Council of England's base line funding. Unfortunately, at the likely inflation outturn of 3 per cent., that still represents a cut in real terms. It means, too, that we have not clawed back any of the unworthy and unnecessary cut made to the council's grant in 1994-95. Assuming that continuing real rate of inflation of 3 per cent., the council's grant will need to increase from £191 million to £207 million to get us back to where we were in 1993-94.

What is the argument for going back and not forward, even if modestly forward? It cannot be the need, with which I happen to agree, to cut public expenditure totals. There is a difference between £100 and 3p. It cannot be impatience with an insatiable lobby. The subsidised sector is the merest seedcorn in an industry which makes massive returns to our economy in the form of tax, overseas revenue and employment. Even the present Secretary of State for Employment—whom I find hard to criticise as he is as passionate about Wagner as I am—must recognise that the subsidy-job ratio in the arts is £483 to one. In agriculture, the next cheapest, the ratio is over £4,000 to one. And while overall employment has increased by 4 per cent. in the past 10 years, in the arts it has grown by nearly 50 per cent.

In art terms I am impossibly, perhaps foolishly, what used to be called "dry". I happen to believe that the Arts Council could manage to serve the arts on rather less money than my colleagues or the arts practitioners themselves believe. The lottery will improve current funding as venues get better. We, the consumers, will be enticed by good environments and exciting buildings to get off our backsides, to leave our tellies and enjoy the wonder, indeed the spiritual regeneration, that participation in living events can bring. That will help on current account, but it takes time. We have to get from here to there. We need £15 million on the baseline. Even if one extrapolates an increase of this kind across all the relevant cultural activities in this country, one is still left well short of 1 per cent. of public spending.

In conclusion, without a restitution of that kind we shall continue to preside over crisis management in our orchestras, our regional theatres and particularly our local art centres. One can manage crisis for a while; as a permanent atmosphere, it saps creativity. It is not much to ask, and I ask for it now.

7.10 p.m.

Lord Rothschild: My Lords, in March 1980 the noble Lord, Lord Mowbray and Stourton, wound up the debate in this House on what became the National Heritage Act by saying that it would prove to be the most important piece of legislation in the heritage field since the Second World War. Under the inspired leadership of the noble Lord, Lord Charteris, the National Heritage Memorial Fund made that prediction come true. The well nigh impossible task of following in the noble Lord's footsteps has fallen on me.

In those 12 years of his chairmanship our notion of this country's heritage was enormously extended. It covered not only historic houses like Kedleston, Calke Abbey, and in Scotland, Thirlestane and Fyffe Castle, but also Sir Donald Campbell's Bluebird, the first letter

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that Nelson wrote with his left hand, a collection of trade union banners for the Museum of Labour History, and a rare breeding colony of the greater horseshoe bat in the roof of an old school kitchen.

For the heritage, the 1993 National Lottery etc. Act is likely, I think, to become even more important than the 1980 Act. Within just a few months the National Lottery has become an important factor in British economic life. Some 58 per cent. of the adult population are playing every week, spending just over £2 a week, and an estimated £3 billion in revenue seems likely to be raised in the lottery's first year. Our fund already has about £60 million available to it after 19 weeks in existence compared with the £8.6 million we received for the whole of last year. Quite soon, the National Heritage Memorial Fund may be giving away more than the Ford Foundation and the Getty Museum in the United States by quite a large margin. The National Lottery is well on its way, as someone said, to becoming one of those national events like the Grand National, the last night of the Proms, or the BBC's weekly "Match of the Day".

In addition to the lottery factor we have a strong following wind for the heritage. It has become a hugely popular movement. Consider for a moment the extraordinary growth of the National Trust, whose centenary is being celebrated this year under the leadership of the noble Lord, Lord Chorley. It now has 2.2 million members—a larger number than all the political parties put together.

Noble Lords may ask what principles should be guiding us in our allocation of resources. Before we get carried away with these large numbers, we should remember the vast areas to be covered: historic buildings, the landscape, museums and their collections, books, manuscripts and archives, industrial transport and maritime history.

Let us just consider for a moment one aspect of the built heritage, and perhaps I may take the opportunity to thank the noble Lord, Lord Palmer, for raising this important subject and for giving us the opportunity of discussing it. In addition to the subject of historic houses, which I know will be raised quite often in the debate, we want to help the Government over the rationalisation of their holdings of heritage significance. I wonder whether we have seen anything on this scale since the dissolution of the monasteries in the 16th century. The Ministry of Defence is withdrawing not only from Greenwich but also from Woolwich, Plymouth and a long list of great historic forts and sites. We want to help churches too and to think of uses that can be found for redundant churches in an increasingly secular society.

Close to this House, Westminster Hospital is just one splendid example of the type of building which is in need of a new future. The Lord Chancellor's Office wishes to find alternative uses for many 18th and 19th century distinguished law court buildings, often grade I or grade II.

The principles which will guide our grants are evolving all the time but some are already clear. We share the concern that has been voiced that lottery moneys provided by the less well off should not be

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directed in the main towards the narrow interests of the better off. The lives of those who have provided the revenues should benefit from how they are spent. We therefore want to identify small local projects which will have a profound and lasting impact on the communities of this country and the people who live in them.

Popularism and elitism are often represented as irreconcilable but they need not be at odds with one another. For example, our citadels of culture, our great national museums, not only have great quality but are also hugely popular. They surely deserve our support.

On the whole we do not want to encourage grands projets like the French. We will be cautious about breeding herds of hungry white elephants which would require a great deal of feeding in the future. It is our incomparable existing stock and fabric which we believe should be our first port of call. We have been asked to concentrate on capital projects and will do our best to avoid adding to the problems of revenue funding when the arts and heritage sector is already so hard pressed. We welcome the freedom we have been given to provide endowment funds in exceptional cases.

We should concentrate on making our heritage more accessible, making use of the revolution in technology as an unparalleled opportunity to democratise knowledge and to break down walls. We wish to avoid the "UK lottery factory" in the international art market. Recently we helped to acquire and conserve for the future an area of great natural beauty on one of the west coast islands of Scotland. The cost of the site was £500,000. If we had acquired the original painting of it by Turner it might have been valued at £20 million. We felt that it was better to acquire the original original. International art prices are already high and our resources may well be better spent right here.

The noble Lord, Lord Charteris, began his first annual report of 1980 by quoting Sir Francis Drake, who wrote to Sir Francis Walsingham in 1587:

    "There must be a beginning of any great matter, but the continuing unto the end until it be thoroughly finished yields the true glory".

May I, too, please conclude with this quotation as we begin the second chapter in the life of the memorial fund with our first lottery grants due to be announced on 26th April? As Sir Francis Drake wrote more than 400 years ago, we look forward to a,

    "voyage of mercy with many ports of call".

7.19 p.m.

Lord Strabolgi: My Lords, it is a great honour and a pleasure, on behalf of the whole House, to congratulate the noble Lord, Lord Rothschild, on his memorable maiden speech. The noble Lord was a most successful chairman of the trustees of the National Gallery during an important part of its development and he has also been a generous benefactor to the gallery. I believe that he was rather too modest, if I may say so. He was an ideal choice to succeed the noble Lord, Lord Charteris of Amisfield, in 1992 as chairman of the National Heritage Memorial Fund. The noble Lord is also chairman of the management committee for the National Trust House of Waddesdon, the great

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Rothschild house, to which he has also been a generous supporter. I renew my congratulations and I hope that we shall have the pleasure of hearing the noble Lord on many other occasions.

I should like to say a few words about the British Museum and with particular reference to the built heritage which has been the subject of the Motion of the noble Lord, Lord Palmer. The British Museum will celebrate its 250th anniversary in 2003. The BM is one of four great museums of world stature. The only others in the same class are the Louvre, the Hermitage and the Metropolitan in New York. The BM attracts six million visitors a year, more even than the Louvre and the Metropolitan. As a nation I believe that we are surely very lucky to have inherited this wonderful museum although I am sorry to say that this has not always been recognised by governments in their funding.

I remember in the 1950s that there was considerable public concern about the inadequate conservation of many valuable objects at the British Museum due to the lack of funding. In recent years, I am glad to say, the grant-in-aid has become more realistic, but the British Museum's income has been eroded over the years by inflation. This shortfall will become more acute as funding for the arts passes increasingly to the lottery committees. I heard with great interest the speech of the noble Earl, Lord Gowrie. Lottery money, while welcome, can only be used, as we know, to finance new capital projects, but of course these require additional finance for running costs.

When the British Library moves to St. Pancras it will make available 40 per cent. of the Bloomsbury building and will allow the Great Court, where the Reading Room was erected in 1852, later than the foundation of the museum, to be returned to its original conception, providing a central concourse for visitors with many badly-needed public services.

For the first time in 150 years there will be easier access between the north and south halves of the museum and visitors will be able to circulate throughout the building at ground floor level. The former King's Library will be restored to its original condition of 1828 and will house a new exhibition on discovery and learning in the Age of Enlightenment. The extensive ethnographical collection will be moved back to Bloomsbury from the Museum of Mankind in Burlington Gardens. These development programmes will require extra capital funding, I understand, of about £100 million, and a corresponding increase in grant-in-aid.

The noble Lord, Lord Palmer, mentioned France. During the last 20 years or so the French Government have funded 12 grands projets. Here I must beg to differ from the noble Lord, Lord Rothschild. I do not believe that these are all white elephants. One thinks of Le Grand Louvre, to which a most magnificent extension has been arranged since the departure of the French Ministry of Finance to the Quai de Bercy, and one thinks of the wonderful pyramide in front of the Louvre.

One thinks, too, after what the French have done, of what might have happened to our own National Gallery extension if we had not had that very generous donation from the Sainsbury family. I am very glad that the noble

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Lord, Lord Sainsbury of Preston Candover, is going to speak in this debate. I believe that all the Government were prepared to do was to allow what they called a "mixed project", which means shops, and some offices with a few rooms allotted also to the National Gallery. But, due to the tremendous generosity of the Sainsbury family, we now have this beautiful extension. But that is no credit to the Government at all, while I believe we must agree that the French Government have come out well with what has been done in the Louvre.

Therefore, I hope that the Government will lift their sights a bit, take a long view and provide adequate and continuing funding for the splendid new projects I have attempted to describe which are planned for our greatest museum.

7.25 p.m.

Lord Davies: My Lords, I first declare an interest in that I am chairman of Welsh National Opera and a trustee of Cardiff Bay Opera House Trust. The first of these has given me considerable experience of arts funding. The second will add to the architectural heritage for the next century.

Opera provision, particularly outside London, has been one of the great developments over the past 20 years. The main regional opera companies—that is, Welsh National Opera, Opera North and Scottish Opera, together with Glyndebourne Touring Opera—now work to exceptional standards and have built a very substantial and enthusiastic audience in the main cities throughout Great Britain, but like most arts organisations their funding situation remains precarious. They have to plan their work, book and contract singers up to three years ahead, but their income levels, particularly grant levels, are not usually known until a month or two before the start of the financial year and sometimes indeed not until the year starts.

Over the years there have been various attempts to give longer-term funding commitments by the arts councils, but these commitments have always erred on the side of extreme caution, I suspect from Treasury influence. As a consequence, arts council companies have been unable to plan to them because to do so would have meant planning for closure. Fortunately, the events turned out to be less dire than forecast in most cases. Any permanent companies such as Welsh National Opera which, incidentally, employs some 250 people, is very sensitive to swings in funding levels. Relatively small cuts in funding result in relatively large cuts in output. An extra 1 per cent. of grant enables Welsh National Opera to increase audience by 6 per cent. All the companies work on a knife-edge, and the recent reductions in grants in real terms have made matters even more precarious. There is, of course, nothing new in this, but in the past the companies have only survived because after years of financial squeezes they have been forced to cry for help at the point of desperation, and that help has been forthcoming. Our worry is that our cry this time may not be heard or, if it is heard, not acted on.

Following cuts of varying degrees of severity, the three permanent companies expect to survive through the present financial year which has just started, but if standstill grants are applied to the next year, as presently

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indicated, they are all going to be in severe difficulty and will have to make cuts to their quality and quantity of output, which will put at risk their very justification for existence.

Opera is inevitably an expensive art, but great opera can provide intense enjoyment and pleasure for its audiences. Opera done badly is simply not worth the money. How much more sensible it would be if the arts councils were to discuss with the companies how their work and output could be optimised and supply the modest increases in grants which would be necessary to achieve that. Unfortunately, even when the arts councils have the funds to do so they do tend to think that it is more interesting to spend their money on development projects rather than to maximise the benefits from what they already have. As we have heard from the noble Earl, Lord Gowrie, they have not even had sufficient funds to do that in recent years. I do hope that the arts councils and the separate arts councils in Wales and Scotland, are listened to and receive the support from the Government which they need.

The Government are to be congratulated on the great success of the National Lottery. Among the many good causes which the funds generated will support is the built environment in which the arts will be performed into the next century. That is something to which we can look forward with pride and pleasure. However, if we do not look after and cherish the great performing companies, which we have built up and developed during the last part of this century with such great success, the new buildings for the next century will be just silent mausoleums for our citizens to stare at rather than the vibrant and bustling centres to thrill and enhance the lives of the coming generations which they should be, and can be, if we take proper care of those who will breathe life into them.

7.30 p.m.

Viscount Gage: My Lords, I am glad to have the opportunity of speaking in this debate and I am delighted to learn that the National Heritage Memorial Fund will, as a result of the increased income from the lottery, be in a position to fund, among other things, the built heritage. The impact of such a large increase in the funds available for grants could be enormous on listed buildings and monuments in public ownership but will not directly benefit those which are privately owned.

Generous as the increase in funding may be, the grants will still be subject to the imposition of value added tax at 17.5 per cent., and I suggest that a more radical approach from the Government would be to reduce or abolish the tax. The question of whether VAT should be charged on the repair of historic buildings has been raised in this House on several occasions, recently by the right reverend Prelate the Bishop of Norwich in his debate on 31st January 1995 to which the noble Lord, Lord Mackay of Ardbrecknish, replied. It is not necessary to go too deeply into the arguments expressed so eloquently and movingly by the right reverend Prelate and many other noble Lords as they are well known.

However, one issue which has not yet been highlighted is the fact that at the moment VAT is charged on repairs but not on improvements. If it is

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impossible to zero-rate both categories, should we not reverse the situation? Many of the buildings that are so important for the preservation of our heritage require frequent and expensive repairs rather than additions or improvements. The current tax situation offers a disincentive to owners to effect those vital repairs while at the same time encouraging development or substantial reconstruction. That can in some instances lead to over-repair and alteration, damaging the historic aspects of the building. That was not the Government's intention when making the tax concession but, unfortunately, that is sometimes the effect. It is the repair and maintenance of historic buildings, more than improvements, which need the encouragement provided by such a concession.

The importance of historic buildings in our country is self-evident. As the chairman of English Heritage said at a recent anniversary conference, the evolution of the public consciousness and concern about the heritage has rapidly accelerated during the 1980s and early 1990s and has become a national cause. The tourist industry now vies with the oil industry as the biggest contributor to the balance of payments. Seventy per cent. of tourists who visit this country say that they do so to enjoy the countryside, ancient monuments, listed buildings, historic houses and churches—the mosaic of which our past consists. There are therefore sound economic reasons for encouraging the individuals and organisations responsible for the maintenance and upkeep of the buildings.

Many listed buildings are not capable of generating enough income to cover the cost of their upkeep, let alone the 17.5 per cent. VAT levied by the Treasury. Some of our larger historic buildings—those which charge admission fees and run businesses—are able to escape the full effect of the tax by employing direct labour. It is on the smaller, less viable properties that the full burden of the tax devolves. I declare an interest, both as a tenant of a listed building that is open to the public and as warden of the local church. The trustees of the estate are lucky enough to be able to employ a direct labour force and therefore pay VAT only on the materials used in the repairs.

By contrast, the recent £50,000 repair bill for the ancient village church was fully subject to VAT; half of that sum was raised by the hard-working and committed parishioners and half came from English Heritage. As the right reverend Prelate pointed out, much of the burden of repairs to our local churches devolves on very small congregations. Is it right that their charitable efforts should be subject to VAT? Further, in the same debate the Minister suggested that the preferred way of assisting fund-raising is to encourage charitable giving through deeds of covenant, Gift Aid and payroll giving, but many of our less well-off parishioners may not be in a tax bracket to benefit from those concessions.

The Government have remained unmoved by the many excellent arguments put forward in favour of the abolition of VAT on repairs on the grounds that considerable funding is already provided by the Government by grant aid and that it is not government policy to vary or reduce the rate of VAT. However,

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attitudes are changing not only in the United Kingdom but throughout Europe. There is an increasing demand for more assistance towards the preservation of our often threatened heritage. Other countries, such as Belgium and France, already allow greater tax concessions to that end. Will the Minister reconsider the position in relation to the European Commission's policy on the application of reduced rates of VAT in certain circumstances or will he consider reversing the position in relation to repairs and improvements? Need the tablets be set in stone?

7.36 p.m.

The Lord Bishop of Norwich: My Lords, it is a privilege to follow the noble Viscount, Lord Gage, and to congratulate him on his excellent maiden speech. He spoke with conviction and clarity and, like other noble Lords, I listened to him with great pleasure and admiration and, for my part, with total agreement. I know that I speak for the whole House in expressing the hope that this will be the first of many such fine contributions from him.

By chance or providence what I have to say is, in a sense, a continuation of the noble Viscount's speech which I wholeheartedly applaud. I make no apology for returning to the subject of funding for the repair of churches. Indeed, I believe that no apology is necessary in a debate which embraces the nation's architectural heritage because the parish churches of England are a unique and significant part of that heritage.

There are, I believe, just over 11,000 Grade I listed buildings in England, of which 4,000 are parish churches—that is 35 per cent. of the nation's total. In addition, the Church of England alone cares for a further 9,000 listed buildings. That is a major heritage responsibility and, by any standards, anyone who represents the parish churches of England represents a huge heritage constituency. That fact is recognised by the Department of National Heritage, and we are enormously grateful for its co-operation, and for that of English Heritage with which we work closely. At a conference staged jointly by English Heritage and the Church of England last December, that close co-operation was further enhanced and the problems faced by the churches were recognised by everyone there.

A major contribution to the conference was made, as one would expect, by Mrs. Jennie Page, chief executive of English Heritage, to whose work I should like to pay a warm tribute. She referred to the parish church as

    "the most important single type of historic building in England"

and went on to say that,

    "what we have in our parish churches is too precious to lose ... ecclesiastical buildings (especially the parish churches of the Church of England) are such an essential centrepiece of England's built heritage, every effort should be made to assist continuing church ownership and use".

She acknowledged the huge commitment of the Church to the nation's heritage through its care for ecclesiastical buildings. Indeed, it is very large. Although we are grateful for the grants that we receive, they cover only a small part of our repair costs. In a typical year, 1992, when we received about £9 million in grants, the Church spent £112 million on repairs. English Heritage and the Department of National Heritage do what they can, but

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it is simply not enough if we are to preserve the nation's heritage. Their contribution is undermined by the Government's policy on VAT.

I remind your Lordships of a few facts which affect the churches. Although we receive grants from the Government through English Heritage for the repair of ancient buildings, the VAT on those repairs is far in excess of the grants given. For example, in 1991 churches of all denominations received £8 million in grants from English Heritage. That same year the VAT on repair bills amounted to £35 million. In 1994 the grants from English Heritage rose to £13.5 million. The bill for VAT will be close to £50 million.

Mr. Hugh Corner, of the Department of National Heritage, said at the conference that historic buildings were part of the common heritage of which the Church of England buildings were a uniquely important part. He also said that any failure to care for those buildings would be a defeat for the Government's commitment to the protection of that heritage. I am not anxious to see the Government defeated. One may ask what the Government can do to avoid such a defeat. The last time I spoke on this subject I appealed to the Government's higher motives and to natural justice and said that it was ludicrous and unjust that those who maintained the built heritage on behalf of the nation should have to pay back to the Government more than double the grant they received. That appeal has so far failed. Perhaps this time I may appeal to a lower motive. If what we say today filters through to the green-carpeted corridors, perhaps the message can be conveyed that there are votes in it. A survey carried out last summer by Gallup showed that 89 per cent. of people believed that historic buildings and places gave an area a sense of identity. As Mrs. Page has said, public interest and concern for the built heritage has never been higher. We are talking here about a popular cause, not a marginal one. A bold decision by the Government to abolish or lower the rate of VAT, especially on parish churches, would be greeted with popular acclaim.

The East Anglian landscape is punctuated by church buildings. Sometimes several of them are visible at a single glance. The towers of Norfolk and Suffolk and the spires of Lincolnshire that point to the sky are, I believe, precious symbols both of the presence of God among us and, in their heavenward orientation, reminders in a world where consciousness is bounded by three dimensions of a perspective that we badly need to recover. If the Government would help us in this matter we could do much to recover that perspective, and they would win a large number of friends.

7.42 p.m.

Lord Gibson: My Lords, I should like to add my thanks to the noble Lord, Lord Palmer, for an admirable introductory speech. I also extend my congratulations to the two maiden speakers we have heard so far. I was particularly interested in what the noble Lord, Lord Rothschild, had to say about the use that the Heritage Fund intended to make of the lottery proceeds. It is upon that subject that I speak, although I should like to speak more to the Arts Council than the Heritage Fund.

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I suppose that we all agree that the purpose of publicly funding the arts is to help improve their quality, their accessibility and the public understanding of them. An important element in the furtherance of accessibility is the need to keep down the cost to the public of enjoyment of the arts, which means lower seat prices, admission fees and so on. I refer particularly to seat prices and take the case of opera. I believe this to be a particularly important, illustrative point.

I do not know whether any of your Lordships ever read a magazine called Opera. I recommend it. It is excellent. The current issue contains an editorial that deals with the recent Stevenson Report on Opera and Dance that has been commissioned by the Arts Council. The report stated that the audience for opera in London is at best static, probably declining and not large enough to sustain two big theatres. It noted a peak period between 1985 and 1990 when there was certainly a sufficient audience for two big houses, but there was a decline thereafter. The magazine criticises the report for not pointing out the obvious connection between that decline and the sharp rise in seat prices. It reminds us that recently in Paris three operas were performed—"Lakmé", "Lucia" and "King Arthur"—before houses full to the rafters. The reason was that seat prices were about half those in London. Seat prices increase because the subsidy has not been enough to keep them down, after every effort has been made to lower costs.

The problem facing those who decide arts funding policy is obvious. The lower the subsidy, the higher seat prices have to be and the smaller the number of people who can afford to go and the smaller the social justification for having any subsidy at all.

I come to my main point. Long ago I gave up any hope—perhaps it would have been the triumph of hope over experience to think otherwise—of achieving a real lift in public subsidy for the arts. Therefore, I strongly welcomed the idea of the national lottery. I joined the national lottery promotion company to help it along. I did very little but was keen. When the national lottery was set up everybody agreed that the proceeds should not be allowed to replace state funding but should be additional to it. The Government have publicly accepted the so-called principle of additionality. On the face of it, this is greatly to be welcomed. However, the method adopted to ensure additionality has been to confine the use of lottery funds to capital projects.

Of course, there is a tremendous backlog of capital improvements that are badly needed. A good example is the Arts Council's recent grant from lottery money to the Unicorn Theatre in London to update its safety standards and thus keep it in business. I also believe that the Royal Opera House's scheme to update its facilities is an essential capital improvement. I hope that in due course it will attract some Arts Council lottery money. For the time being, to confine lottery money to capital projects is understandable and reasonable, but it means that any hope that lottery money can be used to help bring down seat prices and make opera and the other arts more accessible to ordinary incomes is deferred. I wonder for how long. It would not matter if the

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distributing agencies—the Arts Council in the case just referred to—had enough money to core fund (as it is called) all their main clients, but they have not.

I feel that the principle of additionality is being protected at rather a high cost. For example, it means that the noble Earl, Lord Gowrie, cannot use lottery funds to plug the gap created by the £3 million cut suffered by the Arts Council a year ago. If I were in his place—which 20 years ago I was—I would sooner have the £3 million for the things that I thought needed them most, even if it meant that the Treasury found it easier to breach the principle of additionality when deciding the grant.

I hope that we shall soon be able to use the lottery to supplement arts funding on the revenue side and make good chronic underfunding where it exists. I take heart from the Secretary of State's recent announcement of the possibility of endowment funding in special cases. It would be splendid if that concept could be more widely applied. I hope to hear something from the Minister at the end of the debate on that point.

7.49 p.m.

The Earl of Hardwicke: My Lords, I hope that the House will forgive me for being the third maiden speaker this afternoon. I can do no more than crave your Lordships' indulgence.

I welcome this debate on arts funding as it presents a very good opportunity to review the current state of the British film industry. It is particularly timely in view of the following factors. First, this is the centenary of the showing of the world's first film by the Lumiere brothers in Paris in 1885. Secondly, there is the strong British presence at the Oscars last week. Thirdly, there is yesterday's report by the National Heritage Select Committee on the future of the British film industry which highlighted a number of difficulties currently faced by the industry, and I hope that its constructive recommendations will find favour with the Government.

Of all the arts, film is of the greatest interest to the majority of young people. Eighty per cent. of all movie-goers in Britain are aged between 16 and 25. Film has a direct influence on our opinions, our education, our very outlook and values. That films can have such an impact was highlighted by President Woodrow Wilson in 1916 when he said:

    "Film has come to rank as the very highest medium for the dissemination of public intelligence—since it speaks a universal language it lends itself importantly to the presentation of America's plans and purposes."

Perhaps your Lordships would allow me to reflect on a few interesting aspects of the current state of the British film industry because they highlight its unique characteristics. The film and video industry generates an annual turnover of over £1 billion; it is expected to outpace all other industrial sectors, with annual growth of 30 per cent. over the next 25 years; it also employs 220,000 people in Britain. But important as those facts are, they are essentially economic in nature. They ignore the central role played by the film industry in our nation's cultural life.

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In order to give a balanced assessment of what needs to be done to assist the development of a British-based film industry we should recognise what the Government have done to assist the industry. That includes the creation of British screen finance; their contributions to the European co-production funds; and the establishment of the British Film Commission, designed to attract inward investment, together with contributions to the British Film Institute, the National Film and Television School and various European Union initiatives, such as Euro-image.

In preparing for this, my maiden speech, I have devoted considerable time not only to reading carefully the various policy papers and submissions made by members of the industry. I have also sought guidance and advice from a wide spectrum of its members; and in thinking about what I have been told I have come to the conclusion that there is a key question on which there has yet to develop a consensus —that is, whether the film industry in this country is deserving of special treatment. I believe that it is.

Film plays a pivotal role in our society, and the way many young people emulate their film heroes and heroines shows the ability of films to influence our behaviour and our cultural values. Therefore the expansion of the British film industry will contribute to the preservation of our national identity and cultural heritage.

Our film-makers deserve particular consideration because they have to compete with other nations whose governments give special treatment to their national film industries. When one considers the substantial assistance to the film industries in a number of European Union countries and also in countries such as Canada and Australia, it seems to me British film-makers are a very long way from competing on a level playing field.

But, above all, we have to recognise both the existence and the potential of our creative talent, our acting talent, our production talent and our literary talent, of which Britain can be justly proud. My fear is that in the absence of a more dynamic film industry this talent will continue to leave us for Hollywood.

The creative genius of our animators, for example, has been demonstrated by their winning four of the last five Oscars including one last week. Indeed, it is a measure of the creative talent and commitment, particularly of young people entering the film industry, that 90 per cent. of all graduates from the Film School at the Royal College of Art have succeeded in finding employment in the industry, despite the very real difficulties facing young film-makers.

It is for those reasons, and because the film industry is so culturally and economically important to our future, that I believe that it is deserving of special attention. One need only look at Ireland to appreciate the immediate effect legislation can have on boosting the industry. One year after the introduction of tax incentives for film production, investment grew from £3 million to £100 million.

Let me conclude with one point: the young people in this country, like most in the western world, are concerned about their prospects and our country's future as we go into the next millennium. I hope in a small way

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to highlight those concerns and bring to the attention of this House subjects which affect the younger generation. Film is something that plays a very important part in our lives, not only by providing entertainment but also by offering many the opportunity to develop their creative skills.

On behalf of young people, and, indeed, all people, I would be delighted if we as a nation could actively promote and encourage the expansion of film-making in this country.

7.54 p.m.

Lord Charteris of Amisfield: My Lords, I am by no means the oldest Member of the this House, but I am securely in my 80s. It is for that reason that it gives me particular pleasure to congratulate, on behalf of the whole House, the noble Earl, Lord Hardwicke, happily in his early 20s and our youngest Member, on his admirable maiden speech.

One of the unqualified and unquestioned advantages of the hereditary peerage is that every now and then we have a young recruit who can put a bit of lively salt into our somewhat geriatric stew. The noble Earl is obviously a shining example of that principle, and I hope that we shall hear a great deal more from him in the future.

I hope that I may also be allowed to thank the noble Lord, Lord Rothschild, who, in his excellent maiden speech, said some very nice things about me. I was very much moved by his remarks.

I have three points to make. I no longer have anything officially to do with the National Heritage Memorial Fund, but I follow its fortunes with close and affectionate interest. My first point is one which I can make probably better than anyone else. It is that during the first 14 years of its existence—I was chairman for 12 of them—the National Heritage Memorial Fund, with a staff of only seven, managed to achieve a very great deal. It was able to do that for two reasons. The first was that it received marvellous support from Her Majesty's Government. The second was that once the Government had provided it with adequate resources, they allowed it to get on with the job, almost entirely without interference.

Things are different now with the lottery money. Within a very short space of time the fund has had to increase its staff from seven to 27. Because of all the money that is coming in, the fund has inevitably come under much more bureaucratic control. For the fund, that experience has been somewhat traumatic. In my opinion, it has come through it extremely well.

Let me say this to Her Majesty's Government: the fund has had an excellent and imaginative chairman in the noble Lord, Lord Rothschild; a body of wise and experienced trustees, of which the noble Lord, Lord Crathorne, who is to speak later, is one; and a loyal and devoted staff, under the able and understanding control of its director, Miss Georgina Nayler, who has been with the fund for over 12 years. It is a thoroughly good outfit, so please, please, allow it to do its job with the

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minimum of interference. I can assure the House that that, and that alone, is the road to success. Let the fund manage itself.

The noble Lord, Lord Palmer, is to be warmly congratulated on his Motion. I share his concern for the architectural heritage. However, the question of whether the National Heritage Memorial Fund should contribute to private persons, in whose hands so much of the architectural heritage lies, is not easy. That is my second point. At present, the fund, which is still governed by the National Heritage Act 1980, is forbidden to give money to private persons. The law can be changed but no change will make the matter simple.

Perhaps I may give only one of several reasons for that. The lottery money is unusual stuff to be used in support of the arts and the heritage. In ancient days, the arts were supported by rich patrons. They built the houses and collected the pictures. Alas, there are few of them left and as a result the job has had to be taken over by the Government—who have created the National Heritage Memorial Fund and the Arts Council—and by such splendid bodies as the National Trust.

Possibly for the first time in history, the heritage will be sustained by Peter's pence; it is to be sustained by the money unsuccessfully invested in the lottery game for the greater part by poor people. Those poor people will see their lost money spent without their agreement. That means that the National Heritage Memorial Fund must be not less but more careful on how it spends its money.

I see that I have reached the end of my time and I shall make only one final comment. I ask the Government, please to restore the funds of the National Heritage Memorial Fund. It is the only part of the outfit that is a memorial. Do not destroy it.

8.3 p.m.

Lord Montagu of Beaulieu: My Lords, your Lordships will know that over the past 40 years I have been involved with historic buildings; first, as an owner trying to save his own home, then as the founder President of the Historic Houses Association, and latterly for eight-and-a-half years as the first chairman of English Heritage.

Tonight, however, I wish to restrict my remarks to those national resources which are at present allocated to conserve our built heritage, specifically for the private sector. I make no apology in referring to the problems raised by the National Lottery.

First, however, I should like briefly to remind the House that the post-war Labour Government set up a committee under Sir Ernest Gowers who recommended the principle of grant-aiding houses in need. Consequently, under strict Treasury rules, the first grants were offered in 1953.

Over the years, successive governments of every political party have accepted the important principle that houses left in private hands were often better and more cheaply preserved for the future than if they became a burden on the state. This policy, which was administered for more than 30 years with the assistance of the Historic Buildings Council, can be counted a great success story in the world of conservation.

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Over the past 40 years, very few important houses have not benefited and those denied have usually been because the owner was disinclined to disclose his financial assets or refused public access. The very large majority of private owners have done the nation proud.

They have conserved their houses by sacrificing their privacy and becoming major players in attracting tourists, especially from overseas. They were specifically encouraged by government to follow this policy of accepting grants, carrying out repairs and opening up. It was certainly not done for profit.

Now, in the 1990s, I fear that this successful partnership is in danger of collapsing. Since 1953 the total value of grants in real terms fell because of more candidates such as churches, conservation areas and industrial archaeology, not forgetting the National Trust, which made increasing claims as their portfolio increased and their historic endowments proved inadequate.

I regret that during my time as chairman of English Heritage I reluctantly accepted the necessity of grants to private owners becoming a smaller proportion of the whole, although their share never dropped under 25 per cent. of total grants available and several houses, both private and National Trust, received individual grants of over £1 million during my time in office.

No grant, however big, is going to secure a building for ever. Maintaining an historic building permanently means continual inspection and repair. Ever-rising costs are going to make future maintenance increasingly difficult.

So where is the money going to come from? The public believed, as indeed did many senior members of the Government and Members of Parliament, that the National Lottery funds were going to make a great contribution, with eventually one-quarter of the proceeds devoted to all heritage projects. How mistaken they were! Due either to legislative error or misguided Treasury influence, the largest majority of buildings—those in private hands, the most deserving and most in need—have been excluded.

I say "deserving" because private owners, unlike the National Trust or local authorities, have to pay inheritance tax, income tax and all other taxes. They normally have to produce 60 per cent. of the cost of repairs, thus entailing the selling of assets or family heirlooms, or varying family trusts.

How has this inequitable situation come about? It is certainly not the fault of the noble Lord, Lord Rothschild, whose maiden speech I much enjoyed. When the National Heritage Memorial Fund was set up it was rightly laid down that funds should only go to charities or for the public benefit. Unfortunately, when the National Heritage Memorial Fund was given authority to administer heritage funds emanating from the National Lottery, it can only do so under its existing rules.

Thus, there is a clear conflict of criteria as to how English Heritage grants and heritage lottery fund grants are to be allocated. We further hear the rather strange principle being propounded that the private sector must

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continue to be discriminated against because public opinion would never accept lottery money being given to private owners for repairs to their historic houses.

What nonsense! The public have accepted that many millions of pounds of their taxes have been used for such purposes for over 40 years and this has created great benefit to the community. Therefore, one would expect that the public would be even more content for lottery money to be used in such a way, as long as the grants were properly supervised.

I have no doubt that we need a revision of the National Heritage Act to give the National Heritage Memorial Fund flexibility to authorise the funding of any building that it sees fit. We have total confidence in the fund doing that. Forcing owners to form new charitable trusts is no way out and it may be legally impossible. Over the past years owners have been encouraged to set up maintenance funds, and adjustments can be made, as the noble Lord, Lord Palmer, said. Could not these maintenance funds, if irrevocably attached to the house as an endowment, be eligible for grants out of lottery funds? In other words, lottery money would be used to help create permanent endowments.

In the meantime, perhaps my noble friend will discuss with my successor at English Heritage whether there is any possibility of increasing the proportion of grants allocated to the private sector without inequity to other types of applicants or problems with the principle of additionality.

To sum up, I believe that the part played by private owners in conserving their historic houses and buildings is one of which we can be proud. The future is less clear and there is a danger that some may give up the unequal struggle.

One is forever hearing well-deserved tributes to the vital part that private owners play in the conservation and presentation of our heritage and we will no doubt hear them again tonight. But a long-term denial of a level playing field for the lottery money is a slap in the face to those who have for many years made many sacrifices.

There cannot, of course, be a built-in right for anyone to obtain grants, which must always remain discretionary, but discrimination should stop and fairness must be the aim for the future.

8.10 p.m.

Lord Chorley: My Lords, with a ration of six minutes, I shall restrict my remarks to the field of heritage. First, I should like to say something about our two main funding bodies—English Heritage and the National Heritage Memorial Fund.

I speak as chairman of the National Trust. We have a close and excellent relationship with both those bodies. It is a relationship that I should describe as being one of partnership. For example, as part of English Heritage's new policy, we have taken on from it 17 of its guardianship properties where that has made sound management sense.

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With regard to repair grants, we have been severely rationed to an annual lump sum, although it is fair to say that we have had help in exceptional circumstances. I acknowledge the help which the noble Lord, Lord Montagu, gave us during his term as chairman of English Heritage. English Heritage's problem has been the restriction of its own funding from government but, again, it is well to recognise the way in which Jocelyn Stevens has managed to free up some extra money for grants as a result of efficiency savings.

The National Heritage Memorial Fund, under the truly imaginative lead of my noble friend Lord Charteris and now under the leadership of my noble friend Lord Rothschild, has been one of the most resounding successes of the 1980s and 1990s. I add my congratulations to the noble Lord on his outstanding maiden speech. His knowledge and advice will be very much in demand in your Lordships' House. He made some kind remarks about the National Trust and I take this opportunity to make some kind remarks about him and his family. Indeed, I congratulate him on the renovation of Waddesdon, which was triumphantly opened, as your Lordships will know, last weekend. In case the Minister thinks that anyone can do a Rothschild, I should tell him that there are not many who have my noble friend's capability and capacity to do what has been achieved at Waddesdon.

I can think of no other organisation with its scale of responsibilities which is as economical in its overheads and lack of red tape as the NHMF has been. I echo strongly what my noble friend Lord Charteris said in that regard. It has a total staff of a mere half dozen, mostly girls. So wise has been the investment of its funds that I believe it has been able to distribute more in grants than it has received from the Government. I see that my noble friend Lord Charteris nods.

The noble Lord, Lord Rothschild, referred to the huge range of projects and bodies which have been helped. With regard to the National Trust, none of the major properties that we have taken on in the past 40 years would have been possible without the NHMF's generous help. Now of course it is taking on the much larger role of distributing the lottery money. Again, I echo what my noble friend Lord Charteris said. I hope that it can remain as unbureaucratic while retaining its brilliant flair. I ask the Government not to interfere with a real success story. That will be quite a challenge for both sides, I suspect.

I turn now to the problems of the typical private owner of historic buildings. It is an area to which the Government need to pay particular attention. That is where the pressure lies. Owners have obligations which go with listing. Those obligations include criminal sanctions. The private owner has to pay VAT. Originally, that was set at 8 per cent., which was perhaps bearable; now it is set at a swingeing 17.5 per cent. The private owner is rarely in a position to cover the VAT by set-off, as can the owner of a larger house with a higher throughput of income. Nor is it likely to be sensible for a private owner to be organised with charitable status. Therefore, he will have no access to lottery money or fiscal advantages. Furthermore, the maintenance fund route has been so hedged around with trip wires as to be,

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in most cases, impracticable. In that regard, I warmly support the wise and sensible remarks of my noble friend Lord Palmer who initiated the debate.

The only source of support for preserving what is, after all, one of the most important parts of our national heritage is English Heritage. As we have seen, its funds are severely limited. Grants were originally set at 50 per cent. and are now only 40 per cent. Those are two issues which the Government need to address.

I, and for that matter, the trust believe that our heritage is best preserved by families—in fact, by plurality of ownership. The role of the trust should be only that of a long-stop should all else fail. Therefore, a healthy private sector is enormously important to us and to the nation.

I began by saying that the trust's relationship with the government agencies is one of partnership and how valuable that is. I should like to see the Government approach their relationship with the private sector in the same vein; namely, a partnership based on good economics and a fair contribution from both sides for the benefit of our great national heritage. I suggest that all that would be a fruitful subject for the Green Paper promised by the Secretary of State in a recent speech, which I warmly welcome.

8.16 p.m.

Viscount Chandos: My Lords, I thank the noble Lord, Lord Palmer, for his particularly timely introduction of this debate. I pay tribute to the eloquence and balance of his arguments and to those of the distinguished maiden speakers.

The timeliness of the debate relates to an interest that I should declare. For the past few months I have been a member of a working group pursuing the planned redevelopment of the English National Opera's home at the London Coliseum. This morning, at the same time as announcing next season's programme, ENO was able to disclose a vibrant start to this season with paid attendances up 31 per cent. over the equivalent period last year and a return to surplus in the financial year just ended.

The debate provides the opportunity to pay tribute to a Member of your Lordships' House—the noble Earl, Lord Harewood—whose retirement was also announced today after half a lifetime's remarkable contribution to ENO's development of an international reputation, first as general director and latterly as chairman.

I am grateful for the opportunity to raise the subject of ENO and the provision of opera and dance in London at this point since the noble Earl, Lord Gowrie, and his colleagues on the Arts Council have been wrestling with the many difficult issues relating to that subject. The prospects of restoring Frank Matcham's great theatre, the London Coliseum, and potentially three other beautiful and important London theatres should be seen as a significant initiative in terms of our architectural heritage over and above the enhanced provision of opera and dance in the capital.

While I make no apologies for devoting the short time available to one specific subject, I believe that it also highlights one or two important and more general

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principles in relation to the allocation of the proceeds of the National Lottery and to the process by which that takes place.

The financial stringency of recent years can only have exacerbated the pent-up demand of arts organisations for capital funding. Therefore, it was inevitable that once the National Lottery came into operation and the Arts Council and other distributing bodies could count on their share of the proceeds a traffic jam of monumental proportions would develop among potential applicants. The Arts Council sought advice on, among other matters, the particular problems which that presented for the provision of opera and dance in London through the commissioning of the Lyric Theatre Review and a committee chaired by Mr. Dennis Stevenson. In setting out a wide range of options, in some cases very hypothetical, and in considering some of the even broader issues behind the demand for large-scale opera and dance in London, the review was perhaps misunderstood. It certainly caused a degree of anxiety among a number of the Arts Council's clients, including ENO. However, it was an important step in trying to address the urgent needs of both ENO and the Royal Opera House for the redevelopment of their currently inefficient and potentially dangerous homes and, at the same time, provide a venue or network of venues for large and medium-sized dance companies.

The review and the responses it elicited have been of substantial value to the Arts Council in its continued consideration of what projects it might support and how those might be co-ordinated. Before that consideration is completed, there is therefore an opportunity for your Lordships' House to express its views. While the Department of National Heritage will understandably not wish to usurp the role of the Arts Council, I should be very pleased if the Minister felt able to comment on any of the issues that I or other noble Lords have raised on the subject.

The principle that lottery funds must be matched, at least in some proportion, by private sector funding, is an important test of each project's underlying support and appeal. On the other hand, the introduction of that admittedly specialised market test cannot easily be reconciled with an unduly interventionist approach by the Arts Council even where, for example, it has a continuing role in funding the company or companies using the theatres being redeveloped. It would be invidious, surely, to set timetables which favoured unnaturally one project against another in their appeal for private donations.

Therefore, although it is understandable that the preoccupation of the Arts Council has been to avoid the simultaneous closure of both the Coliseum and the Royal Opera House, a degree of overlap, if necessary, especially in the context of contemporary homes in London for both companies, may well be preferable to an unnatural and expensive delay in one project or the other.

A critical step in achieving the best possible sequence of restoration for both the Coliseum and the Royal Opera House may be the earliest possible redevelopment of Sadlers Wells Theatre—a cause which, in its own

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right, merits the strongest possible support from lottery funding in the light of the historic role of Sadlers Wells in British opera and dance.

The imaginative decision taken by the Sadlers Wells board to seek Arts Council, lottery and other support for redevelopment commencing early in 1996 therefore deserves particularly positive consideration, both on its own merits and as a key to unlocking the potential logjam for the relocation of ENO and the ROH.

Finally, the lottery Act requires a clear linkage as regards the source of the funding generated by the public support for the National Lottery and the types of causes that benefit from such funds, as the noble Lord, Lord Rothschild, made clear. None of your Lordships who attend performances of ENO can fail to be struck by the widespread and deep support for the company, with the audience drawn from all walks of life. The average lottery punter who spends around £2 a week on lottery tickets could attend 10 performances per year in cheaper seats at ENO for an equal amount of money, or attend at least four performances a year at the average price of seats. It is not a cause whose supporters and beneficiaries are distant from the providers of the funding.

8.22 p.m.

Lord Crathorne: My Lords, we are all grateful to the noble Lord, Lord Palmer, for introducing today's debate which has attracted three maiden speakers who have all made memorable contributions. I should particularly like to congratulate my chairman at the National Heritage Memorial Fund, the noble Lord, Lord Rothschild, on his eloquent and statesman-like speech. As a trustee of NHMF, I have had the pleasure and privilege of serving under the noble Lord's chairmanship. In saying that he is a worthy successor to the noble Lord, Lord Charteris, I cannot give higher praise.

The noble Lord, Lord Rothschild, spoke about his plans and hopes for the lottery. I should like to touch upon one or two points that he did not have time to cover. First, there is additionality, which has already been mentioned in the debate. As noble Lords know, it means that NHMF has to ensure that lottery money is not used as a substitute for government funding but is additional money bringing additional benefits to projects. Now that we actually have real applications to look at and have had a chance to consult widely, we are getting a clearer picture of what we can and cannot fund.

One of the areas where we have to be particularly careful is in our relationship from a grant-giving point of view with English Heritage. However, it is clear that there is a wide range of projects which are not eligible or which are not a stated priority for English Heritage funds; for example, Grade II buildings, interior works to decorative schemes, fittings and machinery, works to gardens and parks and settings of historic buildings and works to monuments, cemeteries and graveyards. We believe that we can complement English Heritage funding and avoid substituting for it. It is clearly important that we should not be seen to be providing exactly the same type of support but bringing about additional benefits to a project.

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Within our statutory framework, we believe that we shall be able to assist funding projects which are in principle eligible for English Heritage funding in the following circumstances: when the project requires such a massive scale of funds that it would swamp available English Heritage grants; when a major buildings complex is involved where English Heritage has made a grant to an early phase or phases but cannot offer sufficient resources to ensure completion within a reasonable time span; and when English Heritage has received many worthy applications under a particular grant scheme and simply cannot deal with them all —for example, conservation area partnerships or grants for historic gardens and parks and where there is no prospect in the future for English Heritage increasing the resources available to a particular scheme.

We shall of course be dealing with additionality on a case-by-case basis. We hope that it will become clear what we can and cannot do. If it turns out that we are too restricted, I hope that the Government will be happy to take another look at the matter in the future.

The noble Lord, Lord Palmer, raised, as indeed did other speakers, the problem of private owners not benefiting from the lottery. In that matter, the National Heritage Act 1980 and the heritage Act 1993 are similar. In 1993, many noble Lords attempted to introduce a greater degree of flexibility with regard to private owners and NHMF, which would have been desirable. Although NHMF is restricted in the ways that it can help, there are circumstances where the fund can assist, and these have been mentioned; for example, if ownership is transferred to a charitable trust, as has been the case with Burton Constable and Thirlestane with great success. I believe that this is a serious option.

The other way that we can help is by making use of the in situ provision which enables us to acquire works which form an important part of a collection in a house with public access. The work of art can remain in situ, with ownership passing to a museum or an independent charitable trust. It is clearly helpful if the funds created are deployed for the benefit of the historic house, although that is not a hard and fast rule.

I should just like to mention one further point which is frequently raised at executive committee meetings of the Georgian Group, of which I am chairman. It is the old chestnut which has been touched on today by several speakers; namely, VAT on repairs but no VAT on alterations to listed buildings. Rather than repeat what has already been said, I thought that I would tell noble Lords about a friend of mine who was able to avoid VAT by taking the VAT man around a rundown listed cottage that he owned.

The VAT man explained to my friend that the criteria used was simply that, if a member of the public walking around a house, either inside or outside, was able to see that alterations had been made, then the cost of such alterations were free of VAT. In that particular case my friend walked around the property with the VAT man and agreed to increase the floor levels on the ground floor and the ceiling level on the upper floor. That meant that he avoided VAT. However, when it came to the walls, on which my friend had to carry out a particularly large amount of work by way of damp proofing and dry

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lining, VAT was payable as the walls ended up looking the same after the work as before. It is quite a strange situation. It cannot be right that rules on VAT encourage owners of listed buildings to alter them unnecessarily.

Finally, I should just like to say how much I am looking forward to hearing the response to today's very interesting debate from my noble friend on the Front Bench.

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