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Building our Industrial Strategy: consultation response

11 April 2017

Introduction

The Heritage Alliance is England’s biggest coalition of heritage interests, bringing together over 100 mainly national organisations supported by over 7 million members, friends, volunteers, trustees and staff. From historic houses and museums to canals, historic vehicles and steam railways, the Heritage Alliance’s diverse membership owns, manages and cares for the vast majority of England’s historic environment. The Heritage Alliance welcomes this opportunity to respond to the Government’s consultation on its ‘Building our Industrial Strategy’ Green Paper. The Heritage Alliance has been invited to work with DCMS, Historic England and others to develop a heritage specific sector deal. Heritage is important to the Industrial Strategy as:

• The historic environment is geographically diverse, spreading the benefits of skills, jobs,

investment and engagement across the whole UK in both rural and urban environments;

• Heritage its vital to creating a sense of place with social cohesion, rootedness and identity;

• Heritage drives regeneration and productivity in a way that embraces character and

authenticity; and

• Heritage creates economic value through the export of skills and products as well as through

its contribution to inbound tourism.

England’s heritage, and especially our pioneering industrial heritage, should inspire our future success

post Brexit. A strong heritage identity is a catalyst for investment and tourism. Heritage has provided

a successful model for regeneration and development across the country whether at Liverpool’s

Albert Docks, Manchester’s Northern Quarter, or London’s Tate Modern. Heritage is integral to the

nation’s identity and vital to achieving the industrial strategy’s aims and should be woven into all

sector specific deals.

Heritage is itself an important economic sector. It is a source of growth and prosperity and a key

driver of England’s attractiveness as a destination for investment and tourism. Historic England

research in 2016 found that heritage directly generated £10 billion in gross value added (GVA) in

England, which increases to £21.7 billion if indirect and induced effects are considered. This is

equivalent to 2% of national GVA. The heritage sector creates 328,700 jobs or 1% of total national

employment when indirect and induced employment is included. 99.3% of England’s population live

within 1 mile of a designated heritage asset, but it is how those assets are used that gives a place a

competitive advantage.

A successful Industrial Strategy must build on our cities’ and regions’ rich heritage to create the unique places in which people want to live, work, visit and invest. This will create a country where, as the Prime Minister says in her foreword, ‘wealth and opportunity are spread evenly across every community’. This consultation response is an early indication of our thinking which will be further developed in our work on a heritage sector specific deal.

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Response

1. Does this document identify the right areas of focus: extending our strengths; closing the gaps; and

making the UK one of the most competitive places to start or grow a business?

These are largely the right areas of focus. The heritage sector is one of the UK’s great strengths

whether in terms of attracting tourism, international ‘brand recognition’ or world leading heritage

sector skills and expertise. The Alliance was pleased to find that the Midlands Engine Strategy notes

the importance of UNESCO World Heritage sites in creating successful places which ‘attract dynamic,

skilled workers who can drive local productivity and growth’. Similarly, the Northern Powerhouse

Strategy states that work to boost the region is ‘not starting from scratch. As the birthplace of the

industrial revolution, the North has a long and rich history of innovation and entrepreneurship’.

The Industrial Strategy should make clear that it is heritage in its broadest sense, not just cultural

institutions, that attract workers and businesses to a place. For example, the reinternment of Richard

III in Leicester Cathedral has reportedly seen visitor numbers grow by more than 400%1 -

demonstrating the power of heritage to spur investment and tourism.

The Industrial Strategy should weigh a desire for growth against environmental and social

considerations, which are often intertwined with the historic environment.

The Government’s plan to ‘extend our strengths’ should not mean a focus on only the UK’s very

largest sectors. To truly transform the whole economy the Government must also be willing to make

changes in sectors where return on investment may be lower. The heritage sector is galvanised to

respond creatively to opportunities in the Industrial Strategy to create prosperous communities for

the future.

2. Are the ten pillars suggested the right ones to tackle low productivity and unbalanced growth? If not,

which areas are missing?

The ten pillars could be slightly changed to better achieve these goals. ‘Upgrading infrastructure’

could be changed to ‘creating better places’. Infrastructure is not just transport and energy, but

having the buildings needed to house businesses and their workers. Heritage buildings are well placed

for this. There is a strong narrative in re-using the buildings of the industrial revolution to provide

flexible working space for today’s business. This can be especially useful when marketing investment

opportunities internationally.

High concentrations of heritage buildings are often found at the centre of towns and cities. Ensuring

that the occupancy of such buildings is maximised, whether as homes or offices, could help cut

congestion and commutes by reducing travelling distances. This will help make places more attractive

both visually as buildings are cared for and in use, and logistically, as commuting times and congestion

fall.

HLF funded research ‘New ideas need old buildings’ made a number of important findings2:

1 http://www.leicestermercury.co.uk/leicester-cathedral-visitor-numbers-rocket-by-414-per-cent-since-richard-iii-s-reburial/story-29819734-detail/story.html 2 https://www.hlf.org.uk/file/10817/download?token=rlnYHnxZOL4UmqP3xUKy-MU0Ix9hODw2Giyffq5x180

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• Listed buildings are highly attractive to entrepreneurs and start-up businesses in the creative

and cultural sector. Creative industry businesses based in the historic buildings surveyed for

the research included a very high proportion of start-ups – with over 60% established in the

last three years;

• businesses based in listed buildings are highly productive and make an estimated annual

contribution to UK GDP of £47billion and employ approximately 1.4 million people. This

represents 3.5% of the UK’s ‘gross value added’ (GVA) and 5% of total UK employment. Not

all historic buildings are listed – adding non-listed buildings would make these figures even

higher;

• In the places surveyed, a commercial business based in a listed building generates an average

of £308,000 in GVA per year – 4.4% higher than the average for all commercial businesses

across the UK. Rather than being a drag on productivity, listed buildings attract businesses in

the most productive sectors of the economy; and

• The ‘heritage premium’ associated with the occupation of these listed buildings – the extra

GVA they generate over and above the amount generated by an equivalent number of

businesses in non-listed buildings – is £13,000 per business per year.

These findings show the importance of focusing on heritage as part of the industrial strategy and why

it should be considered a key component of business infrastructure.

Cultural Heritage Counts for Europe highlights the role that industrial heritage can play in

transforming whole neighbourhoods. It notes that the Tate Modern became the third most visited

attraction in just one year and an attraction anchor on the South Bank, drawing people to a previously

undiscovered area. £50- £70 million revenue could be directly attributed to the impact of the Tate

Modern itself.

The Government should consider creating more Heritage Action Zones3, which use neglected places’

heritage to achieve sustainable growth. Could the higher VAT rate for restoration work as opposed to

new build be addressed within Heritage Action Zones? Additionally, the Government should consider

if Enterprise Zones could also become Heritage Action Zones to maximise positive outcomes for local

areas.

The ‘Developing skills’ pillar of the Industrial Strategy might be better rephrased as ‘developing

people’ to allow a slightly wider remit to address how changes to working practices can improve

productivity.

Research has shown that flexible working can help to drive productivity gains4. This is something the

Alliance considers important and supports. However, there is more that Government can do to

support smaller/ charitable organisations to offer flexible working. Promotion of flexible and remote

working can help spread jobs around the country. This opens the possibility of remote working hubs

in heritage buildings e.g. libraries – finding new uses for historic buildings in towns where jobs might

3 https://historicengland.org.uk/services-skills/heritage-action-zones/ 4 http://www2.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/02/09/flexible-working-boosts-profits-and-productivity-say-majority-of-employers.aspx

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not be physically located but where workers can take advantage of lower living costs. This in turn will

support local services industries such as cafes etc.

3. Are the right central Government and local institutions in place to deliver an effective industrial

strategy? If not, how should they be reformed? Are the types of measures to strengthen local

institutions set out here and below the right ones?

The heritage sector must deal with at least two Government departments, and for some areas of

heritage, many departments. DCMS is responsible for heritage yet DCLG is responsible for planning.

The protection of England’s heritage is dependent on a planning system which understands the value

of heritage to the wider of economy in terms of creating places which maintain a unique identity to

attract tourism and investment. Heritage protection could be improved by creating much stronger

mechanisms for cross-departmental working and collaboration.

Similarly, there should be better mechanisms for the sector to work with LEPs to ensure that they

understand the value of heritage. Heritage expertise on LEPs may bring new thinking and will help

reduce the risk of later conflict - ultimately reducing the costs of development.

To properly ensure that heritage is reflected in planning policy the Government must ensure that

local authority planning departments are properly resourced and have sufficient conservation and

archaeological expertise. Having this expertise available can help avoid risk and delays for developers,

and ensure that any development carried out is sensitive to / compliments the existing historic

environment.

The Heritage Alliance attended a DCLG led community assets round table at which we identified

several legal barriers preventing communities bringing unused heritage buildings back into use. These

include issues such as a requirement that an asset must have been used by the community in the

‘recent past’. This means that no action can be taken in respect of buildings which have been out of

use for extended periods – the type of buildings where intervention is needed most. Key local

structures left empty and decaying will act as a brake on investment and an area’s development. They

also represent lost space which could be productively used by business. We would like to see action

to remove the legal difficulties which prevent local communities bringing key heritage buildings back

into use.

Government should also consider how Business Improvement Districts (BIDs) can be developed with a

focus on using heritage to improve streetscape and amenity value to drive investment and tourism.

Heritage Counts 2015 looked at BIDs and heritage and found, among other things that 89% of

respondents consider heritage to be important to their image and identity5.

There are also concerns that the lack of local authority resources has led to the closure of local

museums. Perhaps the highest profile example is the closure of the Grade I-listed last surviving 19th

Century steam-powered weaving mill6. As acknowledged in the Green Paper such cultural institutions

increase the attractiveness of an area to live and invest so closing them may cause wider harm to

local communities. The Government should ensure finance is available. The National Trust’s Quarry

Bank, shows how industrial heritage can be a successful tourist attraction showing how a complete

industrial community lived. Similarly, Cromford Mills, brought to life by impressive digital recreations,

5 https://content.historicengland.org.uk/content/heritage-counts/pub/2016/heritage-and-place-branding.pdf 6http://www.lancashiretelegraph.co.uk/news/15208883.Plans_to_reopen_historic_Lancashire_mills_thrown_into_fresh_doubt/

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recently won the 2017 EU prize for cultural heritage7 showing that our industrial heritage has

international reach.

The Alliance recently responded8 to a consultation on discretionary business rate relief noting how

cultural institutions such as museums had been significantly affected by their business rates

revaluation, in part due to the Valuation Office treating their trading arms separately. Revenue raised

in charities’ trading arms in cafes and shops is used to cross subsidise their charitable aims. Therefore,

we urge the Government to provide clarity to the Valuation Office to ensure that charities do not lose

vital revenue to increased business rates. This could in part be addressed by bringing charities in line

with the situation for education, Healthcare and the Ministry of Defence which have a lower

decaptialisation rate9 applied to valuations under the contractors method.

As mentioned later Statutory HERs and digital planning improvements could greatly improve local

decision making for the historic environment.

These issues will be further developed in our sector specific deal.

4. Are there important lessons we can learn from the industrial policies of other countries which are not

reflected in these ten pillars?

As we will discuss below, the VAT treatment of the historic environment is a key issue for the sector.

This Isle of Man case study highlights the benefits of equalising VAT treatment of old and new

buildings.

Case Study: The Isle of Man

Following the EU Council Directive 1999/85/EC, which permitted the reduction of VAT to 5% on the

‘repair and maintenance of private dwellings’ on a temporary basis, the Isle of Man submitted to the

EU a proposal for a ‘Labour Intensive Services [LIS] experiment’, which was adopted as statutory by

the Crown Dependency on 1st January 2000. This experiment meant that most domestic renovation

and repair work, on which VAT of 17.5% was applied, would be charged at 5%. The Statutory

Document (104/00) adopted by the Isle of Man (came into effect in 2002) which altered its Value

Added Tax Act (1996) interpreted “renovation and repair of private dwellings” as buildings referring

to dwellings, buildings solely or primarily used for a relevant residential purpose, buildings belonging

to a charity and ecclesiastical buildings.

The evaluation report on the experiment conducted in the Isle of Man illustrates that, whereas Isle of

Man policy had favoured green field site development, the measure ‘appeared to address the

problems of renovation, rejuvenation and regeneration of existing property in built up areas’. The

report classed the VAT reduction as a ‘huge success’, with 96% of the traders from the evaluation

survey (survey of 7% of traders who had reduced VAT under experiment) claiming that it had

increased business, while 40% of respondents said customers were having work done they would not

normally have done.

7 https://www.cromfordmills.org.uk/news/building-17-wins-2017-eu-prize-cultural-heritage-europa-nostra-award 8 http://www.theheritagealliance.org.uk/tha-website/wp-content/uploads/2017/04/Heritage-Alliance-business-rates-consultation-response-1.pdf 9https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/518696/decapitalisation_rate_government_response.pdf

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The report concluded: “Whilst not all the data sets are available, it is apparent from the VAT details,

the trade survey, other Government Departments input and general hearsay and discussion with the

public that, from the Isle of Man’s perspective, the experiment has been successful in achieving its

and the EU’s aims of creating employment and reducing the size of the shadow economy. In addition,

there have been other benefits to the Government and people of the Island, including improvements

to the existing housing stock and reduced pressure on green field site developments. There has been

far less pressure on builders to cut corners, reduce prices and work outside the system - the knock-on

effect of this, according to the Employer’s Federation is happier customers and staff, fewer

complaints and staff movements, all of which contribute to improved profitability. All concerned have

expressed the desire to continue with the regime and for it to become a permanent feature.”

Conversely, lessons can be drawn from China which suffers from environmental problems due to

unfettered industrial expansion. The aim of driving growth around the country through the Industrial

Strategy needs to be balanced with environmental and social considerations.

5. What should be the priority areas for science, research and innovation investment?

Heritage science is the application of science and technology to cultural heritage to improve

understanding, management and engagement. Heritage science research and innovation is carried

out in research institutions, universities and industry.

Heritage science is a priority area for investment in research and innovation. It is an area in which the

UK is world-leading and, as with many other sectors of the economy, the heritage economy is

dependent on investment in science, research and innovation to grow and prosper.

The Government should explore buying into Horizon 2020 and its successors post EU withdrawal to

enable continuing access for UK research institutions to EU funded transnational projects. There is

also the need to develop capability/infrastructure where the UK has, to date, depended on access to

European equipment.

Concerns have been raised over the lack of European Research Council (ERC) funding for archaeology

post Brexit. Matthew Collins (Professor of archaeology at York University and Niels Bohr professor at

the University of Copenhagen) reported10 that the total contribution from the ERC to UK

archaeological research was over £41.5 million, exceeding the £35 million from Research Councils UK.

The loss of ERC funding, if not replaced, could devastate the archaeological academic community.

6. Which challenge areas should the Industrial Challenge Strategy Fund focus on to drive maximum

economic impact?

The Alliance is not responding to this question.

7. What else can the UK do to create an environment that supports the commercialisation of ideas?

The proposals in the Green Paper for increased R&D funding to expand Higher Innovation Funding

and Knowledge Transfer Partnerships are welcome, as is the suggestion that funding streams could be

created that could be accessed by clusters that are led by business or universities. In each case, it is

important that these funding streams are accessible by both large and small organisations.

8. How can we best support the next generation of research leaders and entrepreneurs?

10 Page 6 British Archaeology - May/June 2017

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Cross departmental Government working would help heritage science. Even in those departments

leading on heritage science (DCMS, BEIS) there is separation, disconnect and a tendency to work

independently. We refer to the consultation paper on the new sports strategy as a good example of

how Government departments can work together on strategy development and subsequently policy.

9. How can we best support research and innovation strengths in local areas?

The Alliance is not responding to this question.

10. What more can we do to improve basic skills? How can we make a success of the new transition

year? Should we change the way that those resitting basic qualifications study, to focus more on basic

skills excellence?

The Heritage Alliance welcomes the Government’s commitment in its digital strategy ‘that adults who

lack core digital skills can access specified basic digital skills training free of charge, where it is made

available by providers as part of the publicly-funded adult education offer’. This could be of great

importance to the heritage sector given that many of its volunteers are older and may lack the skills

needed to fully exploit the digital opportunities which will enable the sector to thrive in future. The

Government must ensure that such opportunities are clearly communicated to smaller organisations

so that they can be taken advantage of. These training opportunities should be available in the

evenings and on weekends so that those already in work can take part. As much of the sector relies

on volunteers, the Government should consider how it can support the sector to provide training

more generally.

The heritage sector already plays an important role in inspiring the next generation to consider

careers in STEM subjects by show-casing the UK’s rich heritage in science and engineering and linking

this to opportunities for careers in these areas today. The value industry places on this can be seen in

the partnerships that already exist. With further investment, much more could be done to use the

UK’s rich industrial heritage resources to help address the nationally recognised skills shortage in

STEM. The Black Country Living Museum regularly provides school visits linked to design, technology

and chemistry based on its engineering and manufacturing collections, and works in partnership with

Royal Society of Chemistry to put on a Chemistry at Work event, showing how chemistry studied at

school is used in real life situations. Brooklands Museum, located on the site of one of Europe’s most

significant aviation manufacturing complexes, maintains strong relationships with the aviation

industry and works with a local college to provide accredited learning in aviation engineering. Its

vision is to inspire the next generation of engineers and designers through the stories of what was

created at the Brooklands site. The ss Great Britain Trust will soon be opening the Being Brunel

museum which is part of its partnership with the University of Bristol and will inspire the innovators of

the future as well as preserving Brunel’s legacy.

However, the heritage sector is broad, covering both sciences and the arts, and requires continued

supply of skills in both areas. Arts and humanities courses provide the basic skills that underpin many

aspects of the cultural industries and the heritage sector and should not be neglected.

The Government states that ‘Raising skill levels is an important way to drive higher incomes over the long term’. However, this does not automatically follow. The heritage sector, and archaeology in particular, is a highly skilled sector with comparatively poor wages and conditions. In archaeology, this has led to a low retention rate, which is probably the most obvious area of wasting resources which go into training individuals who then leave the profession. Creating new vocational routes could be one way to address this. Heritage Alliance member CIfA is working to

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enhance training schemes run by archaeological contractors and are looking to develop other routes of entry, continuing to promote the NVQ in Archaeological Practice.

11. Do you agree with the different elements of the vision for the new technical education system set

out here? Are there further lessons from other countries’ systems?

We welcome the Government’s statement on page 42 of the Green Paper that it will ‘explore ways to

attract more industry specialists’ to increase the quality of technical education. This may be an

effective way to ensure that the heritage sector has a supply of the skills it needs post -Brexit when

there is anticipated to be a shortfall as set out below.

Heritage Alliance member, the Federation of Historic Vehicle Clubs, has received confirmation from

the Department for Education that they can develop a Heritage Engineering Apprenticeship under the

new Government Trailblazer arrangements. This is a model which should be replicated elsewhere in

the sector. It is important to make the new Apprenticeships Levy is easily understandable and

applicable to small and charitable organisations. The Society for the Protection of Ancient Buildings is

developing a Millwright Training Scheme to ensure that millwrighting skills are not lost. Like all

organisations seeking to assist with skills shortages, Government support will be needed to get new

initiatives of this kind underway.

Heritage Counts 2015 showed that 47% of young people aged 18-24 surveyed said that they are

interested or very interested in their local heritage (Historic England 2015 Exploring English Attitudes

to Historic Places, Yougov Poll). However, there is work to be done to ensure that this enthusiasm

translates into an understanding of careers in the heritage sector. The Alliance looks forward to

seeing how the Government’s forthcoming comprehensive strategy for careers information, advice

and guidance, addresses these issues.

The Alliance welcomes the establishment of the Careers & Enterprise Company’s Enterprise Adviser

Network and would welcome opportunities for the sector to engage with it.

12. How can we make the application process for further education colleges and apprenticeships

clearer and simpler, drawing lessons from the higher education sector?

The Alliance is not responding to this question.

13. What skills shortages do we have or expect to have, in particular sectors or local areas, and how can

we link the skills needs of industry to skills provision by educational institutions in local areas?

The Industrial Strategy must ensure that England has planned for any skills shortages post Brexit. This

is an area of concern for the heritage sector as set out in our Brexit and Heritage Briefing. There are

shortages of some heritage skills and arrangements may be needed to ensure continued access to key

skills. It may be impossible, or very time consuming, to fill current and future shortfalls solely from

within the UK.

Repair and maintenance of historic buildings directly generated £9.7bn in construction sector output

in 2015. Recent ONS statistics suggests about 10% of the UK construction industry labour force is

from outside the UK.

Historic/ traditional (pre-1919) buildings require a labour force with traditional skills. There are

c5.5million traditional buildings in England. The 2012 spend (latest calculated figures) was £3.8billion,

down from £5.3 billion in 2008. Over the last 10 years the skills gap to meet demand has ranged from

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about 85,000 to 110,000, with a significant proportion of the gap related to contractors using

traditional materials.

There is an ageing demographic in the traditional heritage skills workforce meaning that it is likely that

we will continue to need to draw on skilled labour from EU countries. Developing training measures

and apprenticeships within the UK will require both a commitment to investment and time for the

skills to be developed. We will need to create and fund new routes to skills. Diminished focus on arts

subjects in the school curriculum (and the withdrawal of subjects such as archaeology A-level) is

counter-intuitive. One sensible move would be to ensure that all construction training, including that

for architects, has an element relating to traditional buildings given that these make up a sizable

proportion of England’s housing stock – not just listed buildings.

There is a concern that universities are closing archaeology degree programmes (e.g. Birmingham) as these are relatively expensive. This trend should not threaten the ongoing provision of high quality vocational degree programmes. In light of the archaeology skills shortage11 these issues are of real concern and should be considered in a heritage specific sector deal. As mentioned elsewhere skills shortages are not just about a need to train more people, but rather to improve working conditions in the sector, where pay is low comparative to other skilled sectors and conditions are poor. These issues see ‘productivity’ constrained due to the desire for market competitiveness. We welcome the Government’s commitment on page 45 of the Green Paper to work towards a single

authoritative view of the skills gaps faced by the UK now and in the future. The heritage sector would

be keen to work with Government to ensure that this captures demand for heritage skills.

14. How can we enable and encourage people to retrain and upskill throughout their working lives,

particularly in places where industries are changing or declining? Are there particular sectors where this

could be appropriate?

Moves announced in the Budget such as Further Education maintenance loans and Doctorial loan etc.

will help encourage lifelong learning.

However, the thought of incurring debt will be bound to put some people off re-skilling. The

Government should consider what support it can give to small employers/ charities to support staff

training which they may not otherwise be able to afford. As already mentioned the heritage sector

has many older volunteers and it is important to ensure that they have they digital skills to ensure

that the sector can thrive.

15. Are there further actions we could take to support private investment in infrastructure?

The Green paper states ‘Infrastructure supports the other pillars of a modern industrial strategy.’

Ensuring business has access to the buildings it needs should be considered as a type of infrastructure

need. Businesses and productivity will be hampered if businesses cannot find the buildings that they

need. The HLF research referred to at question 2 above shows that creative businesses are especially

attracted to listed buildings.

The Green Paper notes that infrastructure investment can support private investment in house

building. Government should consider how such infrastructure can spur the utilisation of key heritage

sites.

A lack of local authority enforcement of existing heritage protection laws due to limited resources

may be holding back private investment in infrastructure. For example, less local authority resource to

11 https://historicengland.org.uk/whats-new/news/increased-demand-for-archaeologists

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support the owners of heritage assets can result in the built environment slowly degrading, and in

extreme cases, derelict historic buildings. A less attractive built environment will in turn reduce the

appetite for private investment in an area. The Government should consider how local authorities can

be supported to better manage the historic environment.

Investment in heritage buildings can also help improve mental health and by extrapolation -

productivity. This was considered at a recent conference on Health and Heritage held by Alliance

member the Churches Conservation Trust.

These issues will be considered more fully in our sector specific deal.

16. How can local infrastructure needs be incorporated within national UK infrastructure policy most

effectively?

The Heritage Alliance welcomes the commitment on page 58 of the Green Paper to use infrastructure

to support rebalancing. Investment to bring underused heritage assets back into use will have the

twin effect of providing desirable spaces for businesses, and improving the attractiveness of an area.

This will help draw business into these areas to rebalancing the economy.

When planning infrastructure, it is important that archaeology is considered at an early stage to avoid

delays and increased costs.

17. What further actions can we take to improve the performance of infrastructure towards

international benchmarks? How can Government work with industry to ensure we have the skills and

supply chain needed to deliver strategic infrastructure in the UK?

The Heritage Alliance is not answering this question.

18. What are the most important causes of lower rates of fixed capital investment in the UK compared

to other countries, and how can they be addressed?

A key problem for the sector is the difficulty obtaining finance for more difficult heritage projects e.g.

in large former industrial buildings. There is also a lack of support for owners of heritage assets. This

means that landmark heritage buildings can sit empty at the heart of communities. These decaying

sites may discourage private investment in the surrounding area.

Improving funding options for financing development of heritage buildings is a key barrier and one

that should be explored in more detail in our heritage sector specific deal. There are currently very

few incentives for private heritage owners to repair and maintain heritage assets to ensure continued

productive use.

There is a significant amount of untapped productivity within the heritage sector as many heritage

assets can be put into greater productive use. For example, there are currently 1,090 buildings and

structures on Historic England’s Heritage at Risk register. Bridging the funding gap and increasing the

capacity and capability of owners and guardians to respond to needs in a proportionate and timely

manner is a key priority for the heritage sector.

There is evidence to suggest that some developers buy heritage buildings but then fail to do anything

with the site. This may be due to costs being higher than expected and difficulty in obtaining finance.

Alternatively, such developers may be waiting for land value to increase or for the heritage building to

fall into such disrepair that they can argue for its demolition. This means that key heritage sites can

remain decaying at the heart of communities even if there are those who might want to take the site

on. This will discourage further investment in other buildings/businesses in the surrounding area.

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As we have pointed out in our Brexit Briefing12, the European Union contributed over £50 million via

the European Regional Development Fund to act as a catalyst for regeneration and diversification,

spurring on wider investment. The Government must consider how that spending can be replicated to

ensure continued investment in England’s heritage.

19. What are the most important factors which constrain quoted companies and fund managers from

making longer term investment decisions, and how can we best address these factors?

The Heritage Alliance is not answering this question

20. Given public sector investment already accounts for a large share of equity deals in some regions,

how can we best catalyse uptake of equity capital outside the South East?

The Heritage Alliance is not answering this question

21. How can we drive the adoption of new funding opportunities like crowdfunding across the country?

The Heritage Alliance has successfully run the Giving to Heritage programme to inform organisations

within the sector how they can best use opportunities like crowdfunding. This programme was paid

for by HLF funding which only enables it to continue until later this year. The Heritage Alliance would

like to continue improving the skills of the sector via giving to heritage but cannot do so without

additional funding.

Such programmes are vital to spreading funding ideas to the small and medium size organisations

within the sector who are likely to find them most valuable. This is especially important in the

heritage sector which is highly skilled but low paid. With a high number of generalist staff. This

creates numerous barriers – such as being able to pay for further training at commercial rates.

The Government should consider providing funding for our Giving to Heritage Scheme to continue

given its significant and demonstrable positive impact on the sector. Last year’s evaluation of the

scheme found that there was an average of £28,673 made per respondent (who attended a £20

subsidised course) reporting an increase in income from private and corporate sources.

The Heritage Alliance has also worked with the Architectural Heritage Fund to draw all the sources of

funding together into our updated Heritage Funding Directory which enables users to find all relevant

sources of funding. However, this has been updated by volunteers and while we intend to try and get

fund managers to take ownership and update their own entries, this may not happen without

resource.

A small amount of resourcing could be transformative for the sector.

22. What are the barriers faced by those businesses that have the potential to scale-up and achieve

greater growth, and how can we address these barriers? Where are the outstanding examples of

business networks for fast growing firms which we could learn from or spread?

The Green Paper recognises on page 61 that the Government ‘needs to ensure that regulatory frame

works, tax and fiscal incentives support business investment rather than distort markets’.

There is a major barrier to growth for firms working in the heritage sector – the distortion in the

market caused by the difference in VAT rates for firms working on heritage buildings compared to

12 http://www.theheritagealliance.org.uk/tha-website/wp-content/uploads/2017/03/Brexit-and-Heritage-Briefing-1.pdf

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those working on new buildings. Even with this distortion, Heritage Counts research in 2016 showed

that heritage construction output was £9.7 billion13. If this distortion was removed this figure is likely

to be significantly higher.

These issues were considered in the Alliance’s response to the EU’s consultation on VAT reform14. The

UK’s current VAT regime disadvantages work to historic buildings by adding 20% to repair,

maintenance and adaptation work – yet new build construction has a zero VAT rate. This aspect of the

current VAT regime is one of the biggest threats to the future of our heritage. Repair and

maintenance is vital. Yet, the current system incentivizes the demolition of historic buildings which

require significant maintenance work due to the increased tax burden compared to new construction.

Government should reduce the rate of VAT from 20% to 5% on the labour element of ‘renovation and

repair of dwellings in private ownership, excluding materials which account for a significant part of

the value of the service supplied’ [by amending the Value Added Tax Act 1994 as permitted under

[European Union Directive 2009/47/EC amendment] Annex III of the VAT Directive 2006/112/EC.

The reduction in VAT from 20% to 5% on renovation and repair of dwellings in private ownership

would create significant economic, social and environmental benefits for England’s historic

environment.

In 2014, research by the Cut the VAT Coalition, of which we were a partner, demonstrated that a cut

in VAT on housing renovation and repair would bring substantial benefits over the lifetime of the

2015-20 parliament, by providing a huge stimulus of more than £15 billion to the economy. A detailed

breakdown and link to resources of why a reduction in VAT would benefit the UK economy can be

seen in our recent response to the reform of EU VAT rates.

Other barriers to growth are pointed out in the Industrial Strategy response of Heritage Alliance

member, the Historic Houses Association. They note that DCMS and DfT ‘should work more closely

with VisitEngland to consider potential public transport solutions to address the ‘final mile’ barrier

that can deter tourists from visiting rural tourism businesses such as historic houses’. Similarly,

‘Highways England should publish its revised guidance document ‘TD 52/17 – Traffic Signs to Tourist

Attractions and Facilities in England Tourist Signing: Trunk Roads’ as quickly as possible. Government

should ensure the guidance recognises the tourism impact of brown signs, especially in terms of their

potential economic benefit to regions and rural areas. DCMS, Highways England and VisitEngland

should work together to develop and promote a plain English version to help promote the guidance’.

The Heritage Alliance is aware that some smaller organisations may not have the available budget to

obtain a brown sign – holding back growth.

The Historic Houses Association has also flagged the importance of overcoming digital infrastructure

barriers to supporting rural businesses.

Future barriers to growth post Brexit will be a lack of skills (as discussed elsewhere).

Another issue post Brexit will be the demand for heritage construction materials. Hydraulic limes are

imported from EU countries in small amounts but it is an important material when required. Many

timber products are imported from EU countries, as are some brick and stone products and some clay

13 https://historicengland.org.uk/research/heritage-counts/heritage-and-the-economy/ 14 http://www.theheritagealliance.org.uk/tha-website/wp-content/uploads/2017/03/EU-consulation-on-the-reform-of-VAT-rates-JO-1.pdf

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plasters. If tariffs are charged prices will rise, but the level of impact will depend on the terms of our

withdrawal from the EU. The Government should take action now to encourage the production of

domestic supplies of building lime, thatch and native hardwood.

23. Are there further steps that the Government can take to support innovation through public

procurement?

The Heritage Alliance is not answering this question.

24. What further steps can be taken to use public procurement to drive the Industrial Strategy in areas

where Government is the main client, such as healthcare and defence? Do we have the right

institutions and policies in place in these sectors to exploit Government’s purchasing power to drive

economic growth?

The Heritage Alliance is not answering this question.

25. What can the Government do to improve our support for firms wanting to start exporting? What

can the Government do to improve support for firms in increasing their exports?

The Alliance wants to be able to export our archaeological, buildings conservation, heritage science,

and museum expertise to Europe post Brexit.

The UK has, and can make more of, its world leadership in conservation and heritage science skills.

Access to heritage and archaeological specialists/researchers will be an important issue for the UK.

Swift access to visas or the research equivalent of a diplomatic passport would help. Bilateral

agreements between countries are of limited value as it would be difficult to identify any one country

in preference to another in the European context. A sectoral approach to free movement is what is

needed to support heritage science and archaeology.

A challenge would arise if movement across borders is dependent on income levels. Conservation and

archaeological expertise are not necessarily highly paid but are highly skilled. This needs to be

considered in the design of any visa regime. For example, any future visa regime could be aligned with

professional accreditation in identified sectors, rather than by income.

The sector is keen to work more closely with the GREAT campaign, and the Alliance is already starting

to do so. The campaign should further build on the importance of heritage in international

perceptions of the UK’s soft power. Similarly, the heritage sector would like to discuss working with

the department for international trade to discuss how our world leading heritage skills can be

exhibited at international trade fairs.

It is important that there is a mechanism to ensure that the sector is aware of opportunities to build

future trading relationships.

While the great.gov.uk site is a welcome step forward the Government must consider raising

awareness of the site with smaller organisations to ensure that it reaches its full potential. A lack of

resource and capacity is a key factor in holding back export of heritage sector skills and expertise.

The Heritage Alliance recently undertook a survey of our members’ international experiences.

Responses include a member who worked in China and Japan ‘through our B2B work with the travel

trade in these countries, who bring visitors to Stonehenge primarily’. Similarly, the Federation of

British Historic Vehicle Clubs is involved in 35 European countries. These and other experiences have

the possibility of being scaled up/ and or expanded to other countries and UK destinations. The

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Government should support those who have already undertaken international work to be

ambassadors to the sector.

26. What can we learn from other countries to improve our support for inward investment and how we

measure its success? Should we put more emphasis on measuring the impact of Foreign Direct

Investment (FDI) on growth?

The Heritage Alliance is not answering this question.

27. What are the most important steps the Government should take to limit energy costs over the long-

term?

As the Historic Houses Association has pointed out, listed buildings are currently exempt from

minimum standards such as the Energy Performance Certificate (EPC), given their particular needs; it

is essential that this exemption is maintained, and Government should make this clear in all related

legislation and guidance.

The Heritage Alliance is concerned that general measures to limit energy costs over the long term

must take proper account of the historic environment in their design. This is especially the case for

external retrofitting of thermal insulation which can drastically alter the look of traditional buildings.

John Preston IHBC’s [Alliance member] Green Panel Chair has called for traditional buildings to be

given a ‘Different but Complementary’ approach in Bonfield’s ‘Each Home Counts’ plans for domestic

energy use and provision.

IHBC Chair James Caird said: ‘While all can welcome the wider moves towards ‘greener’ buildings, the

IHBC’s Consultations Panel was very disappointed that ‘Each Home Counts’ failed to consider

traditional buildings, especially those with solid walls. This is a fundamental omission as such older

buildings represent at least a quarter of the UK’s building stock, undermining the principles of ‘Each

Home Counts’.

The wasted energy and production costs should also be clearly factored in when replacing historic

buildings with new ones. Although a new building may be energy efficient, it is doubtful that these

efficiencies will offset the energy wasted in demolishing historic buildings and the waste of the

materials used to produce it. There is also the energy used in removing the demolition waste, creating

new materials, transporting them to site. Improving the efficiency of a historic building with

secondary glazing, loft insulation etc. will nearly always be more efficient than demolition and

replacement. The House of Commons Housing, Planning, Local Government and the Regions

Committee has previously stated that the ‘reuse of historic buildings can be more environmentally

sustainable than, and their environmental performance can be, as good as, new-build projects’15.

The Government should seek to devise a way of capturing information on the energy wasted in

demolition of existing historic buildings when considering planning applications.

The Government should consider the impact of energy policies on the future of historic vehicles.

Research has shown16 that historic vehicle activity contributes at least £3.2bn annual turnover to the

national economy and sustains some 27,000 jobs.

15 See para 20 https://www.publications.parliament.uk/pa/cm200304/cmselect/cmodpm/47/47.pdf 16 http://www.fbhvc.co.uk/research/_file/123/l-to-b-car-run-reportlatest-pdf/

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28. How can we move towards a position in which energy is supplied by competitive markets without

the requirement for on-going subsidy?

The Heritage Alliance is not answering this question.

29. How can the Government, business and researchers work together to develop the competitive

opportunities from innovation in energy and our existing industrial strengths?

From a heritage sector perspective, we agree that the Government should work to promote the use

of renewable technology which causes limited harm to the historic environment. For example, the

Tesla solar roof17 which is designed to look like an ordinary slate or tile.

The Government could require such technology for new builds, after a period allowing industry to

prepare, as this would be likely to bring the price of such technology down as companies enter the

market to supply new builds. As a result, this technology could be retrofitted in a discrete way to non-

listed historic housing stock at an affordable price. Such technology is likely to lead to a greater take

up from those who would not want ‘ugly’ solar panels.

This marriage of design and appearance is something that the Government should encourage to drive

uptake within the heritage sector.

30. How can the Government support businesses in realising cost savings through greater resource and

energy efficiency?

Small organisations in the sector may not have the resources to carry out energy saving measures.

The Government could look at schemes which could help relevant charities to install such measures.

The Historic Houses Association has suggested that ‘Government could help more businesses located

in listed buildings to develop their sustainability by reworking Renewable Heat Incentive (RHI)

payments to circa 5p per unit for listed buildings. Government could also introduce a new 0% loan

option, which would go some way towards covering the initial capital costs of installing a new boiler’.

31. How can the Government and industry help sectors come together to identify the opportunities for

a ‘sector deal’ to address – especially where industries are fragmented or not well defined?

As this response has already highlighted, the heritage sector will be working on its own sector specific

deal and this response is a precursor to that. We welcome the statement on page 98 of the Green

Paper that ‘business should lead the Government’. It is vital that the changes the sector wants to see

are taken forward if the Industrial Strategy is to have the transformative effect for the economy the

Government seeks.

One of the key challenges facing the heritage sector is that it is highly skilled but underpaid and under

resourced with a high proportion of charities. To tackle the Industrial Strategy as effectively as larger

richer industries, the Government should consider allocating a small amount of resource to co-

ordinate the sector so that the Industrial Strategy reaches it maximum potential for positive change.

The Heritage Sector needs the Government to work with other sectors to ensure that heritage is

considered, and is seen as a positive, in other sector deals.

17 http://uk.businessinsider.com/elon-musk-tesla-solar-roof-cost-less-than-normal-roof-2016-11?r=US&IR=T

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32. How can the Government ensure that ‘sector deals’ promote competition and incorporate the

interests of new entrants?

The Government should ensure that it works closely on sector deals with bodies such as the Heritage

Alliance and its members to ensure a wide spread of representation within sectors.

33. How can the Government and industry collaborate to enable growth in new sectors of the future

that emerge around new technologies and new business models?

The Heritage Alliance is not answering this question.

34. Do you agree the principles set out above are the right ones? If not what is missing?

The Heritage Alliance strongly agrees that ‘A modern Industrial Strategy will have recognition of the

importance of place at its heart’. As we have stated above, heritage and the unique buildings that

form a local identity are integral to a sense of place. Historic buildings evoke a sense of place in the

way that modern buildings often fail to do. This is in part due to the great regional variation in the

design of historic buildings whereas modern ones tend to be similar wherever they are in the country.

Working to bring historic assets into flexible use can help the ‘revival of underperforming areas’ and

‘can spur productivity in areas with lower costs, cheap land, less congested infrastructure and other

underused assets.’ As set out above there are numerous examples of this happening whether

Liverpool Docks, canal side developments or Leicester’s rediscovering of Richard III.

It is pleasing to note in the Green Paper that ‘our great cities have started to revive’. It should be

remembered that despite an extended period of decline these great cities often have impressive and

imposing historic buildings that, if brought into full use can act as a significant draw for people and

investment.

Historic England has recently published ‘Engines of Prosperity: new uses for old mills’18, which

highlights the opportunity for vacant and under-used mills in West Yorkshire to act as a stimulus for

regeneration activity and to contribute to growth in the local economy.

As we have mentioned above LEPS should have heritage expertise to ensure that they understand the

importance of heritage in creating place and that they avoid potential conflict over heritage issues

driving up the costs of development.

It is also important to understand that heritage is integral to tourism (for which the Government has

launched a Tourism Action Plan to drive tourist spend across the UK). Improvements to heritage

protection and bringing underused heritage assets back into use may increase tourism or create new

tourist destinations, creating new jobs. Conversely, as mentioned above, a lack of local authority

enforcement action in relation to unauthorised changes to heritage assets may undermine tourism

opportunities. ‘Heritage Counts’ research in 2016 found that England had £18.4 billion worth of

heritage tourism expenditure19 highlighting the importance of this market.

The Government should again consider the environmental impact of the Industrial Strategy so as to

avoid harming tourism etc.

18 https://historicengland.org.uk/images-books/publications/engines-of-prosperity-new-uses-old-mills/ 19 https://historicengland.org.uk/research/heritage-counts/heritage-and-the-economy/

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35. What are the most important new approaches to raising skill levels in areas where they are lower?

Where could investments in connectivity or innovation do most to help encourage growth across the

country?

The Heritage Alliance is not answering this question.

36. Recognising the need for local initiative and leadership, how should we best work with local areas to

create and strengthen key local institutions?

It is important to recognise that it is not just cultural institutions which strengthen a place’s culture

but the historic environment itself and heritage attractions such as canals and steam railways.

Heritage Alliance member, the Heritage Railway Association, report20 that the 16 million passenger

journeys on heritage railways in the year ending 2015. The Government should consider how such

attractions can be supported and launched.

As we have stated above there is more that the Government can do to ensure that community assets

can be saved for a community. Ensuring that a community keeps its historic assets and does not have

empty buildings at its heart will do much to help drive investment and make areas more attractive.

Local heritage could be better understood and protected, with less delays caused to development, if

previous Government proposals in the Draft Heritage Protection Bill21 to introduce Statutory Historic

Environment Records (HERs) were taken forward. However, as we have said elsewhere, properly

funded local authority conservation and archaeology services are vital.

The Alliance welcomes the statement in the Government’s digital strategy that, as part of the

Government’s drive to accelerate the level of housing development, it is considering how the

planning system can be made both more efficient and give the public greater involvement through

better use of data and digital tools. This could be transformative for better understanding of

development on heritage assets.

These issues will be more fully explored in our heritage sector specific deal.

37. What are the most important institutions which we need to upgrade or support to back growth in

particular areas?

As we have outlined above there are issues with obtaining finance for some heritage projects. The

British Business Bank could have a fund to support the development of heritage buildings. Similarly,

the Homes and Communities Agency could have a heritage strand to support the building of homes in

difficult heritage sites which might not otherwise be viable. These issues will be fully explored in our

heritage sector specific deal.

As mentioned elsewhere, the Government should ensure that local authorities are properly

resourced, with ring-fenced funds for departments such planning, to ensure that money raised

through planning fees etc. is not spent in other areas.

38. Are there institutions missing in certain areas which we could help create or strengthen to support

local growth?

20 http://www.hra.uk.com/docs/Annual%20Report%202016%20v1.0%20Final.pdf 21 https://www.gov.uk/government/publications/draft-heritage-protection-bill

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It may be that neither the British Business Bank nor the Homes and Communities Agency is an

appropriate vehicle to support the development of difficult heritage assets. If so, A new vehicle may

be needed. These issues will be fully explored in our heritage sector specific deal.

Contact

Joe O’Donnell

Policy & Communications Officer

The Heritage Alliance

10 Storey’s Gate London

SW1P 3AY

020 7233 0500

policy@theheritagealliance.org.uk