TAITMAIL Rates bombshell worth millions to museums
This could be ground-shifting, it could cost the Treasury billions and put beleaguered museums’ accounts in the black for the first time in years. The word “floodgates” is being mentioned. And this is the first you’ve heard of it.
Here’s the bombshell: the Natural History Museum, the UK’s most popular tourist attraction last year and probably the most popular museum among museums this year as a result of this, has won a hard fought decade-long case in the Valuation Tribunal for England.
It changes the institution’s business rating - and here it is - of £12.9m a year reassessed in the new reckoning to just a nominal £1. Not only does it change the basic finances of the museum it will win them a backdated refund of, probably, more than £50m. And those floodgates are certain to be blown.
You might think that business rating is worked out every year, but it isn’t. The rate for the NHM was last calculated as long ago as 2017, and since then the NHM’s lawyers have been arguing against it. And at long last they’ve won.
Although the new reckoning was decided three months ago it has only been released now with the Treasury having at first registered an appeal against it but then withdrawing it. It’s been a long and lustily fought battle for both sides.
The Valuation Tribunal is not three judges as its title suggests but actually a board of seven lawyers, HE experts, civil servants and management consultants, chaired by charity board serial member and ex-lawyer Suzanne McCarthy – none with museum experience – who are appointed by the housing secretary.
Arguing on behalf of the museum was Richard New of the employment specialist law firm Mills & Reeve (pictured). The argument swung on whether a museum’s building should have its business rate based on the estimated cost of rebuilding their premises, the building’s value in other words, the usual insurance stance, or on their “receipts and expenditure”, known as R&E – in other words, the profit from what they earn. Eventually, after years of searching for comparable precedents the tribunal has accepted that, with R&E differential negligible, there were no precedents and normal business rate reckoning did not apply.
Other income sources such as in-house shops, restaurants and government subsidy were taken into account but not seen to be changing the fundamental nature of museums and galleries: that they are public-facing non-profit-making concerns.
“This is another important business rates ruling for the museums sector which is already facing significant headwinds given the wider backdrop and long-term pressure on finances” said Helen Whitehouse, the NHM’s chief operating officer and formerly a senior DCMS civil servant. “This is a positive decision which reflects the economic realities of a museum’s accounts and the common-sense evaluation that we are the only realistic tenant for the building we occupy – this is the case for many, if not all, museums who are charities and/or public bodies like ours.
Meanwhile, the NHM has been speaking to other museums such as the British Museum, whose rateable value is set at many millions and which, among potentially 3,350 other UK museums, is expected to appeal the rating assessments quoting the NHM judgement as the precedent.
“Unfortunately all these major museums do tend to run at a loss because, obviously, most of them can’t charge admission fees” New told me. “But it was slightly odd because the valuation office in this case decided to say, ‘Well hang on a second, OK you get government grant-in-aid, but we also think you should add some sort of hypothetical price per visitor on top’. They almost wanted to try and do a double-whammy, but it didn’t work.
It does open the floodgates, he thinks, “and I know senior directors at the Natural History Museum have been speaking to the likes of the V&A and the Science Museum, but it’s not necessarily just what we classify as traditional museums or attractions”.
It needn’t end with museums and galleries, he thinks. Any public-facing institutions whose mission is to entertain and inform rather than make a profit might qualify. “I think that theatres, concert halls and the like would probably be well advised to start looking at this. We’re talking millions upon millions.
It may look like an academic legal attempt to test the system and see how far it would resist, but Richard New and his team had their hearts in it. “As well as being the UK’s most popular visitor attraction in 2025, the Natural History Museum uses its unique collections and expertise to tackle the biggest challenges facing the world today – it’s a hugely valuable asset to the UK” he told me. “We’re thrilled to have been able to play a role which will have a positive impact on the Natural History Museum and the wider sector”.
As to admission fees being reintroduced, as has been mooted of late, which might add a new complication to the tribunal’s judgement, fear not. Andy Burnham was an advisor to the then culture secretary Chris Smith in 2001 when free admission was introduced.