Michael Brightman^[1], Lancashire Business School, University of Central Lancashire

 

Abstract

With over 20,000 scheduled monuments, 1600 registered parks and gardens, 28 world heritage sites and almost half a million listed buildings, the UK is awash with built heritage of cultural, religious, archaeological and industrial significance, dating from circa 4000BC to the Industrial Revolution and later. How does one put a price on the priceless? What is the cost of protecting and preserving this multitude of homes, castles, industrial buildings and urban social history and, more importantly, is it sustainable? This article considers the economics of built heritage, analyses some of the numbers and talks about some of the multitude of organisations that take an active part in its preservation. The business models of heritage assets are considered, along with how those that face market failure are assisted, if indeed they are, and by whom. The relative paucity of academic literature and research is noted, with suggestions for further study.

Keywords: Built heritage, economics, listed buildings, National Trust, English Heritage

 

Introduction

The United Kingdom's built heritage is iconic, unique and abundant; this presents a dilemma of what and how to preserve and conserve. Built heritage consists of all aspects of the man-made historic environment including archaeological sites to post-war buildings including designed landscapes, gardens, historic wreck sites and battlefields (Creigh-Tyte, 2000: 213-29). The UK's built heritage comes in many forms from stately homes to castles, theatres to opera houses and churches to cathedrals with an array of industrial heritage such as bridges, aqueducts and mills.

This article considers this wide range of built heritage throughout the UK. All the information contained within is available in the public domain but the questions asked do not appear to be being openly posed.

 

The Economics of Built Heritage

Academic Literature and Research

There is little academic literature dealing with the economics of built heritage. Where it is in evidence it has primarily sought to analyse the impact of building preservation on subsequent land values and community redevelopment. Although there has been some research regarding historic buildings, museums and monuments this has been carried out in order to justify government expenditure in this area (Stanziola, 1998: 168-76).

The National Trust and English Heritage conduct valuable research covering a range of disciplines. However, this study unearthed only one piece of research that is related to either business or economics, an economic impact report to consider whether or not to introduce catering at Dunster Castle (National Trust, 2009).

Propaganda?

Dame Jenny Abramsky, Chair of the Heritage Lottery Fund, claims that the important economic contribution of the heritage sector has not been understood sufficiently, partly due to the lack of data. "Investing in Success", Dame Abramsky claims, provides the missing data and, in so doing, demonstrates that the heritage-based tourism economy is larger than suggested by earlier studies (Heritage Lottery Fund and VisitBritain, 2010).

Expenditure (per year) by type of visit	Excluding natural heritage	Including natural heritage
International tourism	£2.6bn	£4.9bn
Domestic overnight stays	£0.5bn	£1.1bn
Domestic day trips	£4.2bn	£6.4bn
Total expenditure	£7.3bn	£12.4bn

Table 1: Investing in Success – expenditure on heritage-related activities. Adapted from Heritage Lottery Fund & VisitBritain, 2010 and reproduced with kind permission

Looking at the figures a little more closely, however, it could be suggested that it has been presented in a propagandist fashion. The £12.4 billion expenditure includes natural heritage such as the Lake District and Dartmoor and also incorporates visits to parks and the countryside. This leaves £7.3 billion in expenditure which the report claims is based on built heritage and the museums sector. Further analysis suggests that the method for arriving at that amount may be flawed.

In the report "Economic impact of the heritage tourism economy" the author, Oxford Economics, appears to intimate that the heritage activities included are limited to castles, churches, monuments, historic houses, museums, art galleries and literary, music or television locations (Oxford Economics, 2010). However, tucked away in the appendix of VisitBritain's "Culture and Heritage Topic Profile" which was compiled at the same time, February 2010, and which uses the same figures, is the methodology for arriving at the results (VisitBritain, 2010b).

The inclusion of culture is critical because this adds the following activities to those mentioned in the previous paragraph, namely

• Going to the theatre, opera, ballet or concert;
• Shopping (eg. fashion, design, home, antiques);
• Going to nightclubs;
• Watching sporting events;
• Visiting literary, music, tv, film locations.

Clearly these items could not be attributed to adding to the heritage tourism economy except indirectly when the activity or event takes place within a built heritage asset. Additionally, for all activities "average" spend figures are used. However, given that many museums and art galleries have free admission, it could be argued that spend on these activities would actually be lower.

Market failure

It will become clear from reading this article that many forms of built heritage suffer due to market failure; that is, the supply of goods is not carried out efficiently. As public goods, ancient monuments cannot necessarily be screened from view and attempting to gain payment for access to them is not possible except in extreme cases such as Stonehenge where it is economically viable to create visitor facilities and prevent open access. Even here, though, the structure is clearly visible from the road.

The owners or operators of commercial buildings consider them as units of production. Their predominant concern is their economic efficiency and ideally the owner would seek to alter or adapt in order to improve production; and when it is no longer needed as part of the business to sell at maximum value including redevelopment potential. Expenditure, both fixed and variable costs, will be minimised and additional costs of preservation or conservation due to a building's historic worth may well be unwelcome and, indeed, not financially possible (Allison et al., 1996).

Pricing and Supply and Demand

Historic properties have traditionally charged "token" admission prices which may cover the cost of opening the property to the public and enable a track of visitor numbers but in no way contribute to the long-term sustainability of the asset; some rely on honesty boxes or voluntary donations. Ironically, additional visitor numbers can actually increase costs for a heritage property: such buildings are subject to the normal wear and tear of any property of that age, but they also fall victim to accelerated decay caused by visitor impact. Given the reason for their original construction it is clear that most historic properties were not designed to welcome thousands of visitors each year (Fyall and Garrod, 1998: 213-28). Rising prices may well affect visitor numbers but if the same amount of money or more is raised from fewer people this will also mean that there is less damage from visitor impact.

Fyall and Garrod (1998) argue that where a higher price is charged for admission to a heritage attraction the following occurs:

• Additional revenue can be used to enhance the visitor experience from both an interpretation point of view and with regard to ancillary services;
• The management of the heritage asset become more accountable to their visitors and therefore more responsive to the wants and needs of their visitors;
• There is a reduction in the level of visitors who cause damage or behave inappropriately;
• Studies suggest that demand for heritage attraction visits is price inelastic therefore an increased price results in additional revenue and diminishing visitor impact.

Valuing heritage goods

The hedonic pricing method (hpm)

This looks at the changes in the value of the property or properties that are conserved and at those properties that are indirectly affected in order to give an estimate of the value of environmental goods. This is the most theoretically rigorous of the valuation methods with its roots in microeconomic consumer theory (Allison et al., 1996).

As an example, if two houses are valued that are identical apart from the fact that one has double glazing, then the difference in value can be said to be the value of the double glazing. In the context of built heritage it is theoretically possible to attribute the value of it being listed or historic by calculating the difference between its value and an (almost) identical building that is not listed or deemed historic (Allison et al., 1996).

The travel cost method (tcm)

This is based on the assumption that by travelling to a historic property and thereby incurring a travel cost, a visitor reveals the value that they put on that asset or at least their lower limit of its value (Allison et al., 1996).

The contingent valuation method (cvm)

In contrast to the hpm and tcm which seek to elicit valuations indirectly from consumers, the cvm makes use of questionnaires to ascertain the value that people place on goods. Although it is the least rigorous of the three valuation methods it is the most popular, particularly with politicians due to its compatibility with democracy and the views of society as a whole (Allison et al., 1996).

Dynamic Benefits of Historic Properties

Listing of an individual building may have a negative effect on its value. Putting a constraint on what alterations the owner can make and the potential higher costs of any alteration or maintenance may reduce demand for the property. However, where a building's surroundings are part of a designated area of some form such as a conservation area, this may have a positive effect on a property's value because the physical environment in which the building is situated becomes more secure and it is more likely that increased future values will be realisable. From this, one can deduce that when an area is designated as a conservation area this will probably lead to some "gentrification" (Allison et al., 1996).

No current answer can be given in a numeric sense to the dynamic benefits of individual or collective built heritage. However, it is certainly positive and potentially large, although not in all circumstances with further econometric research required (Allison et al., 1996).^[2]

The Numbers

The UK is ranked 4^th out of 50 nations for the quality of its heritage by potential visitors. It is clear that the UK's heritage is a big draw with foreign visitors and is described as being iconic and appealing to all ages. However, one note of caution is that many potential visitors see "London" as being Britain and do not necessarily venture any further (VisitBritain, 2010).

The Ancient Monuments Protection Act of 1882 gave protection to 50 sites in Great Britain and it was not until nearly a century later that the legislation was fully updated by the Ancient Monuments and Archaeological Areas Act 1979. Wales has around 4000 scheduled monuments (Cadw, 2011), Scotland circa 8000 (Historic Scotland, 2012b), Northern Ireland 16,038 (Northern Ireland Environment Agency, 2008), England almost 20,000 (DCMS, 2010) and the Isle of Man circa 120 (Johnson, 2012).

The Town and Country Planning Act of 1947 introduced the current system of listed buildings (Creigh-Tyte 2000). Listing in itself is not a preservation order or an order preventing change; it is merely an identification that the building's past is worth celebrating in terms of its architecture, its historic interest or a mix of both (English Heritage, 2012b). In England there are currently 374,081 listed buildings (English Heritage 2012c); there are 47,600 in Scotland (Historic Scotland, 2011b), circa 30,000 in Wales (Cadw, 2012) and around 9000 in Northern Ireland (DOENI, 2010). There is no formal listing process on the Isle of Man for any form of built heritage but circa 200 houses of the total stock of 30,000 are 'registered' (Johnson, 2012).

 

The Organisations

Five statutory organisations are responsible for the UK's built heritage in their respective areas.

English Heritage champions and promotes England's historic places and provides advice to the government and other agencies. Most of its funding comes from the Department for Culture, Media and Sport (English Heritage, 2012a). In Scotland this function is carried out by Historic Scotland, as an executive agency of the Scottish Government (Historic Scotland, 2012a), in Wales by Cadw as an executive agency within the Welsh Assembly Government (Cadw, 2012), in Northern Ireland by the Environment Agency (DOENI, 2010) and on the Isle of Man by Manx National Heritage (MNH, 2010).

There is a plethora of non-statutory bodies that have an interest in the sector with the National Trust by far the largest. Founded in 1895 with the aim of saving the nation's heritage and open spaces; it purchased its first building a year later. Today it is the largest conservation organisation in Europe and has 3.8 million members and an eclectic mix of properties and landscapes including stately homes, pubs and nature reserves. Its vision is to have 5 million members by the year 2020 (National Trust, 2012b). The National Trust for Scotland is Scotland's largest membership organisation with 308,000 members (National Trust for Scotland, 2012).

The Historic Houses Association (HHA) represents around 1500 privately owned gardens, castles and houses throughout the UK and seeks to work in partnership with other organisations while working towards a fiscal, economic and political climate which allows private owners to sustain and preserve their properties (HHA, 2012).

Numerous organisations seek to protect and conserve built heritage while not necessarily owning any property themselves; seven of them are 'National Amenity Societies' and thus consulted on all applications for listed building consent where there is a possibility of demolition or part thereof in England and Wales as directed by the Town and Country Planning Act 1968. These are:

• Ancient Monuments Society
• Society for the Protection of Ancient Buildings (SPAB)
• Council for British Archaeology
• The Victorian Society
• The Georgian Group
• The Twentieth Century Society
• The Garden History Society

The Scottish Civic Trust and the Scottish Architectural Heritage Society are equivalent groups in Scotland (JCNAS, 2010).

In addition, numerous other groups seek to ensure the preservation of varying types of UK built heritage, potentially duplicating the work of others and adding an extra layer of bureaucracy and cost for property owners attempting to make alterations or wanting to sell. These include:

• National Heritage Museums Action Movement
• National Churches Trust
• Save Britain's Heritage (SAVE)
• Public Monuments and Sculpture Association
• Civic Voice (formerly Civic Trust)
• Heritage Alliance
• Association of Preservation Trusts
• Country Houses Foundation
• Architectural Heritage Fund

 

Built Heritage at Risk

The National Trust

The writer Vita Sackville-West was born at Knole in Kent (Sackville-West, 1941), one of the country's most important and complete English country houses (National Trust, 2012a). In her 1941 book English Country Houses she lamented the fate that she predicted for the great houses such as her birthplace due in part to their very opulence and magnificence. Large houses always represent a large burden but not necessarily a large income (Sackville-West, 1941). This is one of the problems facing the National Trust with only 20% of properties funding their own preservation.

It is not the only owner facing difficulties, however. In its 2010/11 Annual Report it states that "we are facing unprecedented numbers of requests to take on properties that public bodies can no longer afford to run. Many of these may be impractical or impossible, but we will consider those that fit our criteria of significance and risk" (National Trust, 2011: 35).

English Heritage

Simon Thurley, Chief Executive of English Heritage, states that "programmes to save England's built heritage are being stalled because of the collapse in the economy. There is a conservation deficit and the only way to unlock it is to release value elsewhere. But this is not happening. Thousands of listed buildings have no prospect of finding a viable use" (Museum News, 2011: 4). The article continues and quotes an English Heritage spokesman as advising heritage property owners or managers to, at the very least, maintain their property or properties during the economic downturn in order not to increase costs in the long run (Museum News, 2011).

English Heritage reports the following statistics in 2011 with regard to "At Risk" assets:

• 3% of Grade I and Grade 2* properties are at risk;
• 91 entries were removed from the register in the year but 60 others were added;
• Only 13% of entries on the register are economic to repair;
• 103 (6.4%) of registered parks and gardens are at risk (a net increase of 4);
• 17% of scheduled monuments are at risk.

(English Heritage, 2011: 1).

Wales, Scotland, Northern Ireland and the Isle of Man

Approximately 10% of all listed buildings are deemed to be at risk in Wales with a further 17% described as vulnerable. This does not include scheduled monuments (Cadw, 2009). In Scotland, of the properties in its highest category listing in 2011, 267 (8.2%) of them were deemed to be at risk with 25 "critical" (Historic Scotland, 2011a). In Northern Ireland, 103 buildings appeared on the at risk register in November 2008 (DOENI), 2008). There is no formal 'at risk' designation on the Isle of Man (Johnson, 2012).

Architectural heritage fund and museums

In its 2010/11 Annual Review, the Architectural Heritage Fund (AHF) reports that several of its regular clients are facing financial difficulties which in some cases are threatening the actual existence of its organisation. Some clients are having difficulty making payments on their outstanding loans from AHF (AHF, 2011).There is also concern among practitioners of the long-term sustainability of museum finance. Museums claim to have embraced cultures of entrepreneurship and efficiency and squeezed as much as possible out of principal sponsors and grant awarding bodies. Senior managers are finding the task of balancing budgets relentless, unforgiving and exhausting with financial matters utmost in their mind (National Heritage, 2012).

 

Business Models

Revival, Restoration or Preservation

• Revival is the practice of designing new buildings to look old by reproducing period styles of architecture or decoration.
• Restoration is the use of old buildings for new purposes having, where necessary, improved their appearance by the replacement of aesthetically unpleasant or obsolete parts thereof.
• Preservation is protecting old buildings and maintaining them in good repair

(Lowenthal and Binney, 1981).

English Heritage seeks to add regeneration to this list through "Heritage Works" and heralds it as a "growth industry" claiming that heritage assets represent an opportunity rather than a constraint with a strong economic case that the benefits from a historic building relate not only to that individual asset but to the wider area and community. It admits, however, that ongoing maintenance and running costs of historic buildings may well be greater than those of comparable modern ones and that it is critical that a viable economic use is prescribed for the building. The use must support the initial refurbishment, provide the developer or owner with a reasonable return on their investment and, critically, generate sufficient future income for the long term maintenance of the building fabric and any associated open spaces around it (Drivers Jonas, 2009).

Funding – grants, sponsorship, donations and philanthropy

English Heritage is actively encouraging philanthropy as a means of increasing funding for built heritage (Museum News, 2011). There appears to be an over-reliance on the sector to seek funding in the form of grants, sponsorship or donations rather than to assess or seek a viable economic source of preservation or conservation.

The Architectural Heritage Fund has a dedicated website entitled "Funds for Historic Buildings", which offers a comprehensive search facility for building owners or operators to search for grants that may be available to them. Nowhere on the site is any advice given with regard to funding a project through economic or business means. Indeed, in the Private Owners section, one piece of "funding advice" is that "One radical solution is to give the property to a charity" (Architectural Heritage Fund, 2012).

The thinking behind the "solution" is that there are many more funding sources that will assist projects when they are undertaken by registered charities or not-for-profit organisations rather than private individuals. The website does cede that there is a downside in the loss of ownership but suggests the advantage of the freedom from liability or obligation. However, there's a caveat: "unless the present private owner is prepared to establish an endowment fund to pay for repairs, the willingness or ability of a charity to take on the ownership and management of an historic building will depend on its condition at the time and immediate and longer-term anticipated maintenance costs involved" (Architectural Heritage Fund, 2012).

Visitor attraction conference

A number of presentations were made at the Visitor Attraction Conference (VAC) 2011 with regard to income generation, visitors and marketing. Although not all attraction companies represented were from the heritage sector, many were. "Marketing Magic: Top Ideas for Greater Success" presented a range of tried and tested methods and a suggestion of the use of discount vouchers to attract visitors with the likes of GroupOn or Living Social. However, the author adds a note of caution because unless a business is sure who will purchase these vouchers they may not increase visits but only serve to reduce income from visits they would have received anyway. Underpinning the lack of innovation and indeed entrepreneurship, however, were the facts that only 18% of visitor attractions have an online booking facility, and that of attractions with in excess of 200,000 visitors only around half make the ticket transaction available online (Evans, 2011).

Another presentation was entitled "Making more money: Ways to boost your income" but again lacked any innovative or entrepreneurial approach and ended with a plea. "Please share your ideas! Have you found innovative ways to generate income?" (Harris, 2011).

National Trust membership

The National Trust has a 2020 vision of raising its membership base to 5 million by the year 2020. Its aim is to prove that it is not an exclusive club and that it is open to everyone (National Trust, 2010). Nowhere in its literature does it state an economic or business reason for this 2020 vision of 5 million members.

Table 2 shows the Trust's annual membership income. However, although this is increasing as membership increases so is the amount that it spends on recruiting new and maintaining current members. In fact, its net income from membership has fallen in the last few years. Importantly, the steady growth in admission income appears to have come to a halt.

	2006/07	2007/08	2008/09	2009/10	2010/11
Membership income (£m)	102.3	111.7	116.8	120.6	121.4
Membership expenditure (£m)	34.9	43.6	44.1	46.6	50.8
Net income (£m)	67.4	68.1	72.7	74	70.6
Admission income (£m)	12.6	15.2	15.7	18.3	18.9

Table 2: National Trust Membership Income and Expenditure 2006 – 2011. Adapted from National Trust, 2011 and reproduced with kind permission

As Europe's largest conservation body with a vast portfolio of properties spread throughout the UK and a huge membership it appears to be wielding monopoly powers without taking the benefit of increased profit. Membership of the National Trust entitles one to visit, free of charge, any of its properties and to park for free in its car parks, including those giving beach access.

The author suggests that this tunnel 2020 vision could actually damage its income and therefore the amount of money that it has to spend on conserving and preserving what it owns. Additionally and perhaps critically, there is the very real possibility that the Trust's strive for membership is damaging to other heritage attractions with members preferring to visit Trust properties free of charge rather than another heritage property nearby.

 

Minsky Moments and the Brightman Bubble

In his Financial Instability Hypothesis, Hyman Minsky asserted that an economy has stable and unstable financing regimes and that following periods of prolonged prosperity it is inevitable that it will end in crisis with a collapse of asset values. In essence, when a bubble is allowed to form and get bigger and bigger there will come a point when the bubble will burst (Minsky, 1992). The author of this article asserts that there is a real danger that the built heritage bubble will at some point burst unless more research is carried out into its sustainability not just for this generation but for many generations to follow. Decisions need to be taken as to what can and should be preserved and conserved and it may well be that it is not everything.

 

Conclusion

There is a paucity of academic literature regarding the economics of built heritage. What literature there is, although important in its own right, is written by architects, historians, surveyors, philosophers and conservationists. Experts in their field, but potentially lacking the foresight or the will to ask broader economic questions or to consider business models. Certainly there is no literature asking whether the heritage sector is sustainable or what steps need to be taken in order to make it so.

The National Trust has a 2020 vision that covers another 8 years. English Heritage organises itself with 5 year plans. These organisations are looking after and preserving properties that are hundreds and in some cases thousands of years old. Without a long-term view the heritage sector cannot tell whether it is sustainable or not. New listed buildings are being added constantly. Few are ever taken off the list.

The sheer volume of heritage organisations in this country is testament to the interest in the built heritage. However, owners or managers of listed properties face an onslaught of criticism from many quarters if they attempt to demolish or alter their buildings. This may well put off some people from bothering to maintain or upkeep their property or to improve it. The additional cost to property owners of gaining planning permission is, potentially, not economically viable when up against one or more of the National Amenity Societies such as SPAB or The Victorian Society

The amount of built heritage that is currently at risk is enormous. It is not unreasonable to assume that "at risk" properties require very large sums of money spent on them in order to remove the categorisation. Even then, though, given the nature of built heritage, the property is likely to require ongoing funding to ensure it does not become at risk again. Some parts of the UK do not even have a record of which parts under their stewardship is 'at risk'.

There is a lack of innovation within the sector and no apparent sharing of good practice. Research into business and economic matters appears non-existent. Sustainability will rely on such research and best practice.

The National Trust's monopoly powers are potentially damaging to other parts of the heritage sector. Their drive for membership does not appear to make business or economic sense both for them as an organisation and for the heritage sector as a whole.

The question of whether the conservation of the UK's built heritage is sustainable remains unanswered. Indeed, given the amount of built heritage involved and the amount of organisations to be considered it was never going to be an easy question. What seems certain, however, is that nobody seems to be posing the question. There is an assumption that because built heritage forms part of our proud history that we have a duty to save it. That may well be the case, but at some point the question of money and financial sustainability has to be considered.

 

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List of Tables

Table 1: Investing in Success – expenditure on heritage related activities. Adapted from Heritage Lottery Fund & VisitBritain, 2010 and reproduced with kind permission.

Table 2: National Trust Membership Income and Expenditure 2006 – 2011. Adapted from National Trust, 2011 and reproduced with kind permission.

 

Notes

[1] Michael Brightman gained a first class honours degree BSc Economics at University of Central Lancashire (UCLan) and was awarded the John Coates prize in economics.

[2] A recent study by the London School of Economics on behalf of English Heritage analysed one million property transactions between 1995 and 2010 proving the positive value of conservation areas: Ahlfeldt, G. M., N. Holman, N. Wendland (2012), 'An assessment of the effects of conservation areas on value', available at http://www.english-heritage.org.uk/content/imported-docs/a-e/assessment-ca-value.pdf, accessed 14 July 2012.

 

References

 

To cite this paper please use the following details: Brightman, M. (2012), 'Is the Conservation of the United Kingdom's Built Heritage Sustainable?', Reinvention: a Journal of Undergraduate Research, British Conference of Undergraduate Research 2012 Special Issue, www.warwick.ac.uk/go/reinventionjournal/archive/bcur2012specialissue/brightman. Date accessed [insert date]. If you cite this article or use it in any teaching or other related activities please let us know by e-mailing us at Reinventionjournal@warwick.ac.uk.

 

Spoken Presentation at BCUR