To ask the Chancellor of the Exchequer whether he intends to make any changes to the method by which health authorities are compensated for the application of value added tax to construction work.

The Government have decided to compensate health authorities for the application of VAT to their construction work through matching increases in public expenditure. From 1 April 1990 health authorities will no longer be eligible under section 11 of the Finance Act 1984 for refunds of VAT paid on construction contracts. The extra capital provision necessary to ensure that health authority building programmes are not prejudiced by the application of VAT will be granted to the NHS in supplementary estimates for 1990–91 to be presented in due course.