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Further Education

Volume 406: debated on Tuesday 10 June 2003

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To ask the Secretary of State for Education and Skills what progress has been made with discussions with Customs and Excise to reconsider the value added tax rules relating to sixth form colleges; whether such colleges will receive compensation for the value added tax payments they are required to make; and if he will make a statement. [117421]

The Department for Education and Skills has regular ongoing discussions with Customs and Excise to consider the impact of VAT and there are no plans to change the VAT rules as they apply to sixth form colleges' purchase of general goods and services. Colleges gained a range of important financial advantages from incorporation, including control over their own assets such as land and buildings, and the freedom to employ their own staff and determine their terms and conditions. Costs such as VAT need to be met from college funds and we have announced the largest ever investment in further education over the next three years. Funding will rise by £1.2 billion, an increase of 19 per cent. in real terms, between 2002–03 and 2005–06. We are awaiting advice from Customs and Excise on the levying of VAT on further education capital projects.