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Further Education: VAT

Volume 490: debated on Monday 30 March 2009

To ask the Secretary of State for Innovation, Universities and Skills how much (a) further education colleges and (b) universities paid in value added tax (VAT) in 2007-08; and what estimate he has made of the savings each will accrue as a result of the reduction in the rate of VAT. (243986)

We do not collect data about the amount universities or further education colleges pay in value added tax. This is a matter for individual institutions. However, we have asked some of our key delivery partners to estimate the impact. The main benefit of the VAT reduction for universities and further education colleges will be to reduce the level of irrecoverable VAT they incur on the services they purchase. Using an estimate of the amount universities and further education colleges spend on services, our broad estimate is that this will save around £185 million over the 13 months of the VAT reduction. This is an estimate, which is not based on forecast VAT expenditure, so the amount of actual savings could vary significantly.