FE colleges’ hopes of being exempt from VAT have been dashed again, after a Treasury minister confirmed there are no plans to change the law despite strong opposition from MPs.
Victoria Atkins, financial secretary to the Treasury, told a Westminster Hall debate this morning that exempting colleges from VAT would cost around £200 million a year, which she implied would be a significant removal of public spending elsewhere.
The debate, tabled by Conservative MP George Eustice, argued that while academies and schools with sixth forms do not have to pay VAT, FE colleges and standalone sixth form colleges are in a “ludicrous situation” where they are not exempt from the tax.
Eustice explained that now colleges have been reclassified by the Office for National Statistics late last year as public bodies, they should also benefit from the exemption.
