VAT: Colleges and Schools

Baroness King of Bow Excerpts

Monday 23rd February 2015 Lords Chamber

[Baroness Garden of Frognal]

I entirely agree with the noble Lord about the high standard of sixth-form colleges and the great service they provide. The position is that schools are able to retain VAT costs because they are part of the local government sector, and academies are able to reclaim VAT beca use specific legislation allows them to do so. Sixth-form colleges are liable for VAT because they were categorised as private sector organisations by the Office for National Statistics. Non-maintained schools would normally include VAT in the fees they charge outside and, in that respect, they would be able to reclaim the VAT that they have paid.

[Baroness King of Bow (Lab)]

My Lords, is it not strange, not to mention unjust, that a 16 year-old studying at a secondary school receives more funding than a 16 year-old studying exactly the same subjects at a sixth-form college? Is this not doubly strange when research shows, as my noble friend alluded to, that sixth-form colleges provide better education outcomes and better value for money, and do more to improve social mobility? Given all that, does the Minister agree that relentlessly cutting the 16 to 19 education budget is not the cleverest idea that the Government ever had? Would she, by any miracle, support our policy on this side of the House to protect the 16 to 19 education budget and increase it by the rate of inflation, so that we invest in all our young people, including those studying at sixth-form colleges?

[Baroness Garden of Frognal]

The noble Baroness is a wonderful optimist in her assumption. Of course we would do so in an ideal world, but, as we know, funding has been restricted. The Government’s policy has been to focus on those earlier years, where the most difference can be made to young people’s aspirations and futures. The differential in funding has been as a result of successive decisions by successive Governments. It is not just the coalition Government who have brought about this change.

[Baroness King of Bow]

As no one else is standing up, I ask the Minister why Sure Start places have been cut if that is the case? Secondly, these sixth-form colleges are providing better outcomes, so let us protect that budget. That is a policy commitment in our manifesto and it would be fantastic if the Government could give sixth-form colleges the same protection that we are offering.

[Baroness Garden of Frognal]

Sure Start is somewhat wide of the remit of this Question, but the likely annual cost to the department of reimbursing sixth-form colleges for their VAT costs is currently estimated to be £31 million. That, in the totality of things, is not something that we can currently afford. We intend—or we would have intended—to look at this issue again in the event that we are in the next Government. We cannot predict what will happen for the next Government, but we hope that we would be able to level the playing fields rather more than they are at the moment.