Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the amount of VAT that will be incurred by colleges on projects funded through the £2.275 billion further education college capital programme.

The department is providing significant capital investment to support further education (FE) colleges, including £1.7 billion of funding to maintain their estates and £570 million to expand capacity in construction courses and accommodate additional learners for post-16 education.

The department has not made an estimate of the total VAT that will be incurred by colleges on projects supported through our capital funding.

For their non-business activity, FE colleges are unable to reclaim VAT incurred. This applies to both capital and non-capital expenditure.

In relation to business activity, FE colleges enjoy an exemption from VAT which means that they do not have to charge VAT to students but cannot recover it either.