MPs Urge Government To End ‘Unjustifiable’ VAT Treatment Of Sixth Form Colleges

A cross-party group of 74 MPs, led by Conservative Graham Stuart, the Chairman of the Education Select Committee, has written to Michael Gove, the Secretary of State for Education, urging him to support the introduction of a VAT refund scheme for the 93 Sixth Form Colleges in England.

At present, school and academy sixth forms have their VAT costs refunded by the Government, while Sixth Form Colleges do not. Despite taking steps to ensure that all providers of sixth form education receive the same amount of funding per student, the Government has not yet addressed this inequality. As a result, the average Sixth Form College has to redirect £250,000 of its annual funding away from the front line education of students to pay VAT.

The MPs, who all represent constituencies which either contain or are served by a Sixth Form College, describe the situation as “unjustifiable”, particularly as Sixth Form Colleges are unable to cross-subsidise from the more generous funding available for pre-16 students, as many schools and academies do. They also suggest that the Government’s plan to introduce greater competition between sixth form providers will only be effective if Sixth Form Colleges can compete on a level playing field with schools and academies.

The Department for Education estimates that it would cost in the region of £20 million per annum to refund the VAT costs of Sixth Form Colleges, a step that the MPs believe “would be both effective and affordable”.

Among the MPs who have signed the letter are two former Labour Secretaries of State for Education (David Blunkett and Alan Johnson), the President of the Liberal Democrats, Tim Farron, and Green Party MP Caroline Lucas. At Prime Minister’s Questions on Wednesday 9 October, David Cameron promised to “look carefully” at the VAT treatment of Sixth Form Colleges.

Commenting on the letter, Graham Stuart MP said:

“The Government has made great progress by ensuring all 16-19 education providers are now funded in the same way and should be congratulated for this.

“However, MPs across the House feel strongly that it is wrong that Sixth Form Colleges still have to pay VAT, when school and academies can reclaim those costs.

“Our letter calls on ministers to complete the job they have started by refunding the VAT costs of Sixth Form Colleges. We understand this could be accomplished for around £20 million per year, which is a comparatively modest sum for central government but which would make an enormous difference for the 93 Sixth Form Colleges.”

James Kewin, Deputy Chief Executive of the Sixth Form Colleges’ Association said:

“We are delighted that so many MPs from across the political divide have united to campaign for an end to this longstanding inequality.

“Sixth Form Colleges are the most effective and efficient providers of sixth form education in England. However, changes to the way that 16-19 education is funded will see them lose a greater proportion of their income than any other type of sixth form provider – a VAT rebate would help Sixth Form Colleges to maintain their high standards.

“We are not asking for anything that school and academy sixth forms do not already receive – the current VAT treatment of Sixth Form Colleges amounts to a tax on learning that redirects funding away from the front line education of students.”

The Sixth Form Colleges’ Association has today published a report, Unlocking the potential of Sixth Form Colleges, that highlights how the additional investment from a VAT rebate would be used by the sector and the benefits it would bring.