The subject of this debate may sound a dry one at first glance, yet it has a big impact for South Devon College.
There are 10,000 public sector organisations in the UK, the vast majority of which can claim the VAT they pay back from HM Revenue and Customs. Yet whilst the 228 further education (FE) and sixth form colleges, which operate from around 850 campuses across England, were reclassified as public sector organisations in November 2022 and are now subject to the same controls as academies and other local organisations. However, they still must pay VAT without an opportunity to recover it because they are not part of the refund scheme.
This means unlike Torbay’s schools or others in the Public Sector, South Devon College pays VAT it cannot claim back. This means an immediate 20% disadvantage to its spending power. The College’s non-pay spending each year is approximately £15m including VAT. If they could reclaim the VAT they would have in the region of another £1-2m to invest directly in education, skills and training.
Kevin took the opportunity of a debate secured by his Cornish colleague George Eustice to push for FE colleges to be added to the list of public bodies for the VAT refund scheme.