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Educational activities (VAT)

The hon. Gentleman adds another example to my list. Indeed, exactly the same thing will happen when the Westminster academy opens its doors, when the building is completed in the early spring. It, too, will be taking over a series of sports facilities, which, although currently unsatisfactory, are free and open to the community. There are huge advantages in terms of safety and quality of service in having the academy take over some of that space, but implicit in the agreement was that its use would be open to the community. Yet, if a resolution is not found, we shall find ourselves coming up against exactly that same barrier. At the risk of treading on political corns, I suggest that we need to do all we can to ensure that academies win hearts and minds, in the face of an indisputable fear in some quarters—one that I believe is wrong—that they will not turn outwards to the community. What seem to be arbitrary restrictions on the level of community lettings, or higher than necessary charges for such use, will do little to deliver those hearts and minds, and above all, will not help the still much needed transformation of our much challenged neighbourhoods. As I have said, an LEA school does not have to bear a comparable cost, because it is able to recover VAT under a specific legislative provision: section 33 of the Value Added Tax Act 1994. What I am requesting, therefore, is that academies should either be brought into line with LEA schools for this purpose, or that a less restrictive application of the village hall exception be applied, to reduce the liability. Granting section 33 status would, I believe, resolve the problem more or less in its entirety. Applying the exclusion for business activities in a less restrictive manner, or accepting that, when letting our facilities, an academy functions as a building similar to a village hall in providing social or recreational facilities, offer two alternative, albeit slightly less satisfactory, options. I have talked about academies because they are the starkest example, but many of the same points apply to colleges of further education, such as my much appreciated City of Westminster college, which occupies a prime site in central London just off the Marylebone road and serves a very deprived student profile indeed. When that facility decides to decant and rebuild we will face exactly the same problem, even though ideally we would like the rebuilt City of Westminster college to do everything it can to ensure that its open and outdoor space serves the communities around it. I understand from the Association of Colleges that colleges as a whole paid more than £200 million in irrecoverable VAT last year. I fully accept that EU rules limit the Government’s flexibility. I also accept that, by definition, if VAT could not be recovered from academies and colleges in that way money would be lost to the Exchequer and other provision would be required. However, my worry is that, as in so many other examples—we have neighbourhood renewal funding, a neighbourhood management programme, Sure Start and a positive futures programme for young people—we are putting public money into community services such as our primary care trusts and our healthy living provision only to have a certain proportion returned in fees and charges for such facilities and if VAT is charged it goes back to the Treasury. There seems to be a bureaucratic spiral of money chasing itself, which we should be able to cut out. I do not see any need to keep the subject under further review. My academies will open this year and we need those facilities to be in full community use straight away. We must act as quickly as possible or give a clear indication that action will be forthcoming. I look forward to hearing the Minister’s response and I hope that, depending on what she can say today, we might be able to meet, perhaps in September, to discuss how this can be taken forward.