I thank noble Lords for this amendment, which calls for a change in tax policy. It seeks to allow FE colleges to claim refunds of VAT incurred on their non-business expenditure. As noble Lords have acknowledged, tax policy is a matter for the Chancellor and the Treasury. Any tax changes are considered by
the Chancellor in the normal way and announced in the context of his Budget judgment, as he will be doing next week.
I understand this call for additional funds from the Treasury for FE, but there are clear implications when thinking about such a change. It is estimated that it would cost the Exchequer about £145 million per year. That cost would have to be covered somewhere in the economy—for example, reducing public expenditure on other government priorities. In addition, the VAT treatment of FE colleges is no different from many other public bodies.
However, in view of all that the noble Baroness said about the previous Prime Minister’s comments about looking carefully at the matter, I will go back to see what further I can say by way of explanation for the status quo. I hope that in view of my comments, she will feel able to withdraw her amendment.