SOUTH NORFOLK MP Richard
Bacon has called on the government to help its flagship academies sort
out a tax mess, as a new report finds that academies are being forced to
restrict community groups from using their facilities in order to avoid
VAT liability, despite the fact that academy buildings were always
intended for community use.
Local groups using more than 10 per cent of an academy’s area, time or capacity would make the academy liable for full-rate VAT on its entire construction cost, far exceeding any rental income generated.
VAT rules are also impacting on the design of academies, with one academy opting to demolish and rebuild a sports hall at a cost of £1 million, rather than face a VAT bill of £4.25 million.
Mr Bacon said: “VAT is stopping academies from playing a full role in their local communities. Academies should not have to shut out community groups in fear of the taxman, nor put their own budgets at risk just to open their facilities to local people”.
“This lunacy has already forced one academy to tear down facilities and rebuild them, simply because doing so cost less than a quarter of the VAT demand. This is a total waste of time and money and the government should resolve this issue quickly”.
Mr Bacon also has called for better project management for the academies programme, as the national audit office report finds that building costs overran on two thirds of new academies, with some project managers showing poor control of costs and a lack of knowledge of either construction or education issues.
Mr Bacon said today: “The government has only managed to build around one third of academies on budget, clearly indicating that project management is weak. It is common sense that an academy’s project manager needs to understand both education and construction issues, yet some managers do not have the required knowledge with sadly predictable results. This must be addressed now or the building costs of academies will continue to overrun”.
Mr Bacon was speaking as the National Audit Office published its report into the academies programme. The report finds that the building costs of 17 out of 26 academies overran by an average of £3.2 million.
There has also been criticism of some project managers for poor control of costs and their failure to notify officials of cost overruns. Project managers need to understand both educational and construction issues, but some project managers only had relevant knowledge and experience in one area.
23 February 2007
NAO REPORT: The Academies Programme PARLIAMENT: Academies progress must not be lost, says MP
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