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Spending review: sixth-form colleges will be allowed to become academies

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Sixth-form colleges will be allowed to convert to academy status or join a multi-academy trust, George Osborne has announced in a surprise move.

While an academy conversion process is already in place, the Department for Education has previously shied away from supporting sixth-form colleges interested in making the transition. It has been suggested that one of the main reasons is the fact that, while England's 93 sixth-form colleges have to pay VAT, schools and academies have their costs refunded by the government.

The VAT bill, dubbed a “learning tax” by the Sixth Form Colleges' Association (SFCA), costs an average-sized college £317,000 per year.

This move to abolish non-refundable VAT payments for sixth-form colleges has long been campaigned for by FE personnel and politicians alike. Earlier this year, a cross-party group of 76 MPs urged education secretary Nicky Morgan to address the “VAT anomaly” and support the introduction of a VAT refund scheme for sixth-form colleges in England.

But the move to permit academy conversion could give colleges a means of avoiding VAT.

Commenting on today’s spending review, SFCA deputy chief executive James Kewin said: “We are delighted that sixth-form colleges will have the opportunity to become academies. This will help to move the sector from the margins of education policy to the mainstream."

The move was also supported by Martin Doel, chief executive of the Association of Colleges. “Sixth-form colleges will welcome the news that they can choose whether to become an academy, enabling them to reclaim VAT as schools have done so for many years," he said. "We have long campaigned for colleges to be able to reclaim VAT. It is a positive step in the right direction."

In his spending review speech, Mr Osborne announced that the government would protect £1.5 billion funding for core adult skills participation and revealed details of the apprenticeship levy. He also outined plans to extend FE loans to 19-plus learners.

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