Connexions: Partnerships consider radical measures to save 25m in VAT

Anne Weinstock, head of the Government's Supporting Children and Young People Group, told partnerships in February to make the savings by reducing VAT bills rather than frontline services (YPN, 25 February-2 March, p2).

Chief executives are considering restructuring their operations to qualify for tax breaks to comply with the demands. Partnerships that subcontract services are under most pressure because of VAT costs charged by third-party providers.

Connexions Black Country, which needs to prune its tax budget by 1.2m, is studying the regeneration partnership model as a way of eliminating VAT charges from service provider Prospects Services. Regeneration partnerships, which organise regeneration activities, are typically run by autonomous boards, but staff are employed by local authorities.