VAT; good news and ACEVO's solution.

Well the Byrne amendment may well have been lost but the VAT issue is far from dead. And you can rest assured ACEVO will be banging on about this till change is achieved. And perhaps we are on the way to reform?

I was delighted to see an exchange in the Commons on Wednesday at PMQs. Bob Russell MP is a good friend of the sector and one of the MPs ACEVO had been in touch with on the whole VAT scandal.

Let me reproduce the whole beautiful exchange so we can luxuriate in the potential for change.

"Bob Russell (Colchester) (LD): Voluntary organisations and charities were not responsible for the banking crisis, nor for the financial crisis left by the last Labour Government. As we both value voluntary organisations and charities, will the Prime Minister discuss with his Treasury colleagues how the increase in VAT that those organisations have to pay can be refunded to them?

The Prime Minister: I will certainly have those conversations with the Treasury, and we will want to do everything we can to help what used to be called, rather condescendingly, the third sector but I believe is the first sector: the excellent charities, voluntary organisations and social enterprises that do so much for our country. One thing we should do is look at funding them on the same basis as the Government fund themselves. The Government are always very generous with their own bureaucracy, and they need to recognise that so often these first sector organisations have the right answers to the social problems in our country. "

Apart from the dig at "third sector" (though I can do "first sector" frankly!! ) David Cameron's answer goes right to the heart of the issue of the unfair playing field between us and the state in tendering .

We are following up with the PM and the Chancellor. One solution we will be suggesting is what the HMRC do for academies. They refund the academies' VAT bills in full through a grant so that academies are not at a disadvantage with local authority schools. Clearly the Government will have to consider this in respect of free schools if they are not to suffer a huge disadvantage with a whacking great 20% VAT bill. So a refund grant scheme maybe the answer. We are proposing this to Government.

But it is both heartening that David Cameron MP has picked this up in such a positive way, as well as his generous tribute to the sector and his comment that so often we have "the right answers to the social problems in our country".