§ Dr. Owenasked the Secretary of State for Social Services (1) if he will estimate the effect of the extension of the value added tax to building alterations and extensions on the cost rent scheme facility for general practitioners;
(2) why it is not possible to include value added tax in the schedules of the cost rent scheme facility for general practitioners;
(3) if he will increase the limits of the cost rent scheme for general practitioners in order to accommodate the effect of putting value added tax on building alterations and extensions.
§ Mr. Kenneth ClarkeWe considered very carefully the question of increasing these cost allowances to take account of the imposition of VAT on building alterations and decided that the existing allowances should be made inclusive of VAT with effect from 1 June 1984. Taking the country as a whole, the cost rent scheme is already generous and faced with competing demands for resources within the NHS we have to consider where our priorities should lie. We have agreed that VAT may be added to the existing cost limits for those doctors who undertook to modify their surgery premises before the imposition of VAT was announced on 13 March 1984, but we can see no compelling reason otherwise to increase the cost limits to cover a change in taxation. These arrangements will however be kept under review.
The effect of these developments on the cost rent scheme cannot be predicted with any confidence. They may lead some doctors either to modify projects so that building costs and VAT can be met within the existing cost limits or to make less substantial alterations to their surgery premises under the improvement grant scheme.