What recent discussions she has had with the Chancellor of the exchequer on the effect of value added tax on city academies.

My officials have had a number of discussions with Her Majesty's Treasury and Her Majesty's Revenue and Customs officials about VAT and academies. We are also having discussions with academies about the issue.

What we want is an answer. The Minister will know that when the Prime Minister attended the opening of the new buildings of the City of London academy in Bermondsey on 12 September, he gave a paean of praise to city academies, including these words:

"it is bringing new hope and breathing new life into the local community."

If that city academy must now find an extra £3.5 million so that it can open its doors to after-school, weekend and community activities—and the director of education for Southwark has made it clear that it will not be possible to deliver the programme that was intended—will Departments get their act together, sort out the problem and prevent that threat, involving millions of pounds, from hanging over not just our city academy but every other city academy in the country?

I share the hon. Gentleman's concerns, but we need to be clear that the specific issue under discussion does not prevent academies from providing community use of their facilities. It does limit their ability to charge for such use, which is an important issue that we are absolutely determined to sort out. That is why, for example, my officials are already working with the academy in the hon. Gentleman's Constituency to consider ways of managing the situation and the practicalities of academies reclaiming VAT and accounting for output tax over the economic lifetime of the building. But I share his concern and I want to ensure that we sort this matter out. We are committed to doing so because we are committed to ensuring that academies play that role at the heart of their communities.

May I raise with my right hon. Friend another problem? These VAT rules mean that there is a strong bias in favour of new construction, rather than the improvement and conversion of existing buildings. That is why Newcastle's Liberal Democrats, when they asked the Government for a city academy, decided to close a perfectly good large school in my Constituency with the largest ethnic minority student intake in the city. Does she recognise that precisely this difficulty will apply to foundation schools and to future trust schools?

I do not accept my hon. Friend's final point. There is a specific factor relating to the independence of academies that leads to the particular VAT issue that we are considering. I do not know the details of the school to which my hon. Friend refers, but we should remember that such things are happening in Newcastle and other authorities in the context of considerable extra investment not only through academies, but through the building schools for the future programme, which will increasingly lead to new build and much higher quality school buildings—including across our entire secondary estate—over the next 15 years. But where there are specific, small, technical but nevertheless important issues that prevent us from achieving modernisation and community use of such facilities, we will of course work across government to sort out the situation.