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Care of the old and vulnerable will be effected by the VAT increase.

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6:08am 13th January 2011

Care of older and vulnerable people will be harmed by the increase in VAT, a leading sector body warned today.

The increase in VAT from seventeen and a half to twenty per cent will add extra costs to care providers already suffering due to massive local authority spending cuts.

Unlike most businesses, care providers cannot charge VAT for their services but they have to pay VAT on things like fuel, gas and electricity.

Today the Independent Care Group (York and North Yorkshire) said the VAT increase would harm the sector.

Chair, Mike Padgham said:

"Set against a background of local authorities cutting back on how much social care they commission, the VAT increase is bound to have an impact,"

"Most businesses can offset the VAT they pay against VAT that they charge. This isn't possible for care providers so they will bear the full brunt of the increase."

In the case of businesses providing care to people in their own home for example, the VAT increase will push up the price of fuel needed to travel from client to client.

For those providing care in a home, the VAT rise will increase other costs, including gas and electricity.

Mike Padgham contiued:

"Care providers will either have to pass on the increased cost to people buying the care or absorb the increase by making cutbacks themselves".

"That in itself could have a harmful effect on the quality of care being provided.

"We have long argued that care services should be zero-rated for VAT to protect the care of older and vulnerable people."

The care sector is facing increasing pressure as local authorities reduce the amount of care they commission, due to severe Government funding cutbacks.

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