VAT Charges (Police Scotland and Scottish Fire and Rescue Service)

Part of the debate – in the Scottish Parliament on 31st October 2017.

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Photo of Mary Fee Mary Fee Labour

I thank Ben Macpherson for bringing the debate to the chamber. I speak on behalf of Scottish Labour as deputy justice spokesperson. We support the aim of this members’ business debate, which is to protect the finances of our police and fire and rescue services. The VAT placed on our emergency services is a barrier to them recruiting more staff and providing greater protection for our communities and constituents.

Labour backs the call for Police Scotland and the Scottish Fire and Rescue Service to be exempt from paying VAT, as they were prior to the creation of the single services. Nonetheless, the Scottish Government must also acknowledge that it was aware during the progress of the Police and Fire Reform (Scotland) Bill that VAT would apply. The bill passed without much progress being made on the issue and, five years on, we still have no solution. It is long overdue that a remedy be found, and one must be found soon.

It is reported that between April 2013—when Police Scotland and the Scottish Fire and Rescue Service started as single, national services—and March of this year, £140 million was paid in VAT to the UK Treasury. Using the lowest tax bill of £23 million for Police Scotland and £9 million for the Scottish Fire and Rescue Service, Labour’s analysis shows that we could have hired and trained an additional 547 police officers and 223 firefighters.

We support the reintroduction of the VAT exemption and will continue to press the UK Government to act on it. Our 2016 Scottish Parliament election manifesto made that clear commitment, and we also lodged amendments during the passage of the Scotland Act 2016 to exempt Police Scotland and the Scottish Fire and Rescue Service from VAT. Today, we remain committed to ensuring that unfair tax bills are not forced on our emergency services.

We know that the solution is to change the Value Added Tax Act 1994 at Westminster. That is the key to protecting the finances of Police Scotland and the Scottish Fire and Rescue Service, and I urge the Scottish Conservatives to press their colleagues in Westminster to make those changes and allow our emergency services to recruit more officers. I also point out that, if the VAT that has been paid to date is refunded, as we agree that it should be, it would be good to get a commitment from the Scottish Government that that funding will be ring fenced for reinvestment in police and fire services alone, and will not be used to prop up other areas of deficit in its budget. I would be grateful if the minister could make some comment on that in her closing speech.

The upcoming budget is an opportunity for the UK Government to correct the situation. I support the calls, which unite most of the chamber, for the reintroduction of the VAT exemption for our emergency services.