I congratulate Ben Macpherson on securing the debate. I also congratulate Scottish Labour and the Greens, who support the Scottish Government’s position of exempting Police Scotland and the Scottish Fire and Rescue Service from VAT liability.
I asked to take part in the debate because I chaired the Justice Committee when it dealt with the bill that produced the national services and because I chaired the first Justice Sub-Committee on Policing, and I have pursued the issue of the VAT penalty ever since.
It is true to say that, at the time of the abolition of the local services, the Government was warned of the consequences for VAT. Whether or not we agree with that, it is fair to say that warnings were given. That is as far as it goes. The reason that was given concerned the principle that, because local authorities, as the paymasters, were exempt from VAT, their police and fire and rescue services were also exempt. However, in my book—and, I am sure, in Murdo Fraser’s book—a principle is a principle and should be applied without fear or favour. Let us put to one side the pre-existing Northern Ireland arrangements, under which its single forces are exempt from VAT. As with the £1 billion hand-out to secure the support of the Democratic Unionist Party’s support for Theresa May’s floundering Government, Northern Ireland is always treated differently—in some regards, for good reason.
However, the UK Government was in a bit of a bind when it set about promoting academy schools in England as a favoured policy. What was it to do with the problem of VAT liability as those schools moved from local authority funding—just like the Scottish police and fire services—to central Government funding? Were they just to cough up VAT like the Scottish police and fire services would have to do? Of course not. With the stroke of a Treasury pen, the VAT rules were amended PDQ and thus, from 1 April 2011, a new VAT refund scheme was introduced for academies under section 33B of the 1994 act. The scheme, confined to England, permits academies to reclaim the VAT that is incurred on purchases, imports and acquisitions that relate to their non-business activities.
The Police and Fire Reform (Scotland) Act 2012 came into force in 2013. Glance at those dates. On 1 April 2011, academy schools, which are nationally funded, were suddenly granted VAT exemptions. Two years later in Scotland, no exemptions were given to the police and fire services in Scotland. There is no principle in operation here; there is only expediency for the favoured Tory policy of academy schools and punishment for Scotland for daring to do something different and deliver national police and rescue services. What other explanation can there possibly be?
Ironically, one of the driving forces—no pun intended—behind the amalgamation of the eight constabularies was Tory cuts and the unavoidable need to make efficiency savings by streamlining the services and avoiding the duplication that was involved in a situation in which there were eight chief constables, eight deputies, eight chief fire officers and so on. The policy has had its ups and downs, I admit, but it was right for a population of just more than 5 million people, and it has allowed us to retain front-line officers. After all, the Metropolitan Police serves more than 10 million people.
In England and Wales, the Government has spent its resources on some 43 constabularies with accompanying—and not cheap at the price—commissioners, and has reduced the number of officers by the hundreds. Scotland is punished for streamlining and for trying to be efficient and ensure that we have more front-line officers. English services retain VAT and spend money on commissioners and 43 constabularies. Believe you me, in some instances they would quite like to follow the Scottish example. The situation is ridiculous and indefensible, and I commend Murdo Fraser for dancing on the head of the proverbial pin.