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 Stewart Stevenson Stewart Stevenson Scottish National Party

My speech will draw on a number of sources, one of which is the House of Commons paper on police funding that was published in February 2016 and discusses all the police forces. However, I will start with a letter of 26 February 2016 from David Gauke, the UK minister at HM Treasury, to the convener of the Justice Committee. It specifically says:

“As you may be aware eligibility for VAT refunds for public bodies is subject to strict criteria, as set out in UK legislation, for the two main VAT refund schemes.”

This is the bit that cuts to the heart of the matter:

“The first, under Section 33 of the VAT Act 1994”— referred to by Murdo Fraser and others—

“allows local authorities and bodies whose funding is reliant on local taxation to reclaim irrecoverable VAT.”

That is the relevant scheme; the second one does not apply in this instance.

The first and obvious exemption is the Police Service of Northern Ireland, which was established in 2001 as the successor to the Royal Ulster Constabulary. It is almost wholly funded by the UK Treasury, with a top-up of £22 million a year at the current rate from the Northern Ireland Assembly, and it is permitted to reclaim its VAT.

If we look at page 12 of the Justice Committee’s report on the draft budget 2015-16, we see that 329 Police Scotland officers are funded by subventions from local authorities. Therefore, local authority funding is involved in the provision of Police Scotland services.

Let us go on a bit further. We have heard a little bit about section 33 of the 1994 act. Let us have a look at it. It is maybe just as well to point out that the original act—including section 33, which is the one that matters—was amended in 2012 by paragraph 217 of part 3 of schedule 16 to the Police Reform and Social Responsibility Act 2011. There are some very interesting and odd things in section 33 of the 1994 act. It has two lists: one for England and Wales and one for Northern Ireland and Scotland. I will give members a flavour of some of the things that are on the Northern Ireland and Scotland list. It includes

“a police and crime commissioner, the Mayor’s Office for Policing and Crime and a police authority and the Receiver for the Metropolitan Police District”.

They are on the Scottish list, yet Police Scotland is not. The British Broadcasting Corporation, which is based in London, is also on the Scottish list.

I do not need to go on. The whole thing is a legal and practical guddle that is unsustainable politically and, in the light of David Gauke’s letter, almost certainly unsustainable in legal terms.

In bringing this debate to the chamber, Ben Macpherson has given us the opportunity to visit some of the detail that is before us. The Police Service of Northern Ireland is the clear example that shows us why we should get our VAT back.

In four minutes, one can touch on a few things, Presiding Officer, but there are a few things that need to be looked at again.