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 Liam McArthur Liam McArthur Liberal Democrat

I join members in congratulating Ben Macpherson not only on securing the debate but on the passionate way in which he prosecuted his argument. As members have said, the debate is timely, not least given the financial straits in which our Police Service and our Fire and Rescue Service find themselves at the moment.

To be clear, the Scottish Liberal Democrats strongly support a resolution to the impasse on VAT. That was set out in our manifestos for the 2016 and 2017 elections, and my colleague Alistair Carmichael has written to the Chancellor of the Exchequer to prosecute the point. As we have heard in the debate, there now appears to be cross-party support for such a resolution. It is also pertinent to point out that the Scottish Liberal Democrats strongly opposed the Police and Fire Reform (Scotland) Act 2012, which centralised police services and fire and rescue services.

Prior to the 2012 act, as Murdo Fraser reminded us, police and fire services were controlled by local authorities and were able to reclaim VAT. The Scottish Government was aware of that at the time—there seems to be no dispute on that point—and the then Cabinet Secretary for Justice, Kenny MacAskill, was warned repeatedly of the tax implications ahead of centralisation. On that issue, as on so many other issues, the bold Kenny was not for listening. Doing the wrong thing for the right reason was the mantra of the day.

Over time, the efficiency savings that Mr MacAskill and his ministerial colleagues told us would undoubtedly be delivered have simply not materialised. As a consequence, the financial plight of the SFRS and of Police Scotland in particular has become more acute. Although I disagree with John Finnie on some things, he is absolutely right to point us in the direction of where we should go now in pursuing a resolution.

Last year, my colleague Willie Rennie wrote to the Cabinet Secretary for Finance and the Constitution, Derek Mackay, to draw attention to proposals that, at that stage, had the backing of the Convention of Scottish Local Authorities. They would have involved changing the governance structure of the services from non-departmental public bodies to a shared local government body, which would have allowed the centralised structure to be maintained but would at least have enabled exemption from VAT.

There may be other options, and there may be changes in the way that the UK Government applies the VAT regulations that may allow a solution to be sought at this stage. Nevertheless, there is a mess that I would still argue was largely a result of the Scottish Government’s decision to press ahead with the 2012 act, and it is police officers and staff, and their counterparts in the SFRS, who are now paying the price. We ask those men and women to carry out difficult and often dangerous tasks on our behalf, and it is a price that they can ill afford to pay.

I thank Ben Macpherson for bringing the debate to the chamber, and I look forward to the Scottish Government and the UK Government reaching a resolution without further delay to allow these vital services to be properly funded in the way that we would all wish them to be.