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 Annabelle Ewing Annabelle Ewing Scottish National Party

That is not clear to me, because I have not seen the letter that was apparently referred to in

The Sunday Post

. We might be able to find that out in the fullness of time. Listening to the statements that are being made in the chamber by Tory MSPs, I am not encouraged to believe that those MPs are doing the right thing by their constituents and supporting key front-line services in their constituencies.

I turn to the VAT legislation. Other territorial police and fire services are able to reclaim VAT through section 33 of the Value Added Tax Act 1994. Since 2013, Police Scotland and the Scottish Fire and Rescue Service have moved to being wholly funded by the Scottish Government, rather than being funded in part by local authorities.

Notwithstanding that that funding process does not precisely meet the highly constraining criteria that are set out for section 33 status, that has not proved to be an impediment for other bodies that are currently covered by section 33, such as the BBC. Indeed, the BBC does not meet the criteria that are set out, including having the power of precept over local taxation, but notwithstanding that, it has been given the ability to reclaim VAT, and it has had that since before the creation of Police Scotland and the Scottish Fire and Rescue Service in 2013.

We also know that the UK Government has the power to make changes to VAT rules by way of a finance act to suit its policy objectives, and we know that it has exercised that power. For example, changes were made to section 33 of the Value Added Tax Act 1994 in 2011, following the introduction of academy schools in England and Wales, and we welcome the more recent change in 2015 to allow VAT to be reclaimed by search and rescue charities. We note that the UK Government also made changes to section 41 of the 1994 act to allow Highways England to reclaim VAT from 1 April 2015. It was acknowledged that the existing legislation would not permit the recovery of VAT by Highways England. What did the UK Government do? It simply changed the rules to suit its policy objectives.

It is clear that the UK Government has both the ability and the political will, where it suits it, to change VAT legislation. As we have seen, the BBC was already allowed to reclaim VAT before the establishment of Police Scotland and the Scottish Fire and Rescue Service, and since 2013 the UK Government has changed the rules to allow Highways England to reclaim VAT.

Why does the UK Government refuse to change the rules for Scottish front-line emergency services? We have heard about the cost of that: every piece of kit or equipment costs 20 per cent more for the Scottish Fire and Rescue Service and Police Scotland than it does for any other territorial police or fire service.

It might also be of interest to members to note that in the on-going project to introduce a new emergency services mobile communications system—a vital project that will ensure that police and fire services and other emergency services across the UK have a modern communications system that will allow them all to work together effectively—only Police Scotland and the Scottish Fire and Rescue Service will be subject to payment of VAT that cannot be reclaimed, which will involve an additional £50 million over the life of the contract. That cannot be right.

In conclusion, I urge the Conservatives to use their influence with their chancellor to stand up for their constituents and for policemen and policewomen and firemen and firewomen in their constituencies, and to ensure that, finally, we can bring this anomaly to an end. It is not fair, it is not equitable and it does not make sense because the goalposts have been moved for other bodies.

Finally, I thank members from the Labour Party, the Greens and the Liberal Democrats for supporting the call to end the VAT grab. I call once again on the UK Government to do the right thing by Scotland’s front-line emergency services.

Meeting closed at 17:58.