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 Murdo Fraser Murdo Fraser Conservative

I have already taken one intervention. I have four minutes; Mr Macpherson had seven minutes. He should listen and learn from what I am about to tell him.

Those refunds exist in order to stop VAT becoming an additional burden on local taxes. Because police forces in England and Wales are part funded by the council tax, they have the right to reclaim VAT. However, because both Police Scotland and the Scottish Fire and Rescue Service are not part funded through local taxation, there is no justification for a VAT refund. The legal position is therefore quite clear. It is quite clear today, and it was quite clear back in 2012, when the new bodies were created. Correspondence that passed between the Scottish Government and the Treasury at that time, which is in the public domain, puts that beyond doubt.

I appreciate that both Police Scotland and the Scottish Fire and Rescue Service would prefer it if the £35 million that they pay in VAT could be reclaimed. That is an issue for the Treasury, and I know that the chancellor and his colleagues are aware of it, but we should not be in any doubt that the SNP Government went into the reorganisations with its eyes fully open, and that it is living with the consequences of its actions.

In debate after debate in the chamber when the mergers were being proposed, Opposition parties and other witnesses raised the question of VAT, but the Scottish Government’s response at that time was that there would still be savings to be made from the mergers, even with VAT being taken into account. The Scottish Government was aware of what would happen when it went down that route. At the time, the Treasury even proposed to the Scottish Government alternative routes to try to avoid the problem. It proposed, for example, channelling funding for Police Scotland through local authorities, but that reasonable suggestion was rejected by the Scottish Government at the time. Even Unison the trade union made it clear in evidence that the SNP went into the mergers with its eyes fully open and fully aware that the right to reclaim VAT would be removed. Therefore, any reduction in funding, to which Mr Macpherson so objects, is entirely the fault of his SNP Government, and no one else.