Chancellor Expected To End Scottish Police And Fire Services Paying VAT

22 November 2017, 05:25

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Chancellor Philip Hammond is expected to use his Budget to end the anomaly that means police and fire services in Scotland are the only ones in the UK who pay VAT.

But the Tory minister is set to reject calls from the Scottish Government and others to refund Police Scotland and the Scottish Fire and Rescue Service the £140 million they have paid out so far.

The services became subject to the levy when they were formed in 2013, when ministers at Holyrood merged regional forces together to create the two new national bodies.

Since then SNP ministers have been pressing for them to be exempted from VAT like services south of the border, and after 13 Scottish Tory MPs were elected to Westminster in June, they are said to have been lobbying the Chancellor on the issue.

Scottish Tory finance spokesman Murdo Fraser tweeted on Wednesday morning that the budget move was a "victory for @ScotTories at Westminster - clearing up the SNP's mess for them".

The Conservative MSP added: "13 Tory MPs achieving more for Scotland in 6 months than 56 SNP MPs did in 2 years."

But Scottish Finance Secretary Derek Mackay said a key test of Mr Hammond's Budget would be whether he goes further than exempting the emergency services, and refunds the payments they have already made.

Mr Mackay is also urging the Chancellor to think again on proposed public spending cuts, and to pause the roll-out of Universal Credit, which combines several benefits into one payment.

Mr Hammond is expected to use his Budget speech at the House of Commons to set out a vision for "global Britain" with a "prosperous and inclusive economy where everybody has the opportunity to shine wherever in the UK they live, whatever their background".

With the clock ticking on Brexit he will also argue that the UK should be "an outward-looking, free-trading nation, a force for good in the world, a country fit for the future".

Mr Mackay made clear, however, that the Scottish Government "remains resolute in our opposition to the UK Government's austerity agenda", arguing that this "disproportionately hurts the poorest and most vulnerable in society".

He said: "The Chancellor must meet key tests in his Autumn Budget to repair some of this damage, to recognise the serious challenges we are facing as a result of Brexit and to bring forward substantial measures to boost the economy and ease the pressure on the public sector and those who work in it.

"Mr Hammond must reverse his plans to cut an additional £3.5 billion, halt his £600 million reduction for Scotland's railways and finally address the issue of police and fire VAT that has cost Scotland's emergency services £140 million to date.

"And the UK Government must use this opportunity to stop the damage being done to individual households by the roll-out of Universal Credit and welfare cuts."

The Scottish Finance Secretary said: "I have provided a consistent and comprehensive case for a better settlement for Scotland, and expect the Chancellor to respond positively."

First Minister Nicola Sturgeon welcomed the news that the emergency services would no longer have to pay VAT - but stressed the Tory government must refund earlier payments to the two forces.

The SNP leader said: "It's long overdue and it's an absolute disgrace that it has taken the UK Government so many years to do the right thing here.

"Police Scotland and the fire service in Scotland should never have been paying VAT and they are the only emergency services in the UK that do so."

Ms Sturgeon said the Chancellor should confirm the services will no longer have to pay the levy and called for the backdated amount to be refunded.

"I am hopeful we will get both of those commitments today, because both of them are essential," she said.