WIREDGOV

The Justice Secretary has issued a challenge to the Treasury to ensure Scotland’s police and fire services can continue to recover VAT.

Kenny MacAskill said the policy is in stark contrast to the UK Government’s treatment of Academy schools in England, where the rules were changed to allow VAT to be reclaimed. It would also mean the police and fire services in Scotland would be the only ones in the UK unable to recover VAT.

This follows a number of amendments that the Government has agreed to strengthen the Police and Fire Reform Bill ahead of Stage 3 this week.

These include increasing the proposed size of the Scottish Police Authority and Scottish Fire and Rescue Service board from seven to 11 members to 11 to 15 members following representations from COSLA and others and strengthening the role of the Scottish Police Authority in holding the Chief Constable to account.

Mr MacAskill said:

"This decision by the Treasury is unacceptable, unjustifiable and manifestly unfair. This charge on Scottish public sector reform is not levied on similar reforms in the rest of the UK.

"The people of Scotland should not be penalised twice, firstly by Westminster imposed budget cuts and secondly by this unacceptable VAT retention by the Exchequer.

"There is flexibility in the VAT system, where there is a will to do so, to enable Treasury to take steps to ensure that the creation of new public bodies is tax neutral even where they are centrally funded. They were willing to do this for the UK Government’s own initiative of Academy schools – which are entirely funded by central government – but have refused to do so in respect of the Scottish Government’s reform of police and fire services.

"It also ignores the fact that the new Police Authority will continue to be able to receive funding from Scottish local authorities to pay the costs of agreed local priorities. This provides a direct link with local taxation, which we consider meets the Treasury’s policy on VAT recovery.

"This Government is absolutely clear that moving to single services is the best way forward for Scotland and the best way to protect frontline police and fire and rescue services, the 35-year low in recorded crime, the 50 per cent reduction in fire deaths in a decade and the record 1,000 extra officers we have put on our streets since 2007."

He added: "We are also proposing some amendments to the legislation at Stage 3. These address issues raised by stakeholders, and will increase the size of the SPA and SFRS Boards, ensure their work is as open and transparent as possible, and also strengthen the role of the SPA in holding the new Chief Constable to account."