Scottish Liberal Democrat leader Willie Rennie MSP has today written to the Finance Secretary to propose changes to Police Scotland that would see its VAT bill abolished.
However, the letter also makes clear that Police Scotland incurring VAT has occurred as a direct consequence of the Scottish Government’s centralisation drive.
Commenting on the letter, Mr Rennie said:
“Ministers were fully aware of the issues VAT would present when they chose to undertake their centralisation drive and abolish the regional police forces, yet they plowed on regardless.
“Nonetheless with Police Scotland facing a £200 million funding black hole it is essential that other parties work constructively to repair the damage caused by the Cabinet Secretary’s predecessors.
“That’s why I am writing to the Cabinet Secretary today to propose changes, supported by COSLA, that would allow Police Scotland to be exempted from VAT.”
The text of Mr Rennie’s letter to the Cabinet Secretary reads:
I write with regards to the VAT status of Police Scotland and the Scottish Fire and Rescue Service.
Earlier this week you once again called for the VAT bill incurred by the national police and fire services to be abolished. Let me start by saying that I agree that, given it recently exempted a number of other UK bodies, the Treasury should proceed to lift this VAT obligation or allocate the proceeds back to the Scottish funding block.
However, it should come as no surprise to ministers that the police and fire services are currently ineligible for the VAT refunds granted to their local predecessors.
It is a problem of your own making. The Scottish Liberal Democrats repeatedly warned of this entirely foreseeable situation. The £35million cost is the responsibility of your predecessors.
However, I have a constructive recommendation for you to resolve this matter. It involves altering the Police Scotland governance structure that would simply change it from being a Non Departmental Public Body to a Single Shared Local Government Body. This would enable Police Scotland to remain in its current, centralised form but exempt from VAT.
This is a model that Liberal Democrats do not favour as we have been opposed to the centralised service from the very beginning but it would allow you to continue with the one, centralised service whilst avoiding the burden of VAT which is now a considerable £35 million each year.
This was a model that the Conservation of Scottish Local Authorities recommended to you and to parliament when the police and fire legislation was progressing through parliament.
I would urge you to adopt this new model. I would be prepared to meet to discuss how this could be piloted through the Scottish Parliament quickly so that we can reduce the burden on our police and fire services.
I look forward to your reply.
Yours sincerely, Willie Rennie
Leader, Scottish Liberal Democrats