 The final item of business is a member's business debate on motion 8226, in the name of Ben Macpherson, on unfair police Scotland and fire service VAT charges. The debate will be concluded without any questions being put, and I would ask those who wish to speak in the debate to press the request-to-speak buttons. I call on Ben Macpherson to open the debate for up to seven minutes, please. I would like to thank the Presiding Officer for securing debate time on the current unfair situation, where Police Scotland and the Scottish Fire and Rescue Service are the only police and fire services in the whole of the UK that are unable to reclaim VAT. I thank you also to all members who have supported this motion so far, including many SNP, Green and Labour MSPs. Unfortunately, no Lib Dem or Tories have yet to sign the motion for debate. However, in good faith, I hope that Tory and Lib Dem colleagues will take the opportunity of today's debate to show their support for Scotland's police and fire services and get their VAT back. As I already mentioned, at present, Police Scotland and the Scottish Fire and Rescue Service are the only territorial police and fire services in the whole of the UK that are unable to reclaim VAT from the UK treasury. The anomaly needlessly costs our public services a total of £35 million a year, unfairly depriving Police Scotland of around £25 million a year and our fire service of approximately £10 million a year. There is no justification for this discrepancy. It is totally unjust. Paying the VAT means that, while the Scottish Government is protecting the police budget in real terms and has increased the operational resource of the fire service this year, while those things are happening, the UK Government is needlessly depriving extra resources from Police Scotland and Scotland's fire service, resources that would be better spent on front-line services and communities in my constituency and all across Scotland. Some have argued previously that the Scottish Government was aware that there would be VAT implications when the Parliament passed the Police and Fire Reform Act 2012. However, the SNP never accepted or agreed with the position that our police and fire services should be unfairly treated as a result of their merger in 2013. There was no good reason to accept the glaring disparity then, and it should not be accepted now. The anomaly that penalises Scotland's emergency services never made sense in 2012. It does not make sense now, and the UK Government rules around this, needlessly disadvantaged communities across Scotland, and they should and must be changed. The chair of the Scottish Fire Service, Pat Waters, described the injustice of the current situation in the justice committee as follows. When the people of Scotland have to provide for major emergencies, it costs them 20 per cent more than it costs anywhere else in the UK. It is not right that it costs the people of Scotland 20 per cent more to get the same protection as elsewhere in the UK. There are no reasonable arguments for the UK Government to maintain their discrepancy in this matter. Furthermore, there are no legal reasons why the current rules and position cannot be changed, either. Through section 76 of the Finance Act 2011, the UK Government have amended VAT rules to allow academy schools to reclaim VAT. Sometime after the mergers of Police Scotland and our Fire Service, Highways England was granted the ability to reclaim VAT by the UK Government by way of the Finance Act 2015. The BBC is also exempt. All the UK Government needs to do to rectify this unfair anomaly is legislate in a similar way in which it has already done so for academy schools, Highways England and the BBC. It would be a very simple process for the UK Government if it decided to do the right thing and treat Scotland's Police and Fire Services with equity. Moreover, some have recently erroneously tried to excuse the UK Government's indefensible position by referring to EU legislation on VAT. However, as the UK Government well know, individual member states have latitude on how they implement the sixth VAT directive. How individual countries operate VAT refunds is principally down to national legislation. Considering all of that, the UK Government should and must use the forthcoming UK budget to end the unfair disparity towards Police Scotland and the Scottish Fire and Rescue Service when it comes to reclaiming VAT and give Scotland's Police and Fire Services parity with other forces in the UK academy schools, the BBC and Highways England. Because the UK Government could have made such changes several years ago, it would only be right for the UK Government to also refund Police Scotland and the Scottish Fire and Rescue Service to refund the £140 million already paid in VAT that has been taken away from Scotland's front-line emergency services since 2013. All that is being asked for here is an equitable solution from the UK Government. For that reason, in good faith, I hope that all speakers in today's debate will join me in pressing the UK Treasury to change their rules. That includes Scottish Conservative MSP colleagues. The Sunday Post reported on 8 October that 13 Scottish Conservative MPs in London have written to the chancellor requesting a change in the VAT rules for Police Scotland and the Scottish Fire Service. I hope that Tory MSP colleagues will clarify that point today and that Tory MSPs will also do the right thing. Do the right thing by Scotland and its constituents and join with me and many others in pressing the chancellor to treat Scotland's Police and Fire Services with equity, parity and fairness? The Tories like to think that they are the party of law and order, but if that is to hold any credibility whatsoever, they need to support Scotland's Police and Fire Services on this matter. As MSPs supporting our police and fire officers means much more than words, it means standing up for them as much as we can, because that is what this debate and this issue is all about. It is not about grievance, it is about fairness, it is not about party politics, it is about making sure that our police and fire officers are treated with parity, to be treated the same as every other police and fire service in the UK. The UK Government has said several times in recent years that it will respect Scotland and treat it with equality. When it comes to charging our police and fire services VAT, it has yet to deliver, but I hope genuinely that, as MSPs together, we can change their minds, because they should change their minds, they must change their minds, they should change their rules, they must change their rules, and they should change them very fast. We now move to the open debate, and I call Murdo Fraser to be followed by Rona Mackay. Speeches have up to four minutes, please. Thank you, Deputy Presiding Officer. Can I start by congratulating Ben Macpherson on securing the debate? Although I would have to say to him very gently, I think that this is a rather unusual subject for members' debate in this Parliament. The issue that he raises is not a new one, it is the issue that we have debated in this Parliament on many previous occasions, and it is hard to see that there is a specific constituency interest that he has or indeed any other member has. Perhaps I can forgive Mr Macpherson. Ben Macpherson? My constituency, like any other, whether it is rural or urban across Scotland, has policing needs. That is about making sure that, for the whole of Police Scotland, a more effective and more efficient police service, and for the whole of Scottish Fire and Rescue, we, as constituency and regional MSPs as a whole, surely have an interest in this, in making sure that our services have the resources that they need and deserve. Murdo Fraser? Perhaps I can forgive Mr Macpherson, because he was not a member of this Parliament at the time that the legislation was put through to create the single police and fire services for Scotland. He might not therefore be aware that the issues that he is referring to tonight were thoroughly debated at that time before the legislation was passed. The situation that we have today has arisen entirely because of the actions of the SNP Government. They went into that with their eyes fully open and they are now calling for others to sort out a problem that they themselves have created. Perhaps I can spend a few moments educating Mr Macpherson on what exactly is a legal position here. Section 33 of the VAT Act 1994 allows certain locally funded bodies to reclaim VAT on the purchases of goods and services. I have already taken one intervention, Mr Macpherson. I have got four minutes, you had seven minutes. I think that he should listen and learn from what I am about to tell you. Those refunds exist in order to stop VAT from becoming an additional burden on local taxes. Because police forces in England and Wales are part funded by 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 therefore no justification for a VAT refund. The legal position, Deputy Presiding Officer, is quite clear. It is quite clear today. It was quite clear back in 2012 when the new bodies were created. Correspondence in the public domain that passed between the Scottish Government and Treasury at that time puts that matter beyond doubt. I quite appreciate that both the police and the fire and rescue services would prefer if the £35 million that they pay in VAT could be reclaimed. That is an issue for Treasury, and I know that the Chancellor and his colleagues are aware of that. However, we should not be in any doubt that the Scottish National Party Government went into those reorganisations with their eyes fully open and they are living with the consequences of their actions. In debate after debate in this chamber, when the merger was being proposed, opposition parties and other witnesses raised the question of VAT. The Government's response at that time was that there would still be savings to be made from those mergers, even with the VAT issue being taken into account, so they were aware that that was going to happen when they went down that route. At that time, the Treasury even proposed alternative routes to the Scottish Government to try and avoid that very issue being arising. For example, channeling funding for Police Scotland through local authorities. However, that reasonable suggestion was rejected by the Scottish Government at that time. Even the trade union unison made it clear in evidence to the Parliament that the SNP went into those mergers with their eyes fully open and fully aware that the right to reclaim VAT would be removed. Therefore, any reduction in funding that Mr McPherson objects to is entirely the fault of his SNP Government and no one else. He referred in his opening—I have already taken an intervention with Mr McPherson. He said when he was opening that he said something quite inaccurate. He said that the only police and fire services in the United Kingdom who cannot reclaim VAT are those in Scotland. That is not the case, Mr McPherson. If you have done your research, you would know that the British Transport Police cannot reclaim VAT. The Ministry of Defence Police cannot reclaim VAT. Mr McPherson says from the Benches territorial that that word was not used by Mr McPherson in his opening remarks as the official report. No, Mr McPherson. Thank you. You have to close. So, rather than indulging in what aboutary, Mr McPherson, you need to accept that your Government got this role. Despite all the bluff and bluster from the SNP, the fact is that they have created this problem and are looking for others to try and bail themselves out of it. Once again, it will be the Conservatives at Westminster who are asked to sort out the SNP's mess. I have Rona Mackay to be followed by Mary Fee. First, I thank my colleague Ben McPherson for bringing this crucial debate to the chamber and I welcome the chance to take part in it. When Ben put forward this motion, he received an onslaught of criticism on Twitter to which I was copied in. I did not respond to any of it because I prefer not to enter into antagonistic dialogue on social media. Like Murdo Fraser, the main thrust of those who support charging police Scotland in the fire and rescue services VAT, which results in a loss of £140 million over the past four years, appeared to be, we told you so and you were warned before setting up a merd service. Presiding officer, my overriding thoughts on those comments were and always have been, does that make it right? If your answer is yes, please explain why it is acceptable that Scotland is the only devolved nation to be hit with punitive charges. As Ben said, everything that police Scotland or the fire and rescue service buys costs 20 per cent more here than the rest of the UK. That is simply outrageous and unacceptable. It is only effective to starve our vital services of £35 million per year, which would enhance law and order justice and safety of the public in Scotland. The UK Government's hypocrisy on this issue has been astounding. It rightly praised the tremendous work done by our emergency services, while at the same time starved them of much-needed resources. They have point blank refused to reverse the VAT charge despite there being a clear precedent for doing so, as we have heard in Highways England and academy schools are examples. It is a spiteful and disgraceful way for a national government to act, and there is no excuse for it. Now would be the best time for Ruth Davidson to use her growing popularity with Westminster and the British establishment to do something useful for Scotland for once. Will her motley crew of Tory MPs be standing up for Scotland? Of course not. Why break the habits of a lifetime? I certainly will not be holding my breath for that. As for Labour, it is good to see that they have finally come on board, albeit grudgingly, to ask the Tory Government to hand back our money, better late than never. Shamefully, until now, they stood side by side with the Tories and the Lib Dems to the detriment of Scotland. I am proud of the work that those great forces do to keep us safe and well. Last month, I attended the annual review of the fire and rescue service. While discussing the challenges and ever-growing demand that the service faces, the much-respected former chairman of the board, Pat Waters, replied simply, we will make it work, because that is what they do and have always done against all odds. We need that excessive charge to be dropped. It only serves to hamper the efforts of our police and firefighters. The people of Scotland deserve better, so I ask the Westminster Government to ceaseence and end this petty punitive charge. Can I remind members that they should always refer to colleagues by their full name because that helps the official report. I now call Mary Fee to be followed by Christine Grahame. Can I start by thanking Ben Macpherson for bringing this debate to the chamber tonight? On behalf of Scottish Labour, as the Deputy Justice spokesperson, we support the aims of this member's debate to protect the finances of our police and fire and rescue services. The VAT, which is placed in our emergency services, is a barrier to our police and fire services, recruiting more staff and providing greater protection for both our communities and our constituents. Labour backs the call for Police Scotland and the Scottish Fire and Rescue Service to be exempt from being VAT, as they were, prior to the creation of the single services. However, the Scottish Government must recognise that it was aware that VAT would apply during the progression of the Police and Fire Reform Scotland Bill. However, the bill progressed without much progress being made on that issue. Five years on, we still have no solution, and it is long overdue that a remedy is found and found soon. It is reported that between April 2013, the date that Police Scotland and the Scottish Fire and Rescue Service started as a single national service. In March of this year, 140 million has been paid in VAT to the UK Treasury. Labour's analysis shows that when using the lowest tax bill of 23 million for Police Scotland and 9 million for Scottish Fire and Rescue, we could have hired and trained an additional 547 police officers and 223 firefighters. We support the reintroduction of the VAT exemption, and we will continue to press the UK Government to act on that. Our 2016 Scottish election manifesto made that clear commitment, and we also lodged amendments to the Scotland Act 2016 to exempt Police Scotland and the Scottish Fire and Rescue Service. Today, we remain committed to ensuring that unfair tax bills are not forced upon our emergency services. We know what the solution is by changing the VAT act at Westminster. That is the key to protecting the finances of Police Scotland and the Scottish Fire and Rescue Service, and I urge the Scottish Conservatives to press their colleagues in Westminster to make those changes and to allow our emergency services to recruit more officers. I also point out that if the VAT paid to date is refunded, as we agree that it should be, it would be good to get a commitment from the Scottish Government to ring-fence that funding for reinvestment in police and fire services alone, and not to use it to prop up other areas of deficit in their budget. I would be grateful perhaps the minister in her closing if she could make some comment on that. The upcoming budget is an opportunity for the UK Government to correct this situation, and I support the calls that unite most of the chamber in reintroducing the VAT exemption for our emergency services. Thank you, Presiding Officer. I congratulate Ben Macpherson on securing this debate and congratulate two Scottish Labour and the Greens who support the Scottish Government's position of exempting Police Scotland and Fire and Rescue from VAT liability. I request it to take part in this debate as I chair the Justice Committee through the progress of the bill that produced those national services and indeed the first sub-committee on policing and have pursued the VAT penalty ever since. It is true to say that at the time of the abolition of local forces, the Government was warned of the consequences for VAT, and whether you agree with that or not, it is fair to say that warnings were given, but that is as far as it goes. The reason given was the principle that local authorities, as they paymasters, being exempt from VAT on the service as it existed, the police services and fire rescue services would also be exempted. In my book, and I am sure in Murdo Fraser's book, a principle is a principle and should be applied without fear or favour. Let's put to one side the pre-existing Northern Ireland arrangements with its single forces exempt from VAT, because, as with the £1 billion handout to secure the DUP's report for May's flowering Government, Northern Ireland is always treated differently and in some regards for good reason. The UK Government was in a bit of a bind when it set about promoting academy schools in England as a favoured policy. What to do with the problem of VAT liability as the schools moved from local authority funding, just like the Scottish Police and Fire and Rescue, to central Government funding, where they just cough up VAT like Police Scotland and Fire and Rescue, would have to? Of course not. With the stroke of a treasury pen, the VAT rules were amended PDQ, and, from 1 April 2011, a new VAT refund scheme under section 33B of the VAT Act 1994 was introduced for academies. The scheme, confined to England, permits academies to reclaim the VAT and curtain purchases, imports and acquisitions that relate to their non-business activities. The Police and Fire Reform Act 2012 came into force in 2013 and glanced those dates. 1 April 2011 and academy schools nationally funded are granted suddenly VAT exemptions, Police and Fire and Rescue, two years later in Scotland, and no exemptions. There is no principle in operation here. Just expediency for favoured Tory policy of academy schools and punishment for Scotland for daring to do something different in delivering a national police and rescue service. What other explanations can there possibly be? Yet ironically, one of the driving forces, no pun intended, to amalgamate those eight constabilies was Tory cuts and unavoidable efficiency savings, the duplications of eight chief councils, eight deputies, eight chief fire officers to be replaced with streamlined services. It has had its ups and downs, I admit, but the policy was right for a population of just over five million and has retained front-line officers. After all, the net serves well over 10 million. However, in England and Wales, it has spent its resources in some 43 constabilies with a company that is not cheap at the price commissioners and reduced the officers in their hundreds. Scotland punished for streamlining and trying to do efficiency to make sure that we had more front-line officers. English services retaining VAT, spending money on commissioners, 43 constabilies, and believe you me, they are quite like in summonsness to follow the Scottish example. It is ridiculous, it is indefensible and I have to commend myrdofraiser for dancing on the head of the proverbial pin. I joined with others in congratulating Ben Macpherson in bringing forward the debate. That is a very important issue, and I think that language is very important. It may surprise some people, but I suspect not many that know me that I wasn't necessarily a personal supporter of a single service, but, just as my former convener of the Justice Committee said, we were driven to that position by cuts from Westminster. What I would disagree with Christine Grahame on is that it wasn't just eight versions of things, there were nine versions and sometimes ten versions. The model that is there is a strategic one that sees top-level issues such as cross-border, crime, organised crime and trafficking dealt with. Of course, there is a very significant local model working. It is not necessarily as robust as I would like to see, but there is local input. As I heard someone mention, there is officers directly funded by local government as well, unless that has changed since the last time we looked at it, but most importantly, there is local scrutiny. I am keen to see the highest level of devolved resource management to apply when I was very proud to serve in Northern Constabulary, initially in Northern Borders Police in Northern Constabulary, at the most advanced system of devolved resource management, to the extent that the two police officers in Barra were responsible for their own overtime bill. Who better to judge when they needed to work extra hours? That is proper local policing, and there is nothing in that model that would not stop that. Sadly, that became a constitutional issue, and I mean sadly that that became a constitutional officer. We have heard that you were told, as Mr Fraser said. I am glad that it seems to be less of a constitutional issue than perhaps at one time where. I want to talk about my MP. My MP for a while was Mr Danny Alexander. Danny Alexander was the chief secretary of the treasury, and thanks to all of you good people but not me and my green colleagues, as a senior member of the Asian Infrastructure Investment Bank, you recently granted him privileges in criminal immunity, but there we go. He was very, very busy on the issue of VAT. He grabbed this issue, and I do not just mean in relation to academy schools, he grabbed the crucial issue that was applying in the area, and he chased and secured VAT exemption for ski lift passes. I have to say that community safety, as has been alluded to, is one of the most important things that we have oversight of and responsibility for, and that is our police service and it is our fire and rescue services. I think that we could go on forever talking about, and I suggest that we don't, and the Prime Minister wouldn't let me anyway, talking about some of the examples. However, it is the case that the national crime agency set up during Theresa May's time, which does not have local funding as a nationwide body, is exempt from VAT, as I understand it. There are challenges in our rural communities for the fire and rescue services about recruitment for policing, and we heard today in the committee a fascinating statistic, namely that 20 per cent of police time is taken up dealing with domestic abuse issues. I think that we all have wider obligations. I think that there are rules, I think that there are laws, I think that there is democratic aboundability and there is public opinion, but there is also political will. If there is a will to resolve the issue, I am sure that we can. To some respects, I would say to Mr Fraser and Mr Kerr, forget where this came from, forget the SNP for once, don't have an obsession with them, think about what your obligations are in relation to the 20 per cent more that could be done, and that is to improve community safety, and that is providing additional resources for our fire and rescue service. I fully support the motion. First and foremost, let's get it right henceforth, and we can talk about the back money after that, but please let's get it right. Thank you. At this point, I have a few people who still want to speak, so I am minded to extend this debate by up to 30 minutes under rule 8.14.3. Can I invite Ben Macpherson to move that motion without notice? Is the chamber agreed that we should do so? That is agreed. Therefore, we will extend the debate by up to 30 minutes, and I call Stuart Stevenson to be followed by Liam McArthur. Thank you very much, Presiding Officer. My contribution will draw on a number of sources, one of which is of the House of Commons paper on police funding, which is published in February 2016, which discusses all the police forces. However, perhaps let me start with a letter from the UK minister, David Gork, at HM Treasury, which was sent to the convener of the Justice Committee here, and it is dated 26 February 2016. It specifically says that, as you may be aware, eligibility for VAT refunds for public bodies is subject to strict criteria as set out in UK legislation for the two main VAT refund schemes. That is the bit that cuts to it. The first, under section 33, referred to by Murdoff Eder and by others, of the VAT act 1994, allows local authorities and bodies whose funding is reliant on local taxation to reclaim a recoverable VAT. The second one does not apply in this particular instance. The first and obvious one is the police service of Northern Ireland, which was established in 2001 as the successor to the Royal Ulster Conservatory, which was almost wholly funded from the UK Treasury, with a top-up of £22 million a year at the current rate from the Northern Ireland Assembly, and which was permitted to reclaim their VAT. In relation to Police Scotland, if we look at page 16 of the report on the draft budget 2015-16 that came from our justice committee, we see that 329 officers in Police Scotland are funded by subventions from local authorities. Therefore, there is local authority funding involved in the provision of Police Scotland services. Now, let's go on a little bit further. We've heard a little bit about section 33 of the 1994 VAT act. Well, let's actually have a little look at section 33. It's maybe just as well to point out that, of course, since its original form and the particular one that matters, it was amended by the Police Reform and Social Responsibility Act 2011, schedule 16.3 paragraph 217 in 2012. There are some very interesting and odd things. There are two lists in section 33, one for England and Wales, one for Northern Ireland and Scotland. Let me just give you a flavour of some of the things that are on the Northern Ireland and Scottish list. A Police and Crime Commissioner, the mayor's office for policing and crime, and a police authority and the receiver for the Metropolitan Police District, they are on the Scottish list. The Scottish list, but yet Police Scotland is not on the Scottish list. The British Broadcasting Corporation, based in London, is on the Scottish list. I don't need to go on. The whole thing is a legal and practical guadow that is unsustainable politically and almost certainly, in the light of David Gawch's letter, unsustainable in legal terms as well. In bringing this debate to the chamber today, Ben Macpherson has given us that opportunity to visit some of the detail that is in the paper that is before us. Northern Ireland, the clear example that shows why we should get our that back. Four minutes, you can touch a few things, but I think that there are a few things that need to be looked at again. I call Liam McArthur to be followed by Marie Todd. Thank you very much to every Presiding Officer. I join others in congratulating Ben Macpherson, not only in securing the debate, but in the passionate way in which he prosecuted it. Argument is, as others have said, a timely debate, not least given the financial threats that both the police service and a fire and rescue service find themselves in at the moment. To be clear, Scottish Liberal Democrats strongly support a resolution to the impasse on VAT. It was set out in our manifesto both for the 2016 and 2017 elections. My colleague, Alasdair Cymru, has written to the Chancellor of the Exchequer prosecuting this point as well. As we have heard already in the debate this evening, it appears to now be cross-party support for such a resolution. It is also pertinent to point to the Scottish Liberal Democrats strongly opposed the centralisation of the bill that created the centralisation of the police and fire and rescue services. Murdo Fraser reminded us that, prior to the 2012 act, police and fire services were controlled by local authorities, and they were able to reclaim VAT. The Scottish Government was aware of that at the time of the act, of which there seems no dispute. Then, just as Secretary Kenny MacAskill was warned repeatedly of the tax implications ahead of centralisation. On that, as on so many other issues, the old Kenny was not for listening. Doing the wrong thing for the right reason was the mantra of the day. Over time, undoubtedly the savings from efficiencies that we were told would be delivered by Mr MacAskill and his ministerial colleagues simply have not materialised. As a consequence of that, the financial plight of both organisations, Police Scotland in particular, has become more acute. However, although I would perhaps disagree with John Finnie on some things, he is absolutely right in pointing us in the direction of where we go now in pursuing a resolution. My colleague Willie Rennie wrote to the finance secretary Derek Mackay last year, drawing attention to proposals that, at that stage, had the backing of COSLA. That would have involved changing the governance structure of the bodies from an NDPB through to a shared local government body, which would have allowed the centralised structure to be maintained, but would at least enable exemption from VAT. There may be other options and changes in terms of the way that the UK Government is applying the VAT regulations to allow a solution to be solved at this stage. Nevertheless, the mess that I would still argue was largely the doing of the Scottish Government's decision to press ahead with the legislation back in 2012. It is, of course, police officers and staff and their counterparts in our fire and rescue services, who are now paying the price. We ask those men and women to carry out difficult and dangerous tasks on our behalf, and that is a price that they can ill afford to pay. I thank Ben Macpherson for enabling the debate to take place. I look forward to the Scottish and UK Governments now reaching a resolution without further delay that will allow the vital services to be properly funded in the way that we all wish them to be. I thank Ben Macpherson for bringing this important issue to the chamber tonight. I sense that there are a few points on which he disagrees across the chamber this evening, so I want to focus first on the points that we can all agree on. Firstly, Police Scotland and Scottish Fire and Rescue play a vital role in protecting our communities. It goes without saying that everyone here values our emergency services, and we are grateful for the hard work and dedication that is shown by the men and women who work for them. Secondly, Police Scotland and Scottish Fire and Rescue pay around £35 million annually in VAT, which totals £140 million since 2013. Thirdly, Police Scotland and Scottish Fire and Rescue are uniquely the only territorial forces in the UK that are subject to VAT. None of that is disputed. Also not disputed is the challenging fiscal environment that we are in currently. We have had several years of Tory austerity and we have more ahead of us, and we now know that Scotland is going to be one of the parts of the UK that will suffer most economically as a result of our withdrawal from the EU, so it has been tough and it is about to get tougher. Scotland's face cuts to its budget from Westminster totaling £2.9 billion over 10 years. That means that every year the Scottish Government is given a more and more difficult job to sustain the high quality of public services that people in Scotland deserve. We have been told on the finance committee, which I am a member of, on a number of occasions that Brexit will result in budgetary pressures worsening significantly in Scotland. Our police and our fire and rescue services cannot afford to be needlessly denied 35 million per year, and that funding will be crucial to keeping a high quality of service through the financial difficulties that Brexit will cause in the future. Every economist that we have had in front of us at the finance committee predicts that the economy will shrink because of Brexit. They only disagree on how much it will shrink by. That will undoubtedly put pressure on the public purse. The Scottish Government has repeatedly called on the UK Government to end the glaring disparity in the way that VAT affects emergency services across the UK. Even, if I am to believe the Sunday post, the 13 Tory MPs in the House of Commons have written to the chancellor to seek an end to what is in effect discriminatory treatment of the Scottish emergency services as far as the VAT rules are concerned, but not one Tory MSP in this Parliament has signed the motion. We have heard already that the UK Government could choose to deal with the anomaly, as it did for Highways England, academy schools and various other bodies. They are happy to change the VAT law when it suits them, so it seems that it does not suit the UK Government to change the VAT laws for our emergency services. That same Government that hands out tax cuts to the rich is more than happy to continue taking 35 million every year from essential front-line services in Scotland. Last month, we asked the Scottish Tories in this chamber to put their constituents before their party and call a halt to the roll-out of universal credit. So far, they have failed to do so. I ask them today to stand up for our police and fire service. Will they? The last of the speakers in the open debate is Liam Kerr. Thank you, Deputy Presiding Officer. I am pleased to have been called to speak in this debate this afternoon and I am grateful to Ben Macpherson for securing it, because it allows Parliament the opportunity to correct some of the significant misconceptions and misunderstandings that have crept into the issue, which are inherent in the motion, which might be the reason that, the last time I looked, only half of the SNP MSPs have supported it. The rest, presumably, having taken the time to inform themselves as to the veracity or otherwise of some of the claims. It is important at the outset to make clear to Ben Macpherson that Police Scotland and the Scottish Fire and Rescue are not in fact the only forces in the UK unable to reclaim that. The members' re-searchers seem to have missed that the British Transport Police and the Ministry of Defence Police are also in the... He didn't say that in his speech, Stuart Siemenson. John Finnie. John Finnie. Thank you, Presiding Officer. I am grateful for Liam Kerr taking a point. One of them, of course, is funded by the Ministry of Defence. The other takes its income from a commercial contract, which is with the real companies. Does that not influence? Liam Kerr. The key point that I am making, John Finnie, is that, when Ben Macpherson sets up his opening speech and says that this is the only force that cannot reclaim the VAT, it is fundamentally on a misconception. They cannot reclaim VAT because, like Police Scotland, they are centrally funded services. I am not going to have time, Ms McPherson, sorry. One might say that those were examples of what would happen when the Police Scotland and the Fire Service were created, and that is the crux of this matter. Organisations that are part-funded locally can reclaim VAT. The idea being that VAT should not be an extra burden... Mr Stevenson, excuse me, Mr Kerr. Mr Stevenson, please stop muttering loudly is how I would turn from your seat. Mr Kerr. That is why Police forces in England and Wales can reclaim the VAT because they are part-funded by council tax. Like Police and Fire Service in Scotland used to be, I just won't have time, Marie Todd, I'm sorry. When everything was centralised, the VAT refund appropriately would cease to apply. This was all explained by the UK Government to Kenny MacAskill in 2012. I have got the letters here, which explain academy schools if you would care to read them, and that will help you to understand what's going on. The then Scottish Government's proposed savings from the single forces creation were predicated on the VAT not being provided for, i.e. they budgeted for it and went ahead anyway. The whole debate isn't about fairness at all. It is about the Scottish Government taking a decision that it now regrets and creating a narrative that, if the UK Government won't change the entire tax system to sort out their mess, it is somehow unfair. Then, in an utterly brass-necked move, they asked for all the money that was paid since 2013 to be given back. Money that they told the people of Scotland was budgeted for, costed and would ultimately produce savings. It is an extraordinary piece of spin designed to distract from SNP failures. The SNP are responsible for ensuring that our services have the resources that they need, but the Police Federation has warned that Police Scotland is becoming a response-only service. Thousands of officers have been taken off the streets. Lack of IT is threatening safety of officers and staff. Papers circulated to senior fire service management say that the current model is not financially sustainable. Longer response times have been blamed on firefighter cuts, and Audit Scotland has warned that fire service faces are a financial black hole. Enough of the Westminster grievance. Let's remember the words of the SNP member at this year's conference. She said, I am angry, Mr Matheson. I am a member of the SNP. This is not a Tory Government in Scotland. This is not a Labour Government in Scotland. This is my party in Scotland, and you are letting down your officers. She is right. Sort it out. The minister to close this debate around seven minutes, please. I congratulate Ben Macpherson on securing this debate and welcome the opportunity to respond at this evening. I hope that the time available to be able to deal with various of the points raised. Let me begin by restating that this Government believes that it is completely unacceptable that our police and fire services face a combined annual vac cost of around £35 million per year, which other territorial services in the UK do not have to bear. Since the establishment of Police Scotland and the Scottish Fire and Rescue Service in 2013, the total amount of that that cannot be reclaimed is of the order of £140 million. If the situation continues throughout the lifetime of this Parliament, the total cost to the Scottish public purse will be around £280 million, which, to put the figure in some context, is more than the resource budget of the Scottish Fire and Rescue Service for a whole year. Leaving aside the intricacies—Certainly? Murdo Fraser. I thank the minister for giving way. Just for the events of the doubt, will she confirm to the chamber that the Scottish Government was fully aware when it went down the route of creating the single police and fire services that the consequence would be, as it is today, in relation to the ability to reclaim that? Will she just confirm that as the case? Annabelle Ewing. What I can say to the member is that, although we were aware of the arguments put forward by the UK Government, we did not accept those arguments, nor did we accept the principle being put forward, where we already were seeing exceptions to the rules in terms of changing goalposts, like, for example, the BBC. However, I will go on to the intricacies of that legislation in a moment, but this Treasury windfall of £140 million is something that could be invested in our police service and our fire and rescue service and make a huge difference to the ability to respond to the needs of the people of Scotland in terms of their emergency front-line services. We have been in discussion with the UK Government for over five years on this issue, and so far they have rejected, sadly, all requests for an equitable solution. When we consider the creation of the single police authority and the Scottish Fire and Rescue Services Scottish Police Authority in the SFRS, we focus on wider benefits that would be attained in moving from eight regional police and fire bodies to single national organisations. We introduced new, more streamlined bodies to reduce bureaucracy and improve the efficiency and effectiveness of these key public services in Scotland so that they could meet the challenges of the 21st century. However, the core functions and purposes of both bodies remain as they were before reform, and funding continues to come from the public purse, as is the case with respect to territorial police and fire services across the rest of the UK. As Mr Fraser has just said, we were aware of the implications of that at the time in terms of our proposed reform proposals. Equally, as I said, it was not a position that we either accepted or agreed with. We have continued to lobby UK ministers seeking a fairness of approach in terms of other changes that they have made before or since, and I will get on to those in a minute. Why is the case a very short intervention? Ben Macpherson, you have spoken about how you have been in correspondence with the UK Government on this matter recently. I wonder if, as the Scottish Conservatives were not able to clarify the point whether, indeed, 13 Conservative Scottish MPs have written to the chancellor on this matter, requesting a change in the rules. Annabelle Ewing. It is not clear to me, because I have not seen the letter that was referred to in the Sunday post, but, obviously, we might be able to find that out in the funerals of time. Certainly, in terms of the statements made by Tory MSPs in this chamber, it is not looking very encouraging in terms of those MSPs doing the right thing by their constituents and supporting key front-line services in their constituencies. Turning to the VAT legislation itself, other police and territorial police forces are able to reclaim VAT through section 33 of the 1994 act. Since 2013, the Scottish Police Authority and the Scottish Fire and Rescue Service moved to being wholly funded by the Scottish Government rather than being funded in part from local authorities. Notwithstanding that funding process does not precisely meet the highly constraining criteria that is set out for section 33 status, which has not proved to be an impediment for other bodies currently contained within section 33, such as the BBC. Indeed, the BBC does not meet the criteria set forth, including having the power of precept over local taxation, but notwithstanding that, it has been given the ability to reclaim VAT, and that, since before the creation of Police Scotland and the Scottish Fire and Rescue Service in 2013. We know also that the UK Government has the power to make changes to VAT rules by way of the 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 VAT act in 2011 following the introduction of academy schools in England and Wales, and we also welcome the more recent change in 2015 to allow VAT to be reclaimed by search and rescue charities. We note also, Presiding Officer, that the UK Government also made changes to section 41 of the VAT act to allow Highways England to reclaim VAT, and that, as from 1 April 2015, even though it was acknowledged that the existing legislation at the time would not permit the recovery of VAT by Highways England, so what do 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. So why does the UK Government refuse to change the rules for Scottish frontline emergency services? We have heard about the costs that this involves for our frontline emergency services. Every piece of 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 be of interest to members to note that, in terms of the on-going project to introduce a new emergency services mobile communications system, a vital project that will ensure that police and fire services across the UK and other emergency services can have a modern communications system, which allows them all to work together effectively. It is only Police Scotland and the Scottish Fire and Rescue Service that will be subject to VAT, which cannot be reclaimed. That 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, to stand up for police men and women and fire men and women in their constituencies and to ensure that, finally, we can bring this anomaly to an end. It is not fair and equitable. It does not make sense in terms of the goalpost having been changed in regard to other bodies. 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. That concludes the debate. The meeting is closed.