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Budget: VAT scrapped for Scots police and fire services

The Chancellor made the announcement in his address to MPs on Wednesday.

Budget: Philip Hammond was lobbied over the change by Scottish Conservative MPs.
Budget: Philip Hammond was lobbied over the change by Scottish Conservative MPs. PA

Scottish police and fire services will no longer have to pay VAT, the Chancellor has announced.

Philip Hammond revealed the change in policy during his Budget statement in the House of Commons on Wednesday.

The Scottish Government has called for the change for a number of years since the new nationalised police and fire services became liable for it after their creation 2013.

Before the change, the services had to pay around £35m a year in the sales tax to the Treasury.

The Scottish Government was warned before amalgamating the regional forces into national bodies that such a change would leave them liable for the tax.

The Scottish Conservatives stood on a manifesto to also merge the services in 2011.

Hammond told MPs: "The SNP knew the rules, they knew the consequences of introducing these bodies and they ploughed ahead anyway.

"My Scottish Conservative colleagues have persuaded me that the Scottish people should not lose out because of the obstinacy of the SNP government."

Budget key points

  • VAT scrapped for Scottish police and fire services.
  • £2bn additional funding for the Scottish Government.
  • National Living Wage (minimum wage) for those aged over 25s to rise to £7.83. in April 2018.
  • Additional £3bn set aside for Brexit troubles in next two years.
  • Office for Budget Responsibility revises down GDP growth forecasts: 1.5% in 2017, 1.4% in 2018, 1.3% in both 2019 and 2020.
  • Government borrowing forecast to be £49.9bn this year - £8.4bn lower than earlier forecasts.
  • Duties on most ciders and all wines, spirits and beer to be frozen.
  • Planned rise on fuel duty for both petrol and diesel cancelled.

Speaking ahead of the Budget, the First Minister called on the UK Government to hand back all VAT collected from the services over the last four years.

Nicola Sturgeon 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."

The news was welcomed by Scottish Conservative leader Ruth Davidson who tweeted: "Cleaning up the SNP's mess when it comes to police and fire service VAT payments."

Changes made in the Budget mean an additional £2bn will go to the devolved administration through the Barnett funding formula.

Hammond also announced the UK Government would set aside an additional £3bn will be set aside over the next two years to prepare for "every possible outcome" in the Brexit process.

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