Fire and rescue service criticise £10m VAT 'burden'

Fire and rescue chiefs yesterday hit out at the VAT “burden” placed on Scotland’s single service amid suggestions it could fund 350 more firefighters.

The Scottish Fire and Rescue Service (SFRS) has had to plug a funding gap of almost £50m in its first three years in light of a significant drop in government funding and a rising cost base, primarily as a result of VAT and pay inflation.

Against this backdrop, the SFRS joined colleagues within Police Scotland in reiterating calls for an exemption from VAT, which could free up £10m a year – equivalent to around 350 firefighter posts.

The two national services are the only two blue-light organisations of their type in the UK required to pay VAT to the UK Treasury after failing to inherit exemptions granted to their regional predecessors.

Appearing before Holyrood's Justice Committee in November, Police Scotland chief constable Sir Stephen House said the decision not to allow the single service to recover VAT was “bewildering”.

“VAT has been a burden on the Scottish Fire and Rescue Service,” said SFRS Board chair Pat Watters, who held up new transport agency Highways England and UK-wide Olympic legacy organisation London Legacy as other national organisations recently formed that have been granted VAT exemptions.

Watters, appearing before the Justice Committee, added: “It is very much a matter for the Westminster Government. Last year, VAT cost us £10m. That is £10m that we would not have had to look for in savings in the service, and which would have protected part of the service on an ongoing basis.

“It is therefore important to our ongoing financial situation. The money would not cover the whole gap, but it would certainly go a long way towards helping us.”

Watters confirmed that he had written to the Prime Minister and Chancellor as well as parliamentarians at Westminster and Holyrood but the issue remained unresolved.

SFRS chief officer Alasdair Hay said the VAT issue was a “massive” one facing the service, though he stopped short of committing to spend any such money on recruiting additional firefighters.

“As we look to the future, we do not anticipate any significant increase in our funding, so exemption would be a very useful and powerful thing and would help improve safety outcomes for the people of Scotland,” he told MSPs.

Funding available to the SFRS has reduced by £31.5m – equivalent to a 11 per cent drop – in cash terms since 2012/13.

There are 3,890 full-time firefighters in Scotland at present, though Hay told MSPs their "target operating model" would see this number reduced by roughly 180.

Stephen Thomson, Scottish Secretary of the Fire Brigades Union (FBU) Scotland, said: “We are extremely concerned about the cut to the fire service budget. We believe that, if that continues, there will be a reduction in the front line, not only in numbers but in outcomes.

“The duplication has stopped, yet the cuts keep coming. That means that, at some point, there will be a reduction in front-line outcomes.”