The taxman is taking the equivalent of 350 firefighters out of Scotland while handing tax breaks to similar London-based organisations, the Scottish Fire and Rescue Service (SFRS) has said.
SFRS and Police Scotland did not inherit the VAT exemption enjoyed by the old regional forces when they merged in 2013 and HM Revenue & Customs has refused to reinstate the exemption despite repeated entreaties by MSPs.
Since then, it has handed tax breaks to new transport agency Highways England and UK-wide Olympic legacy organisation London Legacy, Holyrood’s Justice Committee heard.
SFRS is facing cuts of almost £50 million and is looking to cut nearly 200 firefighters.
The £10 million annual VAT bill is enough to pay for 350 firefighters, according to Alasdair Hay, chief officer at SFRS.
He said the new staffing structure is a “safe model” which will allow them to continue to meet casualty and safety targets, but agreed with union observations that it may not be the “best model”.
Committee convener Christine Grahame said the VAT bill is “unjust”.
Pat Watters, chair of the SFRS board, said: “VAT has been a burden on the organisation. We are the only fire and rescue organisation in the whole of the UK that is burdened by VAT.
“There have been subtle changes in the two years that we have been a fire service.
“For instance, the transport agency that was formed very recently down south is a national agency, very similar to the formation of a national service in Scotland such as the fire and rescue service, and there was a change in the regulations to allow them to be exempt from VAT.
“The London Legacy organisation, the Olympics legacy organisation, was formed into a national organisation to see the benefits of the Olympics spread throughout.
“That was a local body that was made into a national body and was made VAT exempt.”
SNP MSP Christian Allard said the BBC and the Metropolitan Police also enjoy VAT exemptions.
Mr Watters added: “Last year VAT cost us £10 million – that is £10 million that we wouldn’t have had to look for savings in the service and would have protected part of the service.
“Will it cover all of the gap? No, it won’t, but it will certainly go a long way to help us.
“I wrote the Prime Minister, the Chancellor of the Exchequer and every Scottish MP, and copied in my colleagues in the Scottish Parliament for information, and the replies that I got were: there are organisations that are exempt but we are not one of them. No reason was given.”
Mr Hay said the £10 million equates to “roughly about 350 firefighter posts”.
“At the moment there is 3,890 whole time firefighters in SFRS,” he said.
“The target operating model that we have is moving towards 3,709 whole time firefighters.”
He added: “We have looked at what would be a safe and effective crewing model.
“It would be disingenuous of me not to say that we have to live within our budget.”
He said the model will be “effective and efficient”, and they have hit targets on reducing public casualties and firefighter injuries.
However, he would not commit to using the additional £10 million to recruit firefighters if a VAT exemption is applied, saying he does not know what the total future budget will be.
Stephen Thomson, Scottish secretary of the Fire Brigades Union Scotland, said: “Who is to say that the safe model is the best model?
“If there were more resources then I believe there should be more firefighters to produce the best practice, not just the minimum practice to ensure safety.”
Mr Hay nodded in agreement and Mr Thomson went on: “We are extremely concerned about the cut to the fire service budget.
“I do believe that if this continues you will not have the frontline service, and there will be a reduction in the frontline not only in numbers but in outcomes.”
Ms Grahame said: “The VAT issue is a huge issue. For the life of me, I can’t understand why SFRS and Police Scotland are still having it levied.
“Whatever everyone’s politics are, it just seems unjust.”