SCOTTISH Tory MPs have been credited with finally convincing the Chancellor to axe the £40m-a-year VAT bill on Scotland’s police and fire services.
Philip Hammond said he was getting used to having his "ear bent by 13 Scottish Conservative colleagues” following the party’s resurgence in June's election.
He confirmed Scottish police and fire services would be eligible to reclaim VAT from April, ending a four-year stand-off between Westminster and Holyrood.
The services lost their ability to recover VAT when they underwent mergers in 2013, because they stopped being funded through local government.
The SNP were aware of the penalty but accused the Tories of “vindictiveness and nastiness” by refusing to reinstate the exemption.
The UK Government has admitted that it could have made the change at any time, but said it was not minded to bend to the SNP’s “politics of grievance”.
The Chancellor said: “The Scottish National Party knew the rules and knew the consequences of introducing these bodies, and ploughed ahead anyway.
“My Scottish Conservative colleagues have persuaded me that the Scottish people should not lose out just because of the obstinacy of the SNP Government, so we will legislate to allow VAT refunds from April 2018.”
Scottish Conservative leader Ruth Davidson said her party was “cleaning up the SNP's mess when it comes to police and fire service VAT”.
Finance spokesman Murdo Fraser said his party was “achieving more for Scotland in six months than 56 SNP MPs did in two years”.
SNP Westminster leader Ian Blackford welcomed the change on VAT but told the Chancellor it was too late and demanded a refund of past taxes.
He said: “It is a disgrace that we have had £140m taken out of frontline spending.
“The SNP spoke out, here and in Holyrood, 140 times before the Government finally saw sense. What about the £140m that has been paid?
“The Chancellor has confirmed what we knew all along: that it was a political choice to charge VAT on our emergency services.
“He has accepted that he was wrong, but I am calling on him and his friends from Scotland on the Tory benches to make sure that we push for a refund of the VAT that has been paid over the past three years.”
Scottish Finance Secretary Derek Mackay said: “It’s clear it was a political decision to change it now. They could have changed it any point in the last number of years.
“Bear in mind the Tories supported a single police service and a single fire service, so they didn’t oppose that in principle in terms of the structure of it.
“This is a decision that can be delivered at the stroke of a pen. They’ve done it for transport agencies, they’ve done it for academy schools, they could have done it for police and fire at any point.
“So having accepted the principle, I am pursuing them for the £140m that police and fire services have paid out in terms of VAT, because it is an absolute injustice that they were paying it at all and it should certainly be repaid now that they have accepted the principle.”
First Minister Nicola Sturgeon welcomed the decision on VAT, but said the refusal to refund previous taxes was “disappointing and unfair to emergency services”.
LibDem Liam McArthur MSP said: "This situation could have been avoided altogether if it wasn’t for the SNP’s obsession with centralisation. It is our police and fire services that have paid the price of that arrogance to the tune of £140m."
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