I do not disagree to a large extent with what Mr Flanagan said. It very much depends on whether the money would remain in the police budget. If we assume that it would, that would self-evidently mean that the reform funding that has been provided could have been utilised to provide some of the fairly significant investments that are required in many areas of the police infrastructure, notably in IT.
I appreciate that there are huge political sensitivities around the VAT, but let us not kid ourselves. We are where we are with the set of circumstances and, in truth, I do not think that any of the political parties—probably with the notable exception of the Liberal Democrats and the Greens, who would probably take some moral high ground on this—have covered themselves in glory on it.
I have not seen any legitimate proposals that would have ameliorated the set of circumstances that has prevailed and that sees the police service paying VAT. I was involved with civil servants and others in the planning arrangements for the development of the police service, and although there were some tentative arrangements around the laying of amendments to say that the new police authority should be considered to be like a local authority, there was ultimately, as far as I can see, no alternative to the service being governed by anything other than a non-departmental public body such as the Scottish Police Authority. That, in its own right, was going to result in VAT.
The Treasury now gets money from policing that it never got previously, but in overall financial terms in the United Kingdom, it is but a pimple on the backside of a cow. It is a tiny sum of money that is available to the Treasury.
On the general question of whether the police service and other public services should be paying VAT, I think that that is particularly difficult to justify. I have heard some attempts at justification from the Chancellor of the Exchequer, Philip Hammond, who said that it is a consequence of European Union rules. Unsurprisingly, we have made some inquiries with some of our European counterparts, and the Danes, who are funded in an almost identical manner to the police service in Scotland, are exempt from paying VAT. Either Philip Hammond was wrong in the information that he presented or the Danes were able to secure a carve-out from the European rules that he cites that the UK either decided not to pursue or has no knowledge of, in which case there is negligence in a number of areas.
I suppose the short answer is that, if we are able to get the VAT money and it stays in the police budget, it will make a huge difference, particularly given the constraints that are placed on the police service at this time.