Scottish Government cladding levy could harm housing emergency, MSPs say

There is “significant risk” that a new Scottish Government bill to tackle dangerous cladding on homes could derail the housing market, it is claimed.

MSPs fear ministers have failed to think through the impacts of new laws.

Shona Robison’s Building Safety Levy (Scotland) Bill would set a tax on new homes, with the cash collected used to fund improvements to stock.

Housebuilders would be required to pay up as part of a scheme that will be similar to one planned for England.

But Holyrood’s Finance and Public Administration Committee says it is “unconvinced” the SNP administration has fully worked through what it will mean for the housing emergency.

Members fear the extra costs could put developers off, leaving new housing on the drawing board and deterring the reuse of historic buildings.

It wants the government to think again before members of the Scottish Parliament meet to vote on the matter in January.

For the first time, the committee has made no recommendation on the bill – and says it wants the government to take its calls on board.

SNP MSP Kenneth Gibson, convener of the committee, said: “We have concerns regarding its potential impact on the housing market, and on the delivery of houses in areas where the viability of building sites is already challenging.

“We are unconvinced that the government has fully considered the implications for its self-declared housing emergency when designing the policy approach for this levy. We also believe the policy design has been focussed on the arbitrary figure that the levy could raise, and not sufficiently focussed on developing a good, well-structured levy that is sustainable.”

The stage one debate will be held in January, and in a report published today the committee says there is a “strong case” to exempt rural areas from the plan, and to include a sunset clause which would see the scheme reviewed at set points.

It also suggests loophole to avoid deterring the conversion of disused historic buildings into housing.

If approved, the scheme would come into place in 2028.

The bill is part of the Scottish Government’s response to the Grenfell Tower tragedy, in which more than 70 people died when cladding ignited on a London high-rise.

Scottish ministers established a national Cladding Remediation Programme to find, check and address safety risks for buildings to avoid a similar catastrophe, with money raised through the proposed levy to go towards future works.

The government said it wants to avoid the costs of such work falling on affected homeowners, or on the general taxpayer.

Gibson said: “Our committee does not consider the levy to be fully reflective of the sensitivities of the housing market in Scotland. We therefore recommend the government undertakes a sensitivity analysis to assess in more detail the impact of the levy on the housing market – in particular on rural sites and on SME [small and medium enterprise] developers.

“The analysis should be published in time to inform the government’s decisions in setting levy rates and, where applicable, any reliefs, through secondary legislation.”

The Scottish Government said it is “committed to doing what is right and necessary to address the challenge of fixing buildings affected by unsafe cladding”.

A spokesperson said: “The development of a levy helps ensure developers make a fair contribution to these costs, just as they are being asked to do under equivalent legislation in England.

“The design of the levy seeks to minimise any negative impacts on housebuilding, such as including protections for small developers and the affordable housing pipeline, while also facilitating funding to support Scotland’s cladding remediation programme, which will make buildings safer.”