Meeting of the Parliament 12 March 2024
I note that there are 13 high-rise buildings in scope in the wider Falkirk district, none of which is in my Falkirk East constituency. However, I am interested in the bill because of the potential impacts on people and business—specifically SMEs. For the record, I have no declarable interest, and I never have had, in house building.
First, I note that the bill is another framework bill. I am a member of the Finance and Public Administration Committee. We have raised multiple times the implications of framework bills where the nub of the issues is left to secondary legislation. I express my concern about that here again today. I note that that was backed up by Cruden Investments Ltd, which stated:
“It is concerning that all ... detail will be left to secondary legislation which will be unlikely to receive the same level of parliamentary scrutiny.”
In that respect, it is immaterial whether the same approach has been adopted in England and Wales.
I will start by discussing SMEs further. Few, if any, in the chamber will have run an SME that builds houses. I have not, but I know enough about the sector to surmise that the trading environment is difficult. There was an increase in activity coming out of the Covid pandemic, but that has been accompanied by a significant increase in base costs, exacerbated by Brexit and the cost of living crisis. There are considerable risks, and margins can often be tight.
That was backed up in evidence from the likes of Robertson Homes. It was noted that SMEs wish to act responsibly in the matter of the remediation of homes, but they simply do not have the same heft that larger house builders have. The representative from Robertson Homes also made the critical point that many SMEs are debt funded and therefore a liability for remediation may render the business insolvent.
Based on my knowledge of commercial banking contracts, I add to that that even a simple technical breach of that liability appearing on a balance sheet—not an actual default in making repayments—could allow the lender to seek repayment of any facility on demand. There is precedent of large banks using commercial contract clauses in that way, despite businesses trading solvent and meeting all their financial obligations. I simply note that as a warning.
Another area of risk for SMEs is liability where there exists the very likely scenario that subcontractors have been used. I agree with the Law Society of Scotland that, in that case, the builder would have legal remedies, but enacting those remedies will be time consuming and will impact the ordinary people who are caught up in the situation.
I must admit that I support the call from Homes for Scotland for a £10-million threshold for a responsible developers scheme that is similar to that in England. My concern is that, without that, we run the risk of losing more small house builders at a time when there is huge pent-up demand for and chronic undersupply of housing.