Meeting of the Parliament 08 January 2026
I am pleased to speak on behalf of the Finance and Public Administration Committee, which was the lead committee for stage 1 scrutiny of the Building Safety Levy (Scotland) Bill. I refer members to my entry in the register of members’ interests.
The committee’s call for views on the bill was held between 26 June and 15 August 2025. We received 39 submissions, including those from the house-building, land and property sectors; local authorities; and taxation and law experts. The committee is grateful to those who took the time to share their views, and to our clerking team for their excellent work in advising members and producing our report.
We held three evidence sessions during October and November. Based on the evidence received, we made no recommendation in our stage 1 report on whether Parliament should support the general principles of the bill. We have asked the Scottish Government to respond favourably to our recommendations regarding the provisions and impacts of the bill in order to inform today’s debate. I will therefore focus on some of the committee’s key considerations and conclusions, together with the Scottish Government’s response, which, of course, has changed even today.
In evidence, many witnesses told us that they oppose a building safety levy—particularly house builders and their representative bodies, who suggested that it would negatively affect Scotland’s housing market. They highlighted significant impacts on rural development, small to medium-sized enterprises, the build-to-rent sector and their ability to build affordable homes. I am pleased that the minister has today gone some way towards addressing the concerns at least of SMEs.
Those who are supportive of the levy consider that it is a fiscal necessity for the remediation of cladding defects, as having a levy would be better than placing the full costs of remediation on affected home owners or paying for them through general taxation.
On balance, the committee was persuaded by evidence that the levy would have a macroeconomic effect on the Scottish housing market, although more data is needed to identify exact impacts. The committee recommended that the Scottish Government undertake a sensitivity analysis to assess in more detail the levy’s potential impact on the housing market, particularly on rural sites and on small and medium-sized developers. We asked for the results of that analysis to be published in time to inform Government decisions on setting levy rates and, where applicable, any reliefs through secondary legislation.
We also sought an updated business regulatory impact assessment, alongside the subordinate legislation, to set out an explanation of how the Government has taken those findings into account. Although the Scottish Government has committed to providing an updated BRIA, it is unclear whether our recommendation to carry out a sensitivity analysis has been accepted. That was a key recommendation underpinning the committee’s findings, and we urge the minister to clarify in his closing speech that that much-needed piece of work will be undertaken, as requested.
The bill would exempt from the levy all residential developments on Scotland’s islands, and there is broad support for that measure. The committee also believes that there is a strong case to extend the exemption to remote rural areas, and we asked the Government to undertake work on developing an appropriate definition of and exemption for those remote rural areas. The Government now plans to extend the exemption to areas that currently receive 100 per cent relief on non-domestic rates.
Some witnesses also made the case for exempting the build-to-rent sector from the levy—a matter that the minister touched on earlier. Although committee members have concerns about the fragility of the build-to-rent sector, on balance we felt that such an exclusion would significantly limit the levy’s tax base and agreed that the levy should apply to that sector.
The bill exempts any housing for which construction funding has been provided under the Scottish Government’s affordable housing supply programme. The committee heard a mix of views regarding that exemption, with some witnesses arguing that removing affordable housing from the tax base places a disproportionate burden on private homes. Others, such as local authorities, suggest that the exemption does not go far enough and should be extended to cover all affordable housing developments, not just those that are funded through the Scottish Government’s programme.
The committee asked the Scottish Government to consider, as part of the sensitivity analysis that we requested, the potential effect of the levy on the delivery of much-needed affordable housing across Scotland. It would be helpful if the minister could confirm in closing whether he accepts that recommendation, as his response on that has been, again, unclear.
The Government originally planned to introduce the levy from 1 April 2027, just over a year after the bill would pass if agreed to by Parliament. In evidence, there were concerns that that timeline would not provide house builders with sufficient time to properly prepare for the levy’s implementation, particularly as key details such as levy rates and transitional arrangements would be set out only in secondary legislation. In evidence, the minister announced that levy implementation would be deferred by one year, to 1 April 2028, and advised that indicative levy rates would be set out in June this year, as he touched on earlier today. The committee welcomes the decision to delay the levy’s implementation and believes that the new timescale provides the housing industry with sufficient time to prepare for its introduction.
Section 13 of the bill requires the proceeds of the levy to be used
“for the purposes of improving the safety of persons in or about buildings in Scotland.”
However, the Scottish ministers’ current intention is for the levy to support the cladding remediation programme. We were told in evidence that building construction quality scandals have tended to occur every 10 to 15 years and that the broad wording in the bill could lead to a permanent levy that funds the remediation of any building safety issue that arises. Witnesses said that the consultation processes focused exclusively on cladding remediation rather than broader safety matters. Certainly, that should be the case.
The committee sees merit in those arguments and in recommendations that are aimed at ensuring that the levy does not continue indefinitely without proper checks and balances. The proposals should also provide much-needed reassurance to the industry that the levy will not become a permanent house-building tax.
Our recommendations include asking the Government to further consider adding a restriction to ensure that the bill pertains exclusively to cladding remediation, which I am pleased that the minister agreed to. A sunset clause should be added to the bill, which would provide an opportunity after 15 years to robustly review how the levy is operating and for Parliament to decide whether it should continue. Although the minister is not in favour of a sunset clause, he said that he will consider including a clear date for review by strengthening the bill’s reporting provisions. We heard a few minutes ago that that date will be every three years.
The bill’s financial memorandum suggests that the levy seeks to raise £30 million a year as one of the revenue streams for the Scottish cladding remediation programme. That is the amount in
“Barnett consequentials that the Scottish Government might have received had the UK Government England-only levy been extended to Scotland.”
Evidence that the committee took suggests that that figure is optimistic, given uncertainties around the potential impacts of, and behaviours arising from, the levy. We asked that the figure be reviewed once the sensitivity analysis that is recommended in our report has been carried out.
Concerns were expressed that the data set that the Government used to calculate the costs of cladding remediation is not as robust as it should be and that the financial data in the FM uses “estimates of estimates”. The minister told us that the Scottish Government
“will not know the full scale of remediation that is required until all the assessments are done”.—[Official Report, Finance and Public Administration Committee, 18 November 2025; c 53.]
The committee finds it concerning that more accurate cost estimates are not yet available. The Government’s response commits it to reviewing that as part of wider work to consider impacts in relation to levy rate setting.
The Scottish Government’s response is helpful in further informing this stage 1 debate. Nevertheless, the committee believes that introducing the levy carries significant risk and that policy design has not been sufficiently focused on developing a good, well-structured and sustainable levy. As previously mentioned, I urge the minister to clarify in his closing remarks his intentions regarding the sensitivity analysis that the committee has requested.
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