Meeting of the Parliament 08 January 2026 [Draft]
The Government will, of course, listen to people who come forward with proposals, and it is no secret that that work has been under way for a period of time. If there were alternative proposals, we would have expected those to have been put forward.
Regarding the stage 1 report, I take the opportunity to thank everyone who gave evidence during the stage 1 process and the many stakeholders who have supported the development of the legislation so far. I also thank the Finance and Public Administration Committee for its detailed scrutiny of the bill and its stage 1 report. I know that no recommendation was made on the general principles of the bill, and I trust that the committee and the Parliament more widely will receive my response to the stage 1 report and my remarks today in the spirit in which they are intended, which is one of positive engagement with the substance of the committee’s findings and its concerns.
I note that the committee’s primary concern was around impacts. Although both the Scottish and UK Governments assess that the overall impact of the respective levies will be low, it is right that the topic is given appropriate consideration.
I will draw attention to areas where I can provide updates that look to address concerns around impacts. First, regarding the levy-free allowance, as I set out in my stage 1 report response, it is my intention to indicate a 19-unit threshold for the levy-free allowance in the bill. That annual allowance of levy-free units will apply equally across the tax base. Our analysis indicates that a threshold of 19 units will exempt just under 20 per cent of new-build sales from the charge and remove just under 80 per cent of those undertaking relevant development activity from any need to interact with the tax at all. That will, of course, protect small and medium-sized developers by either removing them entirely from the charge or providing a sizeable reduction in their chargeable activities.
The levy-free allowance will play a role in mitigating impacts on rural development, with its effects being most acute in those areas that are designated as “remote small towns” and “remote rural areas” under the Scottish Government’s sixfold urban rural classification. As viability in remote rural areas was particularly raised by the committee, I confirm that we will continue the work that we have been undertaking with rural stakeholders throughout stage 1 to ascertain whether additional measures are required to effectively protect rural development.
The committee also recommended that affordable homes that are funded by local authorities should not be subject to the levy. I agree with that position. Provision that is already included in the bill captures the vast majority of social and affordable homes that are being delivered, and we will continue to engage with the Convention of Scottish Local Authorities and local authorities to ensure that all relevant activity is captured.
The committee raised a further concern around measuring impacts. At £30 million per annum, the levy represents around 0.6 per cent of the value of the new-build housing market in Scotland. It has also been introduced alongside an equivalent levy in England, which significantly reduces any risk of tax arbitrage. I welcome the committee’s ask for further details on the impact. As I stated at my evidence session on the bill on 18 November last year, it is my intention that indicative rates for the levy will be published in June this year, alongside the appropriate impact assessments.
The committee has recommended a strengthening of the reporting requirements in the bill to require the Scottish Government to report at intervals of three years and to include an assessment of the impacts of the measure on the Scottish housing market. I am happy to accept those recommendations and confirm my intention to lodge an amendment at stage 2 to reflect that.
I hope that those updates and commitments address the key issues that the committee highlighted in its stage 1 report, and I welcome any further questions from colleagues.
The bill is about funding cladding remediation in a way that is fair. If the bill is not supported, the Scottish Government will have no choice but to look to the existing capital budget envelope for the amount between £360 million and £450 million that the levy is intended to generate over 12 to 15 years.
I look forward to discussions this afternoon, and I ask members to reflect on my comments now and in my stage 1 report response, and to support the bill at decision time.
I move,
That the Parliament agrees to the general principles of the Building Safety Levy (Scotland) Bill.