Hansard

As the member will know, a significant amount of work had to be done before the work commenced, but, as I have indicated, that work is now ramping up, as will the funding requirement. In the first year of the levy’s operation, the spending review has allocated £115 million to cladding remediation. The Scottish Government has rightly stepped in to marshal the necessary work to protect and repair Scotland’s housing stock and to ensure that it is properly funded. I am sure that members across the Parliament will be supportive of that work.

Undertaking that vitally important work comes at a sustained and significant cost to the public purse. The programme’s costs are forecast to be between £1.7 billion and £3.1 billion over the expected 15-year lifetime of the programme. Faced with the need to ensure that Scotland’s public finances are sustainable, the Government has proposed through the bill that a contribution to those costs be made by the residential property development industry, just as the previous Conservative and current Labour Governments have done in England. During its 15-year lifespan, the levy will raise an estimated £450 million for the programme, meaning that the levy will form only a contribution to the overall funding requirements.

Those who have called for the levy not to be introduced would have to be honest that the consequences for future Scottish Governments could include higher taxes that would be borne by the general public, less money for hospitals, schools, roads or, indeed, less money for affordable housing. As far as possible, I have looked to ensure balance and that any costs that arise from the levy do not restrict the supply of house building.

When introduced, the bill contained protections for those parts of the sector that could be most impacted, including exemptions for social and affordable housing, island house building and an annual levy-free allowance to protect Scotland’s small and rural house builders. Thanks to members and stakeholders, the bill was amended at stage 2 to increase the levy-free allowance to 29 units, which will remove around 85 per cent of developers from the scope of the levy entirely. That supports a healthier and more diverse house building sector. The universality of the allowance also ensures that medium-sized developers will see a sizeable share of their activity exempted, which will strengthen their capacity to invest in future projects. The increase of the threshold to 29 units will also benefit development in rural areas, removing up to 89 per cent of units from the levy in classes 4 and 6 of the urban-rural classifications, depending on developer behaviour.

Also included in the bill at stage 2 was a duty for ministers to introduce a minimum 15 per cent discount on brownfield development, which will ensure that the additional costs of building on previously developed land are taken into account. Moreover, the bill includes delegated powers to allow for further exemptions and reliefs to ensure that the levy keeps pace with an industry that is subject to a wide range of external factors.

As I set out stage 2, the Scottish Government will consult on proposals for a brownfield relief of at least 50 per cent, and a further relief for conversions. We will also use the opportunity of consultation to consider other support measures, such as payment flexibilities for build-to-rent or purpose-built student accommodation developments. Through further engagement with our industry partners, the Government is committed to getting the balance right. Ensuring that the levy remains frictionless and fit for purpose requires reporting and reviewing mechanisms, and that is why the bill contains provisions for reports on the operation of the levy at least every three years.

The changes that have been made by the Government and agreed by the Finance and Public Administration Committee at stage 2 mandate clear periodic reporting that ties spending directly to the cladding remediation programme, giving industry confidence in the operation of the levy. The Parliament asked for stronger reporting provisions, and the Government heard that call and acted. I am pleased that the amendments on that were agreed to.

I note the concern from some stakeholders that the bill is in contravention of the housing emergency declaration. Our housing emergency action plan sets out that

“Having a safe, warm and affordable place to call home is central to a life of dignity and opportunity.”

Homes that are impacted by unsafe cladding cannot be said to meet that criterion. As the revenues that are raised will be spent on efforts to rehabilitate existing stock, the levy is intended to support the alleviation of the housing emergency, rather than exacerbating it. Given the scale of the funding challenges and the need to minimise any disruption in house building, the levy is a small but necessary contribution to the remediation of Scotland’s cladding-affected housing stock.