Meeting of the Parliament 08 January 2026 [Draft]
I do not understand that point. Every tax has exemptions. Every measure that we take has exemptions. There will always be special cases and exemptions.
However, in relation to housing funded by local authorities, if we push up the costs of building affordable housing, it ends up being the public purse that has to pay out more grant. Therefore, I welcome the Government’s response to the committee’s report, in which it stated that it wants to
“avoid any circularity in public funding”.
I very much support the fact that the Scottish Government is using primary legislation rather than the secondary legislation approach that has been taken in England. Other features that are probably acceptable include that the scope of the expenditure covers building safety risks more generally, rather than purely the current cladding issue. The uncertainty over the costs—estimated at £1.7 billion to £3.1 billion—is probably acceptable as well.
However, there are other provisions that I have reservations about, including home owners not having to pay anything. That seems at odds with other products or services that we all buy, whereby the purchaser takes on at least some of the risk under the principle of caveat emptor.
I also question the exclusion of hotels. After all, people who stay in hotels tend to be better off, and a few more pounds on their bill would not hurt them. I accept that there may be relatively few large new hotels being built, but every little helps. Therefore, I am not convinced by the Government’s response to the committee’s recommendation in paragraph 112. It says that commercial entities such as hotels are not intended to be covered by the cladding remediation programme. However, the reality is that there is very little link between those paying the levy and those with the cladding problems, so I do not think that that argument holds water.
I also question the use of floor space rather than value. Someone buying a very expensive detached house in a smart area will pay the same as someone paying for a bottom-of-the-range mid-terrace property or flat in a poorer area, because the properties are the same size. I accept that floor space is easier to measure, but I think that that approach is less fair and makes the tax somewhat regressive. Therefore, I am very much in agreement with the committee’s recommendation in paragraph 83 that the Government should consider using market value rather than floor space. I note the Government’s response on Tuesday 6 January, arguing against that. There might be complications, but I think that they can be overcome. The Government reckons that the levy will not be added on to house prices. However, like others, I am sceptical about that.
Whether Revenue Scotland can keep to its usual target of keeping administration costs under 1 per cent also has to be questioned. We know that the set-up costs will be greater, but the levy will be a very small tax in the scheme of things and is therefore potentially inefficient and costly. The recent Government response suggests a 2.7 per cent admin cost. That problem is exacerbated by the uncertainty as to how much tax will be collected, as figures appear to be based on the English model, where there is a very different mix of private and affordable housing.
I remain somewhat unclear whether the Scottish Government intends to match the UK levy rate, as it does with landfill tax and aggregates tax, or whether there would be a higher rate in Scotland if the tax base here turned out to be lower and the £30 million target proved difficult to achieve.
It is interesting to note how often the Government’s response to the committee refers to our system being just like England’s. That is not a normal response for an SNP Scottish Government to make, and it illustrates a key problem with the bill and the levy, which is that the room for manoeuvre that is allowed to us by Westminster is very limited.
I do not particularly like the situation that we find ourselves in. However, the responsible thing to do is to support the bill at stage 1 and, perhaps, to improve it later.
16:35