Scottish Government Consultation: Scottish Building Safety Levy
Argyll and Bute Council · 20 November 2024
Back to Planning, Protective Services and Licensing Committee — 20 November 2024 and its agenda
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ARGYLL AND BUTE COUNCIL PLANNING, PROTECTIVE SERVICES AND LICENSING COMMITTEE DEVELOPMENT AND ECONOMIC GROWTH 20 NOVEMBER 2024 SCOTTISH GOVERNMENT CONSULTATION: SCOTTISH BUILDING SAFETY LEVY 1.0 INTRODUCTION 1.1 The Scottish Government has launched a consultation on the proposed Building Safety Levy, which would apply to the construction of new residential buildings. The Scottish Government is seeking views and evidence on how the Levy should be structured and operate, based on the distinct characteristics and needs of the housing market in Scotland. Revenue from the Levy will be used to support the Scottish Government's Cladding Remediation Programme. The consultation closes on 18 November 2024. 2.0 RECOMMENDATIONS 2.1 It is recommended that members consider and approve the proposed council response to the Building Safety Levy consultation. 3.0 DETAIL 3.1 The Scottish Government is seeking views on the introduction of a tax on new residential developments, to be paid by developers. This is in response to unsafe cladding that has been installed on thousands of high and medium rise buildings across the UK including Scotland. 3.2 Following England's lead, the new tax – the Building Safety Levy – would take the form of an additional charge to support the Scottish Government's work to remediate cladding in existing residential buildings. 3.3 In England, the UK Government intends to raise the majority of the funding for its work to remediate these buildings through a Building Safety Levy, paid for by developers in the residential property development sector. The UK Government’s decision to create this Levy in England-only means that Scotland will receive no consequential funding from its introduction. "This creates a gap in our funding arrangements, and the need to address this gap must be considered in the context of an incredibly challenging medium-term outlook for public finances," it said.
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3.4 A consultation for the Scotland Building Levy opened in September and runs until 18 November 2024. It focuses on the principles of introducing a Levy on new housebuilding, to support cladding remediation work. It is seeking views, both positive and negative – to understand the impact the Levy could have. It asks who should pay, and who should be exempt; how the Levy should be calculated; how the Levy should operate – when will it be charged, and how will it be collected. 3.5 It also asks questions around compliance – what kind of powers might be needed to enforce the Levy; how long the Levy should run for; and how developers and the wider housing supply chain might be affected by the introduction of the Levy. 3.6 "Responses to this consultation and the associated programme of engagement will support the policy development for a potential future Building Safety Levy in Scotland," the Scottish Government said in a press release. "If the powers to allow Scottish Ministers to introduce a building safety levy are devolved to the Scottish Parliament, then responses will also support development of a future Bill that provides for a devolved tax." 3.7 A Partial Business and Regulatory Impact Assessment (BRIA) has also been published, which provides the government's initial view of the costs, benefits and risks that the Scottish Building Safety Levy may have if introduced. This link to the consultation supporting documents provides relevant information pertinent to each question. A draft response to each question is included in Appendix 1 of this report for Member’s consideration. Information on the consultation can be found via this link. Scottish Building Safety Levy: consultation - gov.scot Overall the response as drafted calls for rural areas such as Argyll and Bute to be exempted from this levy for a number of reasons outlined in the consultation response and paragraph 3.8. 3.8 Whilst it is important to recognise that in the interests of public safety this cladding needs to be removed from these buildings as soon as practicable the introduction of a building safety levy could have negative implications for the future of delivery of housing in our area where we have declared a housing emergency. In addition, the rural nature of our area and the predominance of older housing stock and low rise new build means that there is a limited number of buildings in our area that has to deal with this issue. That said, the Scottish Government hopes to raise circa £30m per annum to address the cladding issue as this is a devolved matter following the UK Government approval for the Building Safety Bill to be published in Scotland. If the levy is therefore rejected the bill is still likely to fall on Scottish tax payers in some form. 4.0 CONCLUSION 4.1 The Scottish Government has launched a consultation on the Building Safety Levy that is intended to be applied to new residential buildings. The consultation covers a range of different issues including possible exemptions,
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methods of collection and identification of impacts. The proposed council response to the consultation questions has been included in Appendix 1 of this report. Given the housing emergency and the current difficulties in delivering new housing across Argyll and Bute and the limited use of high and medium rise buildings across Argyll and Bute it is considered that an exemption be applied to our Local Authority area. That said, it has to be acknowledged that there is a need to remove this form of cladding as soon as practicable from affected buildings and that the money for this will likely have to come from the tax payer. 5.0 IMPLICATIONS 5.1 Policy – None arising from the report. 5.2 Financial – None arising from this report however if the levy was introduced there may be resource implications placed on the council. 5.3 Legal – None directly arising from the report. 5.4 HR – None directly arising from the report. 5.5 Fairer Scotland Duty - 5.5.1 Equalities – Impacts are being assessed by the Scottish Government. 5.5.2 Socio-economic Duty – Impacts are being assessed by the Scottish Government. 5.5.3 Islands – included in response. 5.6 Climate Change – Cladding was installed to assist energy conservation in buildings helping to reduce heating costs and assist the delivery of net zero. Unfortunately the use of flammable cladding systems will require their removal and they will need to be replaced. 5.7 Risk – None arising from the report. 5.8 Customer Service – None arising from the report. 5.9 Rights of the Child (UNCRC) – The Scottish Government is considering potential impacts on the rights of the child. Executive Director with overall responsibility for Development and Economic Growth: Kirsty Flanagan Policy Lead for Planning and Regulatory Services: Councillor Green For further information contact: Fergus Murray, Head of Development and Economic Growth: fergus.murray@argyll-bute.gov.uk APPENDICES Appendix 1: Scottish Government Consultation: Scottish Building Safety Levy Draft consultation response
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Appendix 1: Scottish Government Consultation: Scottish Building Safety Levy Draft consultation response Question 1 Do you think a new tax on housebuilding, paid by developers, is a fair way to generate revenue to fund the Scottish Government’s Cladding Remediation Programme? Please give reasons for your answer No within the context of a Rural Authority. The delivery of house building in rural areas such as Argyll and Bute has become increasingly difficult due to increasing construction costs including the additional requirements of new legislation. For example, the requirement to install sprinkler systems in affordable housing and increased energy efficient measures. At this current time in Argyll and Bute the private sector has only provided 16% of the new housing required for a population that we see across Argyll and Bute. The cost of building has often been cited as a major reason for this lack of new build and relatively low income levels which limits people’s ability to raise affordable finance. The burden of house delivery across Argyll and Bute consequently lies with the public sector and Housing Associations that also struggle with increased costs of delivery. A new levy will add to this financial burden for Housing Associations and undermine the viability of future housing sites across Argyll and Bute. Question 2 Do you agree that homes delivered through the Scottish Government’s Affordable Housing Supply Programme should be removed from the Scottish Building Safety Levy? Please give reasons for your answer Yes, the delivery of house building in rural areas such as Argyll and Bute has become increasingly difficult due to increasing construction costs including the additional requirements of new legislation. For example, the requirement to install sprinkler systems in affordable housing and increased energy efficient measures. With very low levels of private sector build across Argyll and Bute (only 16% of what should be provided by the private sector for a population the size of Argyll and Bute) housing delivery relies on the public sector and work through Housing Associations and they are finding delivery of housing increasingly difficult to deliver viable housing sites due to rising construction costs and skills shortages. Question 3 What are your views on the principle of removing smaller developers from charge of the Scottish Building Safety Levy? Agreed the construction sector in Argyll and Bute predominately consists of small
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and medium sized businesses that are currently struggling with cash flows, additional costs and accessing affordable finance for their businesses. The introduction of an additional levy at this time would add to this burden at a time of increasing legislation demands such as NPF4 requirements and changes to building regulations. Question 4 If you agree that small developers should be removed from charge under a Scottish Building Safety Levy, what are your views on the method of determining who is a smaller developer? The council considers that rural authorities such as Argyll and Bute should be excluded from this levy. That said, the Government may wish to consider the number of units that are delivered on an annual basis and an analysis of the proportion that are affordable housing funded through Affordable Housing Supply channels and that are part of the private housing supply. Question 5 Are there any other exemptions from the Scottish Building Safety Levy that you think should be considered by the Scottish Government? Rural Authorities should be made exempt from the levy to simplify the collection process and taking account of the costs of delivery in rural and remote rural areas including island communities. Question 6 Are there any types of development listed in the exemptions above that you think should not be exempted from the Scottish Building Safety Levy? No Question 7 Do you have any comments on exemptions not covered by the previous questions that you wish to raise? No Question 9 In cases where a property is not sold on the open market, what alternative valuation could be used to calculate the Scottish Building Safety Levy to ensure proportionality with the market value of the property? It is important to understand that the costs of actual construction can exceed market
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value in parts of Argyll and Bute particularly in remoter and island areas. Affordable housing built by social housing providers (councils, community trusts and housing associations) need to be excluded from the levy as all it will do is add costs that may undermine the viability of delivery at a time of a housing emergency. Question 10 In relation to Question 9, do you have any information on valuations undertaken during the building standards process that would be useful for the Scottish Government to consider? Estimates are provided on build costs linked to warrant fees this is potentially a good indicator of the nd value of a particular property. Question 11 What are your views on using one of the following alternative methods of calculation for the Scottish Building Safety Levy: • Flat rate per unit • Rate based on the size (per square metre) of the property) • Rate based on the number of bedrooms of the property • Rate based on the cost of building works of the property No opinion Question 12 Do you think there should be a different rate applied on brownfield developments? Not in relation to this levy. Brownfield needs to be the first choice for new development however if the levy was to be applied to rural authorities there is very little brownfield available in most areas and the costs of delivery on greenfield can be high due to a lack of services, access issues and ground conditions. Consequently applying a higher rate to greenfield development could impact on housing delivery in these areas particularly where economies of scale is already a factor. Question 13 Do you agree that liability for the Scottish Building Safety Levy should arise in relation to the issuance of acceptance of a completion certificate? Please give reasons for your answer Yes as this is accepted position that a building is able to be occupied. Question 14
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Do you agree that Revenue Scotland should act as the revenue authority for the Scottish Building Safety Levy? Please give reasons for your answer Yes, however the view of the council is that this levy should not be applied to a predominately rural authority such as Argyll and Bute. Question 15 Which of the following schedules do you think is the most appropriate for the frequency of returns: a) Per unit b) Monthly c) Quarterly Please give reasons for your answer. Quarterly to reduce the administrative burden Question 16 Do you agree that, in relation to the Scottish Building Safety Levy, the tax authority should have the investigatory and enforcement powers set out in Annex B? If you answered no, please give reasons for your answer. Yes Question 17 Do you agree that there should be no active conditionality between the issuance of each completion certificate and payment of the Scottish Building Safety Levy? If you answered no, please give reasons for your answer. Yes Question 18 What are your views on introducing additional sanctions for taxpayers where Revenue Scotland deem there to be persistent or major non-compliance in paying the Scottish Building Safety Levy? Additional sanctions will need to be applied where a taxpayers does not comply with Government legislation and others are complying as what happens elsewhere in the tax system.
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Question 19 Are there specific aspects of the housebuilding industry that may require a different approach to compliance than set out above? No opinion Question 20 Do you agree with our proposals for dispute resolution in relation to the Scottish Building Safety Levy? If you answered no, please give reasons for your answer. Yes Question 21 What are your views on having a sunset clause or end date for the Scottish Building Safety Levy? This will need to be applied given it’s a tax used to fix an inherent problem that hopefully will not be added to. Question 22 Do you think there should be a regular review for the Scottish Building Safety Levy? Yes as it is important to ascertain the effectiveness of any tax being collected. Please give reasons for your answer Question 23 Do you have any information which could inform any final Business and Regulatory Impact Assessment (BRIA) relating to the Bill? No Question 24 Are you aware of any examples of particular current or future impacts, positive or negative, on young people, (children, pupils, and young adults up to the age of 26) of any aspect of the proposals in this consultation? No Question 25
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Are you aware of any examples of potential impacts, either positive or negative, that you consider any of the proposals in this consultation may have on the environment? No Question 26 Are you aware of any examples of how the proposals in this consultation may impact, either positively or negatively, on those with protected characteristics (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation)? No Question 27 Are you aware of any examples of potential impacts, either positive or negative that you consider any of the proposals in this consultation may have on groups or areas at socio-economic disadvantage (such as income, low wealth or area deprivation)? No Question 28 Are you aware of any examples of how the proposals in this consultation might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas? It is the opinion of the council that the levy being applied to island communities will disproportionally add to the cost of delivery which is already under significant pressure as it is impacting on total numbers being built on our islands. Adding additional costs through the levy would run counter to other initiatives being taken forward by the Government such as the Islands National Plan and work to boost population in areas suffering from depopulation such as Argyll and Bute. The Government has also recognised the impact of rising housing costs in plans such as the Rural and Islands Housing Action Plan. The imposition of this levy would add to this financial burden and further undermine the viability of delivering new housing sites unless additional public funding was made available.