Chamber and committees

Thank you.

Will the member take an intervention?

Earlier, I made a comment about commercial contract clauses, which are very opaque. The fact is that many SMEs might not understand the risk that they are under. I would be happy to pick that up with the minister separately, because I admit that it is quite a niche area.

Before I start, I will make the comment that I wanted to make when I tried to intervene on Mr Marra. I recently obtained an insurance quote, and one of the companies asked whether I could confirm that my house is no nearer than 260m to any watercourse, which, to give a sense of the distance, is a very good drive and a 7-iron. I suggest that that is the shape of things to come.

I speak today in the debate as the constituency MSP for Falkirk East. That includes Grangemouth, so I reference the vital Grangemouth flood protection scheme, which is the biggest project of its kind to be embarked on. Its progress, process and outcomes will have a far-reaching impact on other flood prevention programmes. I certainly do not underestimate the scale of the challenge that we face. I note the efforts, with thanks, of Jacobs, Falkirk Council and other key stakeholders thus far. The estimated benefit involves 2,760 residential properties, 1,200 non-residential properties, 6,025 people and 23km of roads.

As we have seen, adverse weather events are increasing, and the impact of not doing something is incalculable, given the importance of the location to Scotland’s gross domestic product. As the cabinet secretary notes, and I quote from a letter that I received from her in January this year,

“The GFPS is exceptional in terms of scale and financial cost. It is the largest flood scheme ever proposed in Scotland, with a current upper cost estimate of £650 million.”

It is also worth noting that the wider coastal management strategy and modelling for fluvial events is undoubtedly linked to whatever is designed at Grangemouth. Therefore, certainty and progression are necessary not only for Falkirk East residents but for neighbouring local authorities.

A number of consultation events have been held. In January this year, Falkirk Council agreed to move to the next step in the form of scheme notification. After that, the outline business case will be developed.

However, the funding elephant remains in the room. The current funding status, whereby the Scottish Government will bear 80 per cent of the cost of the programme and the council 20 per cent, seems to be unachievable by either party. The cabinet secretary rightly states that, for the Scottish Government to utilise the entire annual local government general capital grant is simply not feasible. Therefore, I understand the rationale for removing the scheme from the current cycle of funding and allowing the Scottish Government to make progress with a variety of other schemes.

Various funding models and options have been developed by the council, and the cabinet secretary has asked her officials to pursue a task force model and engage a team Scotland approach. That is welcome, but serious conversations need to be had about funding to allow for clarity in the staging. In a previous life, I was a programme manager, and I was always aware that, without a clear line of sight for phases, considerable sums of money can in effect be wasted. It is not unreasonable to assume that the pathway to completion might need to be elongated and reworked, and that it will inevitably turn out to be much more expensive, but clarity needs to be found for the initial stages and on-going dialogue for subsequent stages.

I am entirely sympathetic to the predicament that we all find ourselves in. I note, thankfully, that the Scottish Government has no plans to claw back the council’s £4.5 million underspend for the scheme, although I understand that, as yet, there is no clarity on what conditions might be attached, if any. To that end, I am grateful to the cabinet secretary for agreeing to meet me to discuss the GFPS in the near future.

My final point relates to the other stakeholders who have an interest in the area, including RSPB Scotland, the climate Forth project, Buglife Scotland and NatureScot. It will be vital to have proper co-design and a full engagement process on plans for mitigation and biodiversity compensation, and to ensure that any environmentally negative consequences of the GFPS are considered. The last thing that anyone wants to see are objections from those who should be partners in the scheme, and I hope for their full involvement.

Will the member give way?

It may be extremely difficult to have that. I accept that a lot of this is being worked through. I made a comment, which I stand by, about secondary legislation, but I am also sympathetic to the challenge for the Scottish Government, because this is a highly complex area.

With some of the comments that I made previously in mind, I ask the minister what detailed and specific assessment has been made of the potential impact on SMEs of the scenarios that I outlined.

I turn now to the people involved who would have been shocked—as we all were—about the tragedy of Grenfell, but who now, years later, find themselves trapped in a property that they cannot sell or remortgage; they are mortgage prisoners in their own homes. I remain to be convinced that government—and I mean any government—understands how lenders treat risk. They are not swayed by concerns for citizens, but by a complex set of algorithms that say: heads means the lenders win; tails means the borrowers lose. The application of that risk assessment hits Scotland disproportionately harder, as there are simply fewer lenders in our market. Insurers, too, will make decisions based on risk. Ordinary premiums have seen a huge rise in recent years—which is, again, thanks to Brexit and the cost of living crisis—and I suggest that some properties caught up in the cladding remediation challenge are uninsurable or have such punitive clauses that the insurance is rendered worthless, even if it could be afforded.

I accept that the Scottish Government wishes to see faster progress in this matter—as we all do—and I accept its commitment to have all buildings on a pathway to a single building assessment within the next few months. However, what does that actually mean? It could be as simple as booking in an assessment, and not that one has actually taken place. The assessment is simply the starting point for getting the go-ahead for the works. Bear in mind that some will likely involve multiple subcontractors across multiple trades in which we already have a shortage of some resources, and that costs have to be agreed in a still-high inflationary environment and they have to be drawn from multiple quotes. Residents and other stakeholders also have to be communicated with. All of that is immensely time consuming, so I would be grateful if the minister could outline in more detail what is meant by getting buildings on a pathway.

I have a few comments to make on the single building assessment. In its written submission, Barratt Developments cited a scenario where internal fire doors have not been maintained. That is the responsibility of either a factor or residents. Without work on that being completed, the building could not be added to the cladding register, and the Scottish Government has made it clear that only finished buildings will be added. I understand that the plan is to limit works to remediation, but there are clearly complexities in that area. That is the sort of thing that needs to be worked through in subsequent phases.

My final comments are on funding for orphan buildings. I recognise that most of the money that is allocated is yet to be spent, and the Scottish Government’s comments, which say:

“The funding of this programme has been considered and integrated into the future financial planning process.”

The Scottish Fiscal Commission and the Finance and Public Administration Committee have called for longer-term funding in general terms. I would welcome that being set out for the remediation programme; I would be pleased to see it. I hope that that would be set out in other areas, too, as part of general good practice.

I note that there are 13 high-rise buildings in scope in the wider Falkirk district, none of which is in my Falkirk East constituency. However, I am interested in the bill because of the potential impacts on people and business—specifically SMEs. For the record, I have no declarable interest, and I never have had, in house building.

First, I note that the bill is another framework bill. I am a member of the Finance and Public Administration Committee. We have raised multiple times the implications of framework bills where the nub of the issues is left to secondary legislation. I express my concern about that here again today. I note that that was backed up by Cruden Investments Ltd, which stated:

“It is concerning that all ... detail will be left to secondary legislation which will be unlikely to receive the same level of parliamentary scrutiny.”

In that respect, it is immaterial whether the same approach has been adopted in England and Wales.

I will start by discussing SMEs further. Few, if any, in the chamber will have run an SME that builds houses. I have not, but I know enough about the sector to surmise that the trading environment is difficult. There was an increase in activity coming out of the Covid pandemic, but that has been accompanied by a significant increase in base costs, exacerbated by Brexit and the cost of living crisis. There are considerable risks, and margins can often be tight.

That was backed up in evidence from the likes of Robertson Homes. It was noted that SMEs wish to act responsibly in the matter of the remediation of homes, but they simply do not have the same heft that larger house builders have. The representative from Robertson Homes also made the critical point that many SMEs are debt funded and therefore a liability for remediation may render the business insolvent.

Based on my knowledge of commercial banking contracts, I add to that that even a simple technical breach of that liability appearing on a balance sheet—not an actual default in making repayments—could allow the lender to seek repayment of any facility on demand. There is precedent of large banks using commercial contract clauses in that way, despite businesses trading solvent and meeting all their financial obligations. I simply note that as a warning.

Another area of risk for SMEs is liability where there exists the very likely scenario that subcontractors have been used. I agree with the Law Society of Scotland that, in that case, the builder would have legal remedies, but enacting those remedies will be time consuming and will impact the ordinary people who are caught up in the situation.

I must admit that I support the call from Homes for Scotland for a £10-million threshold for a responsible developers scheme that is similar to that in England. My concern is that, without that, we run the risk of losing more small house builders at a time when there is huge pent-up demand for and chronic undersupply of housing.

Maybe it does. I am not trying to get to any slam dunk; I am genuinely trying to understand. You have given me more helpful insight, although I suspect that I have further to go to bottom out some of this stuff. Thank you.

That is helpful. Thank you.

I have just one small question, which arguably follows on from those of the convener and Michael Marra. Mr Doak, in your submission, you noted that

“Significant behaviour change is unlikely unless the Scottish Government decides to change the rate drastically, and even then there isn’t an obvious supply of alternative materials available.”

I know that Mr Marra has been touching on this, but I am still not sure that I have a clear sense of it. Mr Marra made a good point about red chips and aggregate that is specific to Scotland, but I am still not clear on the detail of different aggregate types and what overall potential price increases they could stand, although, as everyone has said, there are no plans for that on the table.

I wonder whether you could help me understand a bit more. As you point out correctly, English producers might be keen to exploit any substantial rate increases in Scotland; we all understand that. However the devil surely must be in the detail. I know that we have danced around the issue a bit with two separate questions, but if you could help me understand a bit more, that would be helpful.