Chamber and committees

In response to the sector, we have moved the implementation back to April 2028, and we have triggered that on completion, which we think is a better method, because it gives more certainty to the market and supports cash flow. We think that that is a better trigger point. To go back and consider what is happening with building warrant applications would run counter to that.

I think that the proposal that we have put in place gives sufficient visibility. It is a more effective trigger point and it is more helpful for the sector. To be honest, amendments 16 and 19 are just seeking to further delay implementation, which is not helpful, given the need for capital income to support the cladding remediation programme.

Amendments 17 and 18, in the name of John Mason, are linked in their aim to bring temporary accommodation within the scope of the levy. I recognise the view that Mr Mason expressed at stage 1 on the benefits of a contribution from larger hotels. However, the amendment as drafted would bring all temporary accommodation within scope, which would not only subject a wide range of recreational accommodation types to the charge but would bring in other temporary accommodation uses, such as accommodation for persons fleeing homelessness or domestic abuse. For that reason, the Government cannot support these amendments as drafted, but I would be happy to consider whether certain types of temporary accommodation would merit being included in the tax base and to discuss that further with John Mason, and indeed with any other members.

Amendments 48 to 50 all seek to introduce an exemption for properties sold to first-time buyers. As with a number of amendments that have been lodged, these proposed amendments to the bill would be very difficult to deliver. At the point of taxation, a building will not have a use, and any such exemption relies on an intended future use. It is not clear how taxpayers would know, at the point of collection, which units were to be sold to first-time buyers. Therefore, while the intent behind amendments 48 and 49 is well meaning, it might inadvertently create additional pressure on developers to demonstrate eligibility, and so increase administration costs for Revenue Scotland.

The concern is that it would create a perverse incentive in the system for people to seek listed building status for buildings in order to avoid paying the building safety levy. I think that having a more general exemption for conversions would be the right thing to do. It would be better to have a more encompassing policy that applied to all such conversions and was not tied to whether a building was listed.

If I may intervene, the first important point to recognise is that, as I said to Meghan Gallacher, we have already delayed the implementation of the levy by one year, which was important to give the sector space and time. In England, the levy comes into effect in October this year, which is significantly earlier than in Scotland.

As things stand, with the levy set to be implemented in April 2028, we are more than two years away—I think that it will be about three months after that date before any revenue starts to flow into the fund as a consequence of the bill. It is fair to say that any funds that are there already will be well and truly spent on the programme, and a lot more besides, before we even start to see any revenue flowing in in 2028.

Will the member give way?

Those were not my words; if I recall correctly, they were the words of John Mason. I say that just for clarity.

I was just going to make that very point: it was the UK Labour Government that set the target, and we have taken a pro rata percentage of that.

—whether it is their position that the trigger point should be on getting the building warrant or on completion of the property.

We have already moved the date by a year. To give more time, we have also committed to setting the indicative rates 22 months out, which will provide clarity for the market. We have moved the trigger point to the completion of the property rather than on getting the building warrant, because that will be a more effective mechanism. What I am hearing from both members sounds like an attempt to further delay the implementation of the tax, rather than give certainty to the market, because the same argument would apply in one, two or 10 years’ time.

Group 2 contains a number of procedural amendments relating to consultation and parliamentary scrutiny when ministers make regulations under the bill. The group contains three Government amendments, which I invite the committee to support, and one non-Government amendment, which I ask the committee to resist.

I start with amendment 3, in my name. The bill as introduced allows Scottish ministers to modify their regulation of categories of buildings that are included in, excluded from or exempt from the definition of a new residential unit for levy purposes. While the bill already requires ministers to consult with persons they consider appropriate, amendment 3 adds to that by requiring that consultation must include persons who

“represent the interests of the residential property development sector”.

Under the amendment, local authorities must also be consulted. The amendment responds directly to recommendations that were made by the Delegated Powers and Law Reform Committee at stage 1.

Amendment 5 makes a similar modification, requiring consultation with representatives of the residential property development sector before regulations are made under section 10 to specify an alternative 12-month period to be treated as a financial year for levy purposes. Again, that reflects the Delegated Powers and Law Reform Committee’s view.

Finally, amendment 6 makes an equivalent change in relation to section 12, which provides for regulations on the levy-free allowance. The amendment ensures that ministers must consult with representatives of the residential property development sector before making regulations under that power, in addition to any other relevant stakeholders. Given the importance of the levy-free allowance in shaping the overall impact of the levy, it is right that those who are most directly affected are formally engaged before changes are made.

I turn to amendment 46, by Liz Smith, which would introduce a new procedural framework requiring ministers, before making regulations, to publish draft regulations for at least 90 days; set out their reasons and provide a formal representation; and then, before seeking parliamentary approval, consider representations received, any parliamentary resolutions and committee recommendations; publish a further statement explaining how those had been taken into account; and secure Parliament’s approval only once all those steps had been completed.

The practical effect of the amendment would be to introduce an additional delay of at least 180 days before regulations could be made, alongside significant additional administrative and resourcing requirements for Government and Parliament. Although I recognise the intention behind the amendment, the Government does not consider it to be proportionate or appropriate in the context, or to be in keeping with the arrangements for other devolved taxes. The additional statutory timescale might prove problematic in cases in which there is an urgent need to modify one of the regulations.

Parliamentary scrutiny alone should be a sufficient check on the proposed regulations. The relevant regulation-making powers are already subject to the affirmative procedure, and the Delegated Powers and Law Reform Committee did not recommend enhanced scrutiny of that nature. For those reasons, the Government is unable to support amendment 46.

I move amendment 3.

I thank Liz Smith for lodging these amendments. The Scottish Government has been clear on its intention to use the proceeds of the levy to fund the work of the cladding remediation programme. The costs of the programme are currently estimated at between £1.7 billion and £3.1 billion, which is substantially higher than the £360 million to £450 million that the levy intends to bring in. Even on those estimates, it is clear that the levy will form only a contribution to that necessary and vital work.

Section 13 of the bill sets out that revenues from the levy

“must be used … for the purposes of improving the safety of persons in or about buildings in Scotland.”

That wording aligns with the UK Government’s England-only levy, which was developed by the previous Conservative Government and introduced by the current Labour Government. In line with the specific power in the Scotland Act 1998, this matter was, with the agreement of both parties, devolved to the Scottish Parliament.

That said, I am sympathetic to the concerns of industry stakeholders that the current definition risks a kind of mission creep, whereby funds from the levy could be used for purposes other than cladding remediation. In that vein, I understand the aim of amendments 34 to 36 in seeking to narrow the scope and provide certainty to developers, and I have already taken steps to address that matter through my amendment to introduce a sunset clause to the bill.