Question reference: S6W-12265
- Asked by: Paul McLennan, MSP for East Lothian, Scottish National Party
- Date lodged: 24 November 2022
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Current status: Answered by Tom Arthur on 5 December 2022
Question
To ask the Scottish Government what consideration has been given to (a) launching an inquiry to assess the potential value of retrofit over demolition and (b) the introduction of a demolition levy, in light of the Chartered Institute of Building’s report, Levelling the playing field, not Scotland’s built environment: a case for retrofit over demolition, which states that introducing a demolition levy could catalyse a shift in priority to favour retrofit projects and fund green initiatives.
Answer
The Scottish Government recognises the importance of retrofitting existing buildings, as noted in our Town Centre Action Plan review and Housing to 2040 Strategy. We are aware that current VAT rules may incentivise demolition over retrofitting. However, VAT policy is currently reserved to the UK Government. As such, we have called on the UK Government to address this issue, but to no avail. We called on the UK Government to issue changes in a letter of 19 March 2021, but this request was declined in a response received in May 2021.
The Scottish Government will, of course, continue to consider what it can do to address the current imbalance, including through the promotion and facilitation of retrofitting within our policies. However, it is clear that the key powers lie with the UK Government.
The Scottish Government welcomes the report from the Chartered Institute of Building. We too have been clear that coordinated action is needed to tackle the challenge of building decarbonisation. We will carefully consider the report, including the recommendation of introducing a demolition levy in Scotland. However, a change to the VAT structure remains the preferred solution. As the imbalance is caused by the design of the VAT system, this would be most efficiently and effectively resolved through VAT reform.
The Scottish Government will continue to call on the UK Government to address the current imbalance.