Scottish Building Safety Levy: consultation

Ministerial Foreword

The Grenfell Tower fire was a tragedy that shocked us all and uncovered that many homeowners and leaseholders across the UK were living in buildings with serious fire and building safety defects. The Scottish Government has been clear that it will do what is right and necessary to fix this issue properly and fully from the outset.

We already have stringent safety regulations in Scotland to keep people safe and have made substantial progress on changes to fire safety standards and guidance, including legislation on smoke alarms, passage of the Housing (Cladding Remediation) (Scotland) Act 2024 and the ongoing delivery of the Cladding Remediation Programme. But we are not complacent. The Grenfell Tower Inquiry’s phase two report makes further, important recommendations which we will carefully consider and, where appropriate, consider any further action required to address building safety.

Work to address unsafe cladding comes at a substantial cost. Many developers have engaged responsibly and positively with the Scottish Government on remediating buildings they were responsible for constructing. However, there are buildings where a developer no longer exists where significant costs may fall to the Scottish Government.

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 we 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.

We believe it is right that we seek a further contribution from the residential property development sector to support this funding challenge, just as the UK Government is proposing in England. That is why we committed in our 2023-24 Programme for Government to seek from the UK Government the transfer of powers to create a Building Safety Levy in Scotland. We have engaged constructively with successive UK Government’s on the transfer of powers, and I am pleased that this process is on course to complete in the coming months.

This consultation marks the next step in this process. It seeks views and evidence on how a Building Safety Levy should be structured and operate in Scotland, taking account of the distinct characteristics and needs of the Scottish housing market. Our approach to designing and delivering good tax policy continues to be guided by our fair and progressive approach to taxation, underpinned by Adam Smith’s four principles of taxation; Certainty, Convenience, Proportionality and Efficiency.

In line with our New Deal for Business principles, we have engaged openly and constructively with business and industry as part of our work to develop initial policy propositions for a Scottish Building Safety Levy, and we will continue to do so as we move through the consultation period and beyond.

I am keen to hear from a wide range of individuals and organisations in the housebuilding sector, particularly those involved in the construction of residential units, the procurement of land for development, and the sale of residential property. This consultation will also be accompanied by a programme of engagement, taking place over the next eight weeks, to ensure that all those who wish to comment and engage with us have every opportunity to do so.

I hope you find this document helpful, and I look forward to hearing your views on how we best design and develop a Scottish Building Safety Levy.