Scottish Building Safety Levy: partial business and regulatory impact assessment

Section 2: Engagement and information gathering

Engagement approach

The Scottish Government will undertake policy development and engagement in the spirit of the New Deal for Business and its four main pillars. This Partial BRIA accompanies a public consultation on a Scottish BSL. Further details of the consultation are set out below.

The public consultation is one part of our work to engage with business and stakeholders, the outputs of which will be used to inform the policy development of a Scottish BSL. This will be supplemented by a programme of engagement that will communicate directly with those operating in the residential property development sector as well as other key stakeholders. This will be held at various levels, including Ministerial engagement sessions as well as those with Scottish Government officials.

The programme of engagement will set out to raise awareness of the policy, gain informed perspectives on specific areas of policy impacts and design, and ensure that all stakeholders have the ability to meaningfully engage in the development process. This work will contribute to our overarching aim of ensuring the design of the levy is compatible with the intended outcomes as well as meet the needs of industry stakeholders.

Internal SG engagement/ engagement with wider Public Sector

Internal SG engagement

Policy officials have engaged with the following directorates and agencies:

• Revenue Scotland
• Scottish Government Legal Directorate
• Directorate for Business and Better Regulation
• Directorate for Cladding Remediation
• Directorate for Local Government and Housing
• Directorate for International Trade and Investment

Officials have engaged with the Directorate for Business and Better Regulation during initial policy discussions, and through development of the consultation.

UK/ Devolved Administrations

Scottish Government officials have engaged with the following:

• HM Treasury
• Ministry of Housing, Communities and Local Government
• Office of the Secretary of State for Scotland
• Welsh Government

Wider Public Sector

Scottish Government officials have engaged with:

• Convention of Scottish Local Authorities (COSLA)
• Local Authority Building Standards Scotland (LABSS)

International

No engagement has taken place with government organisations in other countries. The Scottish Government will consider engagement with policy makers in foreign national or local governments where similar levies are in place. From an initial assessment, we are aware that the Australian state of Victoria has introduced a 'Building Permit Levy' on its housebuilding industry, which is used to fund the Victorian Government's Building Control, Domestic Building Dispute Resolution System and cladding rectification works^[5]. We will consider any evaluations of this policy on the Victorian housebuilding industry and provide any findings as part of the Final BRIA.

Business / Third Sector engagement

Scottish Government officials have engaged with business and third sector organisations through the establishment of the Expert Advisory Group for a Scottish BSL (EAG). In addition to public sector representatives, the following external stakeholders are full members of the EAG:

• Homes for Scotland
• A&J Stephen
• Taylor Wimpey Scotland
• Institute of Chartered Accountants Scotland
• Chartered Institute of Taxation
• Law Society of Scotland
• Scottish Property Federation

The remit of the EAG is to provide expert advice, challenge and scrutiny of policy positions, with the aim of ensuring that the design of a prospective Scottish BSL is compatible with its intended outcomes and meets the needs of industry and other stakeholders. The EAG also works to identify and offer solutions to any potential adverse impacts and unintended consequences that may arise from the introduction of a Scottish BSL.

The EAG is intended to provide a broad view of subject matter expertise and perspectives and act as a sounding board: it will not be responsible for setting direction or making recommendations, nor will it be accountable for any decisions which will ultimately be taken by Scottish Ministers.

The EAG held its first meeting on 8 May 2024 and discussed initial proposals for a Scottish BSL. Following a pause necessitated by the pre-election period prior to the 2024 UK General Election, the EAG met for the second time on 1 August, where it considered draft questions for the public consultation on a Scottish BSL.

In addition to the work of the EAG, officials have also undertaken separate engagement with Homes for Scotland and the Scottish Property Federation.

As part of the consultation process, Scottish Government officials will undertake a programme of engagement with business and industry bodies, which will include larger developers served by the sector's representative body Homes for Scotland as well as those smaller developers not represented at this level. The programme of engagement will also specifically seek to gain the views and concerns of SME housebuilders on the implications and impacts of the policy.

The Scottish Government's engagement strategy on a Scottish BSL will align with the following Business Engagement Principles:

1. Respect – Where possible, the Scottish Government proposes to utilise a method of co-design with the housebuilding industry, to ensure that businesses are given an active opportunity to contribute to the development of a Scottish BSL.

2. Engagement – we have undertaken meaningful engagement with a wide range of industry bodies at the earliest possible opportunity, including the establishment of the EAG. We will continue to engage with businesses, through the EAG, the public consultation, and through targeted engagement sessions to help inform development of the policy and an assessment of its impacts.

3. Evidence – to support informed decision making, we will work with industry bodies and our local government partners to establish an evidence base for measuring impacts of the policy against.

4. Awareness – the Scottish Government will measure the impacts from this policy against the wider regulatory environment for the housebuilding industry, and will propose for this policy to be considered by the Regulatory Review Group

5. Consistency – we will seek to validate any findings from our engagement and internal analysis with industry representatives, through the EAG, to ensure a consistent approach to the assessment of a Scottish BSL.

6. Communication – we will undertake public communications as part of our programme of engagement, including promotion of the public consultation and of the targeted engagement sessions.

Small Business

The Scottish Government recognises that a new tax on residential housebuilding could disproportionately impact small housebuilders. Research from the Home Builders Federation estimates that the proportion of new housing build by SME's has fallen from 40% in 1988 to 12% in 2017.^[6]

To support engagement on this, we have ensured that there is representation from one small housebuilder on the EAG (A&J Stephen).

In addition, in taking forward a programme of engagement, we intend to undertake targeted engagement work with SME businesses on our policy proposals.

Public consultation

A public consultation has been published alongside this Partial BRIA. This consultation will run for eight weeks, from 23 September to 18 November 2024, and seeks views on option 2, or the introduction of a Building Safety Levy in Scotland. The consultation questions are structured around three parts:

1. The Principles of introducing a Scottish BSL – the case for using new residential development to pay for cladding remediation work on existing residential buildings, who should be in scope to pay the levy and the method for calculating the charge

2. Operational considerations – who should collect and administer the levy, how returns should work, and how compliance and enforcement measure should work where needed

3. Impacts of a Scottish BSL – these questions aim to assist in gathering information from the industry on the sort of impacts a levy could have on the housebuilding industry, helping inform our Final BRIA, alongside consideration of other impacts such as island communities, equalities and data protection.

The consultation is published on Citizen Space and on the Scottish Government website. Officials will engage with industry bodies and wider stakeholders to promote awareness of the consultation with the wider housebuilding industry. Access to this consultation is available online at: Scottish Building Safety Levy Consultation (consult.gov.scot)

Other stakeholders

Other stakeholders relevant to the development of a new tax, such as the Chartered Institute of Taxation and the Law Society of Scotland, have been included as members the EAG.