Chamber and committees

The issues are exactly the same, and the timeframe will be exactly the same, in England and Wales. It will be a 10-year programme. For complex buildings, it will take some time for the work to be completed; for others, it will not. For home owners who have faced a level of uncertainty, it is important that, through the SBA process, we are able to, I hope, give the green light and a clean bill of health to a lot of buildings, or say that only marginal remediation is required, so that people can get on with selling properties that are mortgageable again. Exactly the same issues are being faced in England, Wales and elsewhere.

That is an interesting question. It depends on how far the chancellor goes—is she talking about just financial assets or assets per se? I suspect that she will restrict herself to financial assets, such as those relating to the student loan book and so on. I would favour the rules being tweaked to enable us to have the maximum benefit and flexibility, with at least the cut to capital funding being reversed, but we want significant investment beyond that so that we have a line of sight to be able to invest in affordable housing and so on.

That is very topical, given that the UK budget is coming tomorrow. I hope that we get an improvement in the capital position, as has been alluded to. If that is to be believed, I would certainly welcome that, because it would help us with certainty and with being able to invest what we need to invest.

The other important issue is multiyear settlements. The indication is that the spending review for both resource and capital will conclude in the spring. That will give the Scottish Government a multiyear line of sight on capital expenditure, which will be helpful in the building safety space, as it will enable us to plan what we think will be a reasonable allocation to ensure that the pace can be kept up. The last thing that we want is to have the single building assessments completed but for people to then be waiting for the remediation work. We do not want any delay to that. Once the SBAs are completed, we want the remediation work to be got on with as quickly as possible. We absolutely appreciate that people want to be able to move on with their lives. At the centre of this are worried householders who have been waiting a long time, so we want to be able to get on with this.

There is not a formula. As I mentioned, the estimate is that the levy will bring in £30 million a year. My gut tells me that that will be nowhere near enough to remediate all the buildings to the level that will be required once the SBAs come in. We will have to keep it under review, but what the sector wants is certainty. Last week, it asked whether we would just keep changing the levy every couple of years.

That is correct, but all money that has been allocated to cladding—every penny of all consequentials—will be used for remediation. However, we can remediate only what we know needs to be remediated and in what way. The single building assessment will determine that. That is needed before money can be spent. The money will be spent but only after SBAs are carried out.

I can give you an update now, and supply some of the information to you in writing.

It was not possible to commission a single building assessment prior to the passage of the Housing (Cladding Remediation) (Scotland) Act 2024 and the publication of the technical specifications in June 2024. We ran a pilot project to establish the efficacy of the SBA process. It involved SBAs for 13 entries—ministers commissioned SBAs for 12 entries, and there was an entry in Glasgow for which an SBA had already been commissioned. There were a total of 107 entries in the Scottish Government pilot programme, and assessments were undertaken for 30 of those entries. Works to mitigate or remediate risk have commenced on five of the pilot entries, which include works to address either cladding-related risk or to impose urgent interim measures, such as a waking watch system.

Essentially, the pilot was an entity in itself that allowed us to test the process. I have given you the figures for the pilot and I can update the committee on that in writing, if you like.

It is a long, difficult and technical process.

One of the reasons is the single building assessment. Officials may want to come in, but there have been questions and concerns about the detail of the remediation that has taken place in some of the buildings in England. One of the reasons why we have gone down the single building assessment route is so that we can reach a single point of truth about what needs to be remediated. Some aspects of the buildings in England have not been remediated, and there are what could be described as on-going disputes about whether or not remediation has taken place satisfactorily in a number of those buildings.

We want to get it right first time, and the single building assessment is a thorough process, which is now being looked at elsewhere. It will help us to ensure that the work that needs to be done is done comprehensively, and that the outcome for buildings for which no work is required is that those buildings are recognised as safe. Those buildings will then go on to a register, which was established by the 2024 act, and homeowners and others will be able to use the information on it for mortgage purposes. It is important that the buildings that require no remediation or a limited amount of remediation can be put on that register quickly.

The act will come into force from January, which will mean that there is more pace with the single building assessment process and that the process can be forced in cases in which, for example, there is a lack of agreement among homeowners. It will also ensure that there is a process by which the data from the single building assessments will be available to help people to move on for mortgage purposes or if they want to sell their homes that they have not been able to sell for many years. Therefore, getting it right is important.

Stephen, do you want to add anything?

Thank you. In our 2023-24 programme for government, we announced that the Scottish Government would seek the devolution of powers to introduce a building safety levy in Scotland that would be equivalent to the United Kingdom Government’s building safety levy for England. As the Scottish Parliament cannot legislate for a new national tax in Scotland without the consent of the UK Parliament, the Scottish Government requested the transfer of powers from the UK Government under section 80B of the Scotland Act 1998.

To inform the UK Government’s decision on that request, the Scottish Government and the UK Government launched a joint consultation, which ran for six weeks, from 8 January 2024 until 19 February 2024. Respondents were asked to provide evidence that devolving the power might have a disproportionate negative impact on UK macroeconomic policy or impede the single UK market in house building in any way. They were also asked whether the powers for a building safety levy in Scotland should be devolved to the Scottish Parliament.

As both Governments agreed that the consultation had surfaced no evidence to prevent the transfer of powers from proceeding, the UK Government confirmed that it would proceed to legislate for the transfer of powers, but that process was interrupted by the general election. However, we have since renewed the agreement to legislate with the new UK Government Administration, and the order will be considered by the UK Parliament this week.

The draft order before us today sets out high-level criteria for the new devolved tax. It provides that a Scottish building safety levy must be charged at a point in the building standards process and that revenue that is raised through any levy must be spent on building safety expenditure. In doing so, the order, in effect, matches the powers that were taken by the UK Government in the Building Safety Act 2022, which was the UK Government’s intention in drafting the order.

The order does not make any further specifications and, provided that it is approved, decisions on all other aspects of the devolved tax policy will be set out in the building safety levy bill, which the Scottish Government intends to introduce as part of its year 4 legislative programme. In line with our new deal for business and framework for tax, the Scottish Government has commenced a consultation and programme of engagement with stakeholders, including people who operate in the residential property development sector, on the design of a Scottish levy, and I look forward to speaking to the committee on the design of the levy as part of its consideration of the bill.

However, the purpose of today’s discussion is to discuss the principles and practicalities of the devolution of powers, and I am happy to answer any questions that the committee has on that.

On your point about the passing on of costs, that is a live issue that came up in our discussion last week. Developers said that, ultimately, they would have to put the cost on to house prices. Developers down south have said that, too. We will continue to discuss the matter with them. We certainly hope that any impact on house prices would be marginal, but we are keeping an eye on that. That will be part of the business regulatory impact assessment that we will undertake, which is the next phase.