Building Safety Levy Expert Advisory Group minutes: December 2024

Attendees and apologies

• Colin MacBean, Scottish Government Tax Directorate 

• Scott McKenzie, North Ayrshire Council and representing Local Authority Building Standards Scotland

• Fionna Kell, Homes for Scotland 

• David Raine, Homes for Scotland 

• David Melhuish, Scottish Property Federation 

• Justine Riccomini, Institute of Chartered Accountants of Scotland  

• Lindsay Scott, Chartered Institute of Taxation  

• John Stephen, A&J Stephen 

• Ian Drummond, Taylor Wimpey 

• Scottish Government officials 

• Revenue Scotland officials 

• UK Government official 

Items and actions

Welcome and agreement of previous meeting minutes 

Colin MacBean (CM) thanked participants for attending and welcomed an official from the UK Government (UKG) Ministry of Housing, Communities and Local Government.  

Scottish Government (SG) officials reviewed the action points agreed from the previous meeting and confirmed all had been closed. 

The minutes of the previous meeting were approved by the group.  

Update on UKG Building Safety Levy (BSL) 

An update was provided to the group on plans for the UKG BSL, including on timings and scope, with some questions from members. 

Update on the SG Cladding Remediation Programme (CRP) 

SG officials provided an update on the CRP and progress to date, and took some questions from members. 

Initial overview of BSL consultation responses and engagement programme 

SG officials spoke to slides giving an initial overview of responses to the public consultation on the BSL, and of key themes raised in stakeholder engagement sessions. This included: 

• the number of responses to the consultation to date (77) and the types of respondents (majority property developers)
• an overview of engagement sessions (two sessions on scope and calculation of the tax, a Ministerial Roundtable, and a session considering potential impacts on Small and Medium Enterprises (SMEs) and the attendance across all of these sessions (34 organisations)
• preliminary quantitative data from the consultation
• notable views from consultation and engagement including a preference from some developers for a flat rate per unit calculation method, and mixed views on an exemption for affordable housing

SG officials noted a number of gaps identified from the consultation and engagement and signposted SG’s intention for continued engagement and follow-up discussions with a number of stakeholders, for example Purpose-Built Student Accommodation (PBSA) and Build-to-Rent (BTR) developers, urban local authorities, and third sector organisations.  

SG officials also noted that further engagement will take place to develop the full Business and Regulatory Impact Assessment (BRIA), which will be published alongside the Bill. SG officials welcomed feedback from the group on which stakeholders they should speak to, what questions they should be asking, and what data is currently available that would be useful.  

There was a request for further detail about feedback from stakeholders with a preference for a simple methodology for tax calculation (flat rate), with a view that this preference is surprising as developers are used to paying percentage rates for other costs. SG officials confirmed they are not yet able to provide a complete breakdown of figures in terms of respondent type, but will follow up on this question once the consultation has been further analysed. SG officials noted however that the view that a flat rate would provide simplicity and certainty had come from developers in engagement sessions, on the basis that this would be easier to calculate and anticipate the cost of the BSL. CM noted the need to unpack and understand this point further as analysis of the consultation is undertaken.  

There was a suggestion that the group could explore an exemption for bungalows given the justification for exempting hotels on the basis that they have not contributed to the problem of unsafe cladding, and that this would also incentivise these developments which would be positive for the aging population. CM noted the need to be clear on the scope of the tax and to explore and consider all options.  

It was noted that the Scottish Property Federation have members involved in BTR developments and they offered to facilitate follow-up engagement. 

There was a request for further detail on exemptions and how the tax burden is likely to be spread, with a concern noted that if exemptions are too broad, only a few larger developers will be responsible for paying the BSL, and this greater tax burden could have a more substantial effect on their businesses. CM acknowledged the need for balance between exemptions and the resulting burden on the rest of the industry. SG officials noted that a significant factor for the tax cost will be how broad the exemption for SMEs is in terms of how these businesses are defined. MD noted that SG are currently undertaking work to understand how to define SMEs and the impact of these definitions on the taxpayer profile. Homes for Scotland raised that they would like to understand more about the proposed affordable housing exemption, particularly given that affordable housing provision is larger proportionally in Scotland than in England, with the proposed exemption therefore creating a different taxpayer base and a more significant burden on taxpayers. It was also noted that there is a need to appropriately define what counts as affordable housing, and that Homes for Scotland would be keen to help SG understand data around affordable housing and to see any modelling work done on this issue so far. SG officials noted SG will follow up on this with Homes for Scotland. 

There was discussion of the UKG position on pursuing others in the supply chain of unsafe cladding (e.g. manufacturers).  

The view was expressed that there is still no sense of the number of buildings in scope of the CRP and no confirmed standards of repair, therefore no understanding of cost or tax liability for developers. 

Next steps and discussion on future meetings 

CM noted the Expert Advisory Group has been helpful for constructive challenge and development of the policy, and while it was originally set up on a limited basis, SG are looking to continue to engage with the group moving forward as more detailed points of policy are worked through. CM invited thoughts from attendees on maintaining the group on this basis.  

Some members noted that they are happy to continue engaging through this group and to contribute to the development of further policy detail. 

It was raised that Homes for Scotland would be happy to facilitate further engagement between SG and SMEs.  

CM noted that there will likely be an invitation for a future Expert Advisory Group meeting in January, and that group members can contact SG if they are no longer wishing to attend. 

Any other business 

It was asked whether SG intends to conduct a further consultation once more detail has been worked out on the BSL. SG officials noted that an analysis of and response to the consultation that has just closed will be issued in the lead up to introducing legislation in Spring 2025. SG officials noted that there is no plan to conduct a further consultation in advance of primary legislation, though there may be further consultation and engagement in advance of secondary legislation. SG officials also emphasised however that there will be further engagement with stakeholders on aspects of the BRIA, as well as future Expert Advisory Group meetings. CM noted that the parliamentary process will involve committee scrutiny of the legislation, and that this will include further engagement with stakeholders also. 

Action points 

• SG Cladding Directorate to follow up with further information on CRP progress
• SG Tax Directorate to follow up with the group once further analysis of the consultation has been carried out, including a breakdown of views by respondent type
• SG Tax Directorate to follow up with DM and the Scottish Property Federation to facilitate further engagement with BTR developers
• SG Tax Directorate to follow up with Homes for Scotland on the proposed exemption for affordable housing
• Homes for Scotland to facilitate further engagement between SG and SMEs