Building Safety Levy (Scotland) Bill: child rights and wellbeing impact assessment

Child Rights and Wellbeing Impact Assessment Template

1. Brief Summary

Type of proposal:

1. Bill

Name the proposal, and describe its overall aims and intended purpose.

This CRWIA considers the impacts of the Building Safety Levy (Scotland) Bill, which will introduce the Scottish Building Safety Levy (SBSL) – a revenue-raising measure to generate funds to support the Scottish Government’s Cladding Remediation Programme.

The Grenfell Tower fire tragedy in London in June 2017 highlighted concerns about the safety of medium and high-rise buildings with external wall cladding across the UK and demonstrated the need to take action to remediate buildings with unsafe cladding.

The Housing (Cladding Remediation) (Scotland) Act 2024 was introduced by the Scottish Government to facilitate the delivery of its Cladding Remediation Programme, which aims to identify, assess, and address the safety risks of buildings within scope of the Programme.

Funding cladding remediation presents a shared challenge across all the governments in the UK. In order to meet associated costs in England, the UK Government legislated through the Building Safety Act 2022 for the introduction (through secondary legislation) of a Building Safety Levy on the development of new residential buildings.

The UK Levy will only apply to developments in England, meaning that the Scottish Government will receive no consequential funding from its introduction. This creates a gap in the funding options available to address cladding remediation in Scotland.

The Scottish Government set out in its Programme for Government 2024-25 a commitment to introduce an SBSL to support the funding of Scotland’s Cladding Remediation Programme, following the devolution of the necessary powers which was finalised on 19 December 2024.

The SBSL will be charged on the construction of new residential buildings in Scotland, with an estimated revenue target of £30 million per annum. The Bill proposes that the SBSL will apply to:

• New homes built by developers for onward sale
• Purpose built student accommodation and build-to-rent
• The redevelopment of existing buildings for the purposes of providing new or additional accommodation, irrespective of whether the existing building’s current or past purpose is/was for non-residential use

The Bill also proposes that the following types of buildings are outside of the scope of the Levy:

• NHS Hospitals, NHS Medical Centres and NHS GP practices
• Non-NHS hospitals and hospices
• Supported Housing, Residential Care Homes, Children’s Homes
• Conversions, improvements to owner/occupied homes and refurbishments
• Refuges and residential domestic abuse facilities for example, rape crisis centres
• Criminal Justice Accommodation
• Military Barracks and other Military establishments (including accommodation provided for military personnel and their families by or on behalf of the Ministry of Defence)
• Hotels, hostels and similar establishments
• Monasteries, nunneries or similar establishments
• Seminaries and other religious colleges which include accommodation
• Drug and/or alcohol treatment centres
• Temporary accommodation for homeless people
• School premises to be used for the sole or primary purpose of housing its students
• Social and affordable housing designated at completion
• All housing constructed on islands

Start date of proposal’s development: 5 June 2023

Start date of CRWIA process: July 2024

2. With reference given to the requirements of the UNCRC (Incorporation) (Scotland) Act 2024, which aspects of the proposal are relevant to/impact upon children’s rights?

The proposal concerns the introduction of a new tax on the construction of residential buildings, which will be mainly paid by residential property developers. It is therefore not anticipated that the Bill will have any direct impacts on children’s rights. Any potential impacts on children’s rights arising because of the Bill will be indirect, resulting either from the impact on the housebuilding industry or from the impact of funding the Cladding Remediation Programme.

Providing funding to meet the costs of the Cladding Remediation Programme will indirectly have a positive impact on children’s survival (Article 6 Life, survival and development), health (Article 24 Health and health services), and standard of living (Article 27 Adequate standard of living) by helping to improve the safety of affected, existing homes and reduce the risk of fire.

It is possible that the introduction of a new tax on the construction of new build homes could reduce the viability of developments and therefore the availability and/or cost of housing. This could have indirect impacts particularly for example on children and families living in poverty or in temporary accommodation, or university students seeking purpose-built student accommodation (Article 27 Adequate standard of living). Due to already heightened development costs, there could be increased effects on the availability of accessible homes and therefore indirect impacts on the provision of adequate housing for children with a disability (Article 23 Children with a disability).

A reduction in the delivery of new homes may also have an impact on wider community contributions from property developers which support the provision of services affecting children’s rights, such as healthcare (Article 24 Health and health services), public open spaces and sport, leisure, and community facilities (Article 31 Leisure, play and culture), and education (Article 28 Right to education).

The Scottish Government is cognizant of the current pressures on housebuilding and the importance of building more homes and has engaged with industry stakeholders to design the SBSL in a way which minimises the impact on the sector. Measures within the Bill, such as exemptions for social and affordable housing, and the ability to vary rates in accordance with regional house prices and for greenfield and brownfield developments, are intended to minimise the impacts of the Levy.

The Bill should therefore not have any direct impacts, nor any significant indirect impacts, on children’s rights. It is our assessment that the potential impacts set out above are likely to be minimal, for the reasons set out in the Business and Regulatory Impact Assessment (BRIA) accompanying the Bill. As the proposed revenue target for the SBSL (£30 million per annum) is low relative to the value of the new build housing market, we anticipate that the associated costs will be similarly low and that the resulting impacts of the SBSL will be minimal. Accordingly, the overall impact of the Bill on the rights and wellbeing of children and young people is considered to be neutral.

Tax rates for the SBSL will be set out in secondary legislation, at which point a further BRIA will be carried out. The Scottish Government intends to monitor and evaluate the potential economic impacts of the SBSL once the tax is operational.

3. Please provide a summary of the evidence gathered which will be used to inform your decision-making and the content of the proposal

Evidence from:

Existing research/reports/policy expertise

Existing evidence demonstrates the importance of affordable housing provision for children, young people, and families. The 2023-24 Progress Report on the Tackling Child Poverty Delivery Plan notes that between April and December 2023, an estimated 2,015 households with children were helped into affordable housing through the Affordable Housing Supply Programme.^[1] Latest data shows that families with children^[2] make up 24% of all social rented households in Scotland.^[3]

Existing research also indicates that young families with children are the largest buyer group in the new build market and are more likely than average to purchase new build homes over second-hand homes.^[4]

Consultation/feedback and views from stakeholders

The SBSL will be a wholly new national devolved tax in Scotland. There is no existing UK measure to compare to when considering impacts. The consultation and engagement therefore sought contributions from stakeholders on what the potential indirect impacts of the SBSL could be. These views are set out below.

The Scottish Government ran a consultation^[5] on the SBSL for a period of eight weeks which received a total of 78 responses, predominantly from property developer organisations. A partial BRIA^[6] was published alongside this consultation. The consultation invited responses to a range of open and closed questions on several aspects relating to the SBSL, including the strategic context for the tax, scope, calculation, operational considerations, and impacts (including a question on potential impacts of the SBSL on children and young people).

The consultation was accompanied by a programme of engagement with stakeholders to facilitate further collaboration with the residential property sector. These engagement sessions provided further evidence in addition to views gathered through the Scottish Building Safety Levy Expert Advisory Group, comprised of representatives from the residential property development sector, as well as representatives from relevant professional bodies in connection with tax and local government building standards.

Through our consultation and engagement, some stakeholders expressed the view that the SBSL would have a negative impact on housing availability, which would subsequently negatively impact young people and families. It was raised that constraints on housing delivery and increases in house prices could make it more difficult for young people to buy their first home and could worsen issues of child poverty and of young people and families living in temporary accommodation. The wider benefits of housing delivery to children and young people were also highlighted, noting the connection between quality housing and health, and the provision of community facilities (including schools) supported by developer contributions. It was also noted that the Levy may lead to increased rents in the Build to Rent sector, which may have a disproportionate impact on younger people.

It was also raised through consultation responses that the Levy would have a positive impact by raising revenue to tackle the problem of unsafe cladding, an issue which has affected children, young people, and families living in affected homes.

Consultation/feedback directly from children and young people

No engagement was carried out directly with children and young people as it has been assessed that any impacts on children’s rights and wellbeing arising from the SBSL will be indirect and connected to the remediation of unsafe cladding or to impacts on the housebuilding industry. A full BRIA has been carried out to evaluate these latter impacts and has been published alongside the introduction of the Bill.

4. Further to the evidence described at ‘3’ have you identified any 'gaps' in evidence which may prevent determination of impact? If yes, please provide an explanation of how they will be addressed

As the SBSL will be a wholly new national devolved tax in Scotland there is no equivalent UK wide example to draw from when considering impacts. The Scottish Government has engaged the housebuilding sector and relevant stakeholders to gather a wide range of informed views and, where available, evidence in relation to the impacts of the SBSL.

The BRIA prepared for this Bill presents existing data relating to the current state of the Scottish housing market alongside previous and current examples of cost increases that may be analogous to the introduction of the SBSL.

This existing data has been considered alongside views from stakeholders to evaluate the potential impacts of the SBSL on the housebuilding sector. A full consideration of these impacts can be found in the BRIA which will be published on the gov.scot website.

When a tax is introduced, there will be an associated behavioural change (transactions may be initiated, postponed or cancelled) and measuring the extent of these things relies on accurately predicting the tax elasticities (the responsiveness) associated with that change. The scale of these responses will vary depending on the economic significance of the tax.

In the case of introducing a Scottish BSL, the impact of the tax will depend on how developers respond. For example, developers could absorb the costs associated with the tax, pass the costs on at some point during the development process (e.g. through decreased land prices or increased house prices), or decide against proceeding with certain developments where viability was already marginal.

Regarding evidence gaps specifically around impacts on children and young people, we have attempted to engage with providers of Purpose-Built Student Accommodation to understand the potential for impacts on these developments, however response rates have been limited.

5. Analysis of Evidence

The evidence gathered does not indicate that the proposal will have any direct or significant impacts on the rights and wellbeing of children and young people. It is our assessment that any indirect impacts identified are likely to be minimal and mitigated by the design of the policy which aims to minimise impacts on the broader housebuilding sector.

We consider direct impacts to children’s rights and wellbeing to be unlikely. Short-term and indirect impacts may vary, but as there has never been an SBSL (or equivalent in the UK) these are challenging to quantify. However, as the proposed revenue target for the SBSL (£30 million per annum) is low relative to the value of the new build housing market, we anticipate that the associated costs will be similarly low and that the resulting impacts of the SBSL will be minimal.

If the Scottish Government did not introduce the SBSL, this would require additional funding for the Cladding Remediation Programme to be drawn from the overall Scottish Budget envelope in any given financial year. This would necessitate reprioritisation of existing spending commitments, or future decisions not to allocate capital expenditure to new projects or infrastructure. These options would create their own impacts, as would failing to provide adequate financing for the Cladding Remediation Programme which would limit the scale and pace of remediation work.

Existing evidence which demonstrates the importance of the affordable housing sector in providing homes for children, young people, and families supports the rationale for providing an exemption for affordable housing from the SBSL. This will ensure that public funding provided for affordable housing is not used to pay costs associated with the SBSL.

6. What changes (if any) have been made to the proposal as a result of this assessment?

To help inform policy development for the SBSL, we have been working collaboratively with the residential property development sector and other stakeholders to ensure that the tax is compatible with its intended aims while minimising any potential impacts. From this process of consultation and stakeholder engagement we have uncovered no evidence to suggest there will be any significant or direct impacts on children’s rights. The Scottish Government intends to monitor and evaluate the potential impacts of the SBSL once the tax is operational.