Building Safety Levy (Scotland) Bill: equality impact assessment

Recommendations and Conclusion

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 the protected characteristics. Any potential impacts on the protected characteristics 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.

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 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 prepared for this Bill 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.

The evidence gathered does not indicate that the proposal will have any direct or significant impacts on the protected characteristics. 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 the protected characteristics 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.

The Scottish Government is proceeding with an exemption for new social and affordable housing provided through the Affordable Housing Supply Programme, in support of the commitment to deliver 110,000 affordable homes by 2032, of which at least 70% will be available for social rent and 10% in our rural and island communities. This exemption aims to mitigate impacts on the delivery of affordable housing and subsequently seeks to protect those identified as more likely to use this tenure of housing from any indirect impacts of the SBSL.

The Scottish Government intends to monitor and evaluate the potential impacts of the SBSL once the tax is operational. Further impact assessments will be carried out if identified as necessary, including when setting rates in secondary legislation. The Bill contains a provision for Scottish Ministers to report on the operation of the SBSL, including how the proceeds from the levy have been used.