Scotland Act 1998 (Specification of Devolved Tax) (Building Safety) Order 2024

Motion to Approve

Moved by

That the draft Order laid before the House on 10 September be approved.

My Lords, I am grateful for the opportunity to debate this order, which is the result of collaborative working between two Governments. It supports the Scottish Government’s request last year to devolve powers for the Scottish Parliament to establish a Scottish building safety levy.

The order before us will be made under Section 80B of the Scotland Act 1998, which provides for devolving additional tax-raising powers to the Scottish Parliament by way of statutory instruments. Scotland Act orders are a demonstration of devolution in action. I am pleased to say that the Scotland Office has taken through over 250 orders since devolution began 25 years ago.

The Grenfell Tower fire was a heartbreaking tragedy that sent shockwaves across the UK and overseas. As the Prime Minister said when the final inquiry report was released in September, it was entirely avoidable. Our thoughts remain with the victims and their families, and the Government will do everything in their power to ensure that a disaster of this scale never happens again.

Many homeowners across the UK still live in buildings with serious fire and building safety defects. The remediation challenge is significant. The Scottish Government estimate that around 49% of high-rise buildings above 18 metres would require some level of remediation, along with 10% of high-rise buildings between 11 and 18 metres. This suggests that there are 382 buildings above 18 metres requiring some form of remediation and around 500 buildings of between 11 and 18 metres requiring it—close to 900 buildings in total.

The UK Government and the devolved Governments have stepped up and committed public funds to help remediate life-critical building safety problems. Many in the building sector have also assumed their responsibilities and taken ownership of the remediation challenge, but there remain buildings where a responsible party cannot be identified. It would be unfair on the taxpayer for the cost of remediating these buildings to fall on to the Government. It would also be unfair on homeowners for the cost to fall on them.

The order will devolve a power to the Scottish Parliament to enable it to legislate for a Scottish building safety levy to fund building safety expenditure in Scotland. The devolved power will be akin to the Secretary of State’s power under Section 105C of the Building Act 1984, as amended by the Building Safety Act 2022, to introduce a building safety levy in England. This follows a request from the Scottish Government last year to devolve such a power. The UK Government will continue to work closely with the Scottish Government, and I am pleased that, in this case, the Governments have worked together to make sure that this issue can be addressed in Scotland. I beg to move.

My Lords, I thank the Minister for the explanation of this instrument. She has made it clear that it is related to the consequences of the Grenfell disaster, which I think we all recognise is still with us in terms of the consequences and the resolutions still needed. We can understand, first, that we need to address it and, secondly, that the two Governments have discussed the ways of doing that. It is not possible simply to do the same thing in Scotland as in England because of different building standards and so forth. I understand that.

The order specifically mentions cladding, but the question arises: are there other forms of remediation that might be included? That is not specified anywhere. The explanation says that the proportion should be the same in principle both north and south of the border, but it appears the method of collection will be different. In England, it will be local authorities which collect and administer it, but in Scotland—I am afraid I am not surprised about this—they prefer to do these things centrally. Local government gets even less support from the Scottish Government than local authorities in England. I do not know whether there is any suggestion that a different way of doing it could lead to different impacts.

The two Governments say that they do not think it would adversely affect macroeconomic policy or impede the UK single market in housebuilding. Nevertheless, the joint consultation produced a rather mixed result. Not very many people or organisations responded— I admit that. Nevertheless, while eight were broadly supportive, six were not and two did not express an opinion.

There was one particular issue I would like the Minister to address. There is a power to impose a levy, in effect on builders, to provide funding to remedy the problem, particularly with cladding. What about a levy on builders who may have not been involved in any buildings affected by cladding? I am thinking of small and medium-sized builders. What is to stop the Scottish Government nevertheless putting a levy on them? If they do, it could presumably affect the market. By definition, big developers—some of which, as the Minister has said, have stepped up already—can probably absorb this and manage it, but small and medium-sized ones may be less able to. I want to highlight that concern because it is the one thing that was flagged up which struck a chord with me as a risk. Not only could it affect the profitability of those small builders but the price of building houses could be adversely affected if builders were subjected to a levy in spite of never being involved in building anything that required remediation.

I thank the noble Baroness for introducing this order. She spoke of collaboration between the UK and Scottish Governments. It is important to note that the collaborative process which led to the order began under the Conservative Government. In 2021, the then-UK Government announced the introduction of a building safety levy. As the noble Baroness stated, the Scottish Government now seek devolution of the necessary powers to introduce an equivalent building safety levy in Scotland.

The collaborative approach taken by the Conservative UK Government and the Scottish Government began with a joint consultation, which ran from January to February this year, with the outcome published in April. It stated that the UK Government were willing to proceed with the devolution of the power and the Scottish Government were willing to receive it.

It is also important to recognise that the Scottish Parliament has agreed to this instrument. The Scottish Parliament’s Delegated Powers and Law Reform Committee has agreed to it, and I believe its Finance and Public Administration Committee did so only today. In light of that background, I confirm our support for the order, but I have a few issues to raise with the noble Baroness.

With the devolution of any proposed tax power, there is always a question about the impact on UK-wide policy issues. Is the noble Baroness satisfied that, in devolving this tax power, there will be no disproportionately negative impact on macroeconomic policy in the UK? In particular, building on a point made by the noble Lord, Lord Bruce, does the noble Baroness think there will be any negative impact on the single UK market in housebuilding? Finally, I ask the noble Baroness whether the Government intend to assess the impact of any tax decisions made by the Scottish Government on growth in the UK more broadly. If she could deal with those queries, I would be most grateful. I welcome the order and am happy to confirm our support for it.

I thank both noble Lords for their contributions. I will respond to all comments, but I want to put on record thanks to the noble Lord, Lord Cameron, who is absolutely right that this process began under his leadership. Devolution has been a cross-party, I hope, success—although some relationships are now being slightly reset.

In terms of the specifics, the noble Lord, Lord Bruce, is right that it refers to cladding and other remediation, but the reality is that the detail of how this policy will be applied is a matter for the Scottish Parliament as a policy consideration. On how it will affect the wider market, there was a genuine consultation and we do not believe that it will have an impact on the market on implementation because we believe that both levies in England and Scotland will be comparable, although collected differently. We will, however, as part of our ongoing relationships with the Scottish Government, ensure that if there is a significant divergence we will look to review.

How the levy is paid is a matter for the Scottish Government. This is devolution in action; they have asked for the powers, and we are working with them to give them the powers they have asked for. We will do everything we can to make sure this is a success as far as they are concerned. I believe I have answered the substantive points, but if I have not, I will reflect and write to noble Lords.

This instrument comes in the year of the 25th anniversary of the Scottish Parliament, which the last Labour Government delivered and which I am very proud of. It is in the spirit of devolution that this Government have set out to reset relationships with the Scottish Government to deliver for the Scottish people, building on the work of all parties. The instrument demonstrates the continued commitment of the UK Government to work with the Scottish Government to deliver for Scotland.

Motion agreed.