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

Lord Cameron of Lochiel Excerpts

Tuesday 29th October 2024 Lords Chamber

[Lord Bruce of Bennachie (LD)]

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.

If the Governments are satisfied that the UK single market will not be affected, what are the arrangements for ensuring that the levies raised are not significantly different north and south of the border? It is devolved, so presumably it is entirely a matter for the Scottish Government. However, if they became significantly different, it would have an impact on the UK single market. Do the Government have any indication of how they could intervene in that situation? I know the single market was very contentious but, given that we are praying it in aid, it is important to know that if it is distorted there will be some mechanism by which there can be redress—particularly if either England or Scotland is adversely affected by the application of this.

Other than that, on these Benches, we understand the principle behind this instrument, and we are happy to support it.

[Lord Cameron of Lochiel (Con)]

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.

[Baroness Anderson of Stoke-on-Trent (Lab)]

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.