Cladding levy on builders put back to 2028

The Scottish Government has announced a delay in the introduction of a tax on housing developers to fund cladding remediation work. The Building Safety Levy is now planned to come into force from April 2028, a year later than initially intended.

Public finance minister Ivan McKee said the levy will raise £360 million to £450 million over 12 to 15 years to go towards cladding remediation work. This is part of the Scottish Government’s effort to address the issue of cladding, which was a key factor in the spread of the fire at Grenfell in 2017.

The Scottish Government’s cladding remediation programme is estimated to cost £1.7 billion. Ivan McKee said the revenues from the levy will make an important contribution to this cost.

The housebuilding sector has raised concerns about the lack of clarity on the introduction of the levy. Ivan McKee acknowledged these concerns and said the start date for the charge is being deferred to give the sector sufficient lead-in time.

Industry body Homes for Scotland has warned that the levy could lead to fewer homes being built. Miller Homes also expressed concerns that the tax could make some projects less viable, particularly in less desirable locations.

Finance Committee convener Kenneth Gibson said there is a sense of bitterness among developers who have not used cladding and are being asked to pay for someone else’s mistake. However, Ivan McKee defended the decision, saying that the funding for cladding remediation has to come from either the government’s capital budget or the industry.

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The delay may mean continued uncertainty and concern for their safety for those living in buildings with dangerous cladding. The Scottish Government’s decision to delay the introduction of the levy may give the housebuilding sector more time to prepare, but it also means that the funding for cladding remediation will be delayed.

The Scottish Government will set out indicative rates for the levy in June 2026, after the Holyrood election. This will give the sector around 22 months to prepare for the introduction of the levy, allowing them to plan their growth accordingly.

The UK Government has already introduced a similar measure in England through the Building Safety Act 2022. Ivan McKee said the Scottish Government had initially called for a four-nations approach to cladding and remediation, but the UK Government pressed ahead with its own proposals.

Labour finance spokesperson Michael Marra criticized the Scottish Government’s approach to the tax, saying it has been chaotic and has inflicted damage on the housebuilding sector. He also said that there has been little progress in delivering the change needed to keep residents safe, eight and a half years after the Grenfell tragedy.

They are still waiting for a solution.