Seòmar agus comataidhean

When we talked about the number of applications to the fund, one would assume that you may have been keen to get shovel-ready projects to show that the scheme was working. You have to admit that it is quite concerning that nearly half of that budget has not been spent, given the need—because of the budget imperative—for you to reform at pace and at scale.

Yes—if you could. Equally, I do not have a detailed understanding of it, but one operator has told me that they are compensated fully for one of the two schemes, but a fixed amount is provided for the other scheme. I do not know whether that relates to the under-22s scheme or the over-60s scheme, but there may be a similar overspend that has to be absorbed by bus companies. Mr Harvie might be aware of how it operates. It would be interesting to see whether that relates to one specific scheme or whether it is just a general oversubscription against forecast.

I accept that the witnesses do not wish to be drawn into a political discussion, but devolving further taxes to Scotland will, potentially, only make the system more complex unless efforts are made to make it more transparent. You see that in respect of rental income falling to the Scottish Government and in relation to various levies—effectively taxes—such as the tourism levy.

To what extent is it inevitable that, as we bring more taxes into the system, there will be less transparency? Could an independent organisation assess the point at which we start working for ourselves in the calendar year and stop working for the Government? The Adam Smith Institute used to call that tax freedom day, and lots of think tanks in the US explore that.

It strikes me that, given the complexity of the tax system—we have VAT on services, taxes and that sort of thing—it is becoming almost impossible for taxpayers to determine how much tax they actually pay, both at the Scotland and UK levels, on income tax and on the proliferation of new taxes. Is the lack of transparency just inevitable now?

Another issue is the public’s understanding of Scottish devolved taxation. They think that we have tax-raising powers when we actually have tax-varying powers. That point seems to have been lost in Scotland.

My question is probably for Stephen Boyle, but others may want to chip in. It strikes me that, with the Scottish Government coming forward with a £1.5 billion figure, it is very much focused on scale, size and cost but not on the required form and function for the public sector in Scotland. If we end up with a salami-slicing approach to the process, what is the risk that we could meet the numerical targets but have entirely the wrong public sector for the challenges of tomorrow? I presume that that is the warning that we should be alerting people to.

You look under the bonnet of the Government machine more than anybody else. Do you get the impression that the really hard work that needs to be done beneath that bonnet is being done to get us into that position?

I will speak briefly to Michael Marra’s amendment 16. I do not think that the minister gave a credible reason when he said that the amendment was effectively a mechanism that would delay the introduction of the levy and would stop funds flowing into cladding remediation. As I think that we have said to the minister on several occasions, the Scottish Government has been given £95 million for cladding remediation and has spent less than a third of that, as I understand it. Therefore, I do not think that the lack of access to capital funds would be an issue by that stage, unless the minister now has a projection of how that money will be spent.

I will speak to amendments 32 and 44. I assure John Mason that he might not always be advocating for a lost cause, because I certainly think that, if there is a strong view that we should be seeking a carve-out for brownfield sites, it would give greater assurance to the industry if that is on the face of the bill rather than being subject to change later.

Amendment 32 would introduce a viability-based relief that allows Revenue Scotland to reduce or remove levy liability when payment would make a development financially unviable. The evidence to the committee from Homes for Scotland and a number of developers was that development viability varies sharply and widely across Scotland depending on geography, site conditions, tenure mix and market values. That variation has become more pronounced in recent years as a result of rising business costs, longer planning timescales and increasing pressure on private capital investment and pools. Therefore, a levy that is applied without regard to viability risks stopping marginal developments from proceeding altogether, which would further slow the market. As the minister has stated, when that happens, there is no levy revenue, no associated LBTT receipts and no contribution to housing supply—three issues that are medium to long-term concerns for the committee.

Amendment 32 would provide a limited, controlled and safe mechanism that prevents that outcome, while retaining clear safeguards through evidential requirements that would be imposed on developers before Revenue Scotland considers any potential reductions or removals.

Amendment 44 is simply consequential to amendment 32. It would ensure that regulations that govern the operation of viability-based relief are subject to the affirmative procedure. Given that it is those regulations that determine who pays the levy and in what circumstances, it is appropriate that the Parliament has the opportunity to scrutinise and approve the framework that governs their use.

On that basis, I cannot see why the minister does not just go for a full exemption, which would make the future far more certain for an uncertain aspect of Scotland’s housing market. The evidence that we have heard is that the levy will reduce the number of homes that are delivered in rural areas. When that happens, the minister should be mindful that the overall revenue that is available to the public purse is likely to fall rather than increase, particularly in rural communities.

I also want to draw attention to some recent research on the effect of depopulation on rural communities. One of the causes is the lack of access to affordable housing. Anything that challenges the housing market in those areas could accelerate depopulation, particularly of young and working-age individuals.

My amendment 42 is consequential to amendment 21. It defines “rural area” with reference to the Scottish Government’s sixfold urban rural classification, which is an objective and well-established framework. I understand what the minister said: the framework is subject to change and does not rest on a statutory footing. I am therefore open to discussing with other stakeholders and the minister how my proposal could be incorporated into the bill to provide a degree of certainty and permanence.

Amendment 42, as it is presently worded, uses categories 4 and 6 in order to target the exemption at areas where viability pressures are most acute. I deliberately excluded category 5 in order to reflect what organisations, including Scottish Land and Estates, say best represents the scale, pattern and delivery challenges in category 5 areas. Taken together, my amendments ensure that the levy is targeted in a way that reflects the evidence that was heard by the committee and avoids severe and unintended consequences for rural housing delivery.

11:15

The minister says that the proposed sunset clauses in amendments 15 and 47 are broadly similar. However, if we look in detail at the minister’s sunset clause, we find that the sun may never set, subject to regulations, so the levy could become part and parcel of the taxation framework. That concerns the industry, and the committee was clear that there should be a sunset clause with a legal backstop.

The financial memorandum for the bill that became the Housing (Cladding Remediation) (Scotland) Act 2024 says that the anticipated expenditure on cladding remediation would be for a period of five to 10 years. Therefore, a sunset clause at 15 years, as proposed by the Government, with no legal backstop, is probably not in the spirit of the original legislation. For the industry to have confidence that the levy will not simply become another aspect of the business operating environment, it is important that there is a clear sunset clause in the bill, and 10 years is a reasonable time span.

Under my amendment 47, it would be possible, with good cause, and subject to parliamentary consent under the affirmative procedure, for that to be extended to 15 years. I believe that my amendment would give clarity and certainty to the industry. Any extension to the lifespan should take place only if there is a clear case and that clear case is put to Parliament, rather than have the levy continuing by default, which is in effect what a 15-year period would mean, given that the general consensus seems to be that the period should be 10 years.

In relation to amendment 45 and making the extension of the life of the act subject to the affirmative procedure, I note that that is similar to the minister’s amendment 14. However, having come relatively late to that particular amendment, I am minded to press amendment 45 as well, just to ensure that there is absolute clarity that it will have the same effect as the minister’s amendment 14. I will do that, unless the minister can say whether he has identified any difference between the application of my amendment 45 and his amendment 14.