The NFB submitted its response to the Building Safety Levy consultation, which is a proposal by the Government to levy a tax on most of the development industry in order to pay for cladding and fire safety remediation works. We wanted to inform members what our response contained.
Unbelievably, the Government has decided not to go down the ‘polluter pays’ route, and instead, is seeking to tax its way to funding a mistake it confirmed it conceived.
Our first choice is for the Government to remediate buildings as soon as possible and subsequently go after the polluters to compensate the costs. This protects all innocent parties and helps leaseholders immediately.
Our second choice is to follow the initial proposal the Government made in 2021, which was to apply the levy to buildings 18m high or 7 storeys. However, meetings with civil servants indicate this option is now off the table and the consultation confirms it.
As the Government is neither choosing ‘polluter pays’ or targeting those who typically deliver the buildings it seeks to remediate, we are therefore left with the third option of fighting to ensure that as few innocent British businesses as possible being targeted to pay for the fault of others.
The theme throughout our response was simple; when targeting innocent parties, the Government should not decide who is more innocent than others.
Although it was positive to see our pre-consultation proposals included, such as exempting SMEs by way of excluding affordable housing, conversions, refurbishments and sites of fewer than 10 homes, we reiterated out initial view that the exemption should be for fewer than forty houses, with a ‘Medium Sized Site’ definition created.
This would not only protect a greater number of SMEs, a group the Government says it would like to support, but begin a vital process of changing how SME builders are treated because a site of 11 to 40 homes should not be treated the same in bureaucratic, planning contributions or strategic land use terms, as a site of 100 plus homes.
We have also indicated to the Government that because it has placed twelve new taxes and costs on the housebuilders in the two years previous and is proposing to remove negotiable planning gain (unless you are a major developer), that this new tax may make sites unviable, particularly as they have watered down planning reforms which sought to make the land market competitive by bringing more of it forward.
The NFB and HBA rejected the Government’s two stage payment approach, where 60% of the levy will be collected at the ‘notice to commence phase’, and instead propose that the levy is collected after the development and sales are completed. This would ensure companies have cashflow to pay the unfair levy.
Fines and sanctions for non-payment, such as legal powers to stop development, have also been opposed in favour of the existing legal mechanisms used to collect debt.
The Government also asked how the levy should be collected and whether it should be set regionally, or by local authorities. We believe the Government should collect it centrally so that administrative costs are kept to a minimum, not taken out of the Infrastructure Levy, and that the levy be set regionally and proportionate to the region’s remediation costs. This would ensure that builders in Leeds are not funding remediation works in London, a region where the majority of fire risk development is not completed by housebuilders but investors.
Finally, we have proposed that no levy is put in place until all parties the Government is targeting have their levy set. The Government already has one cladding tax targeting innocent developers, it should therefore not introduce another and expect developers and housebuilders to disproportionately fund a failure the Government itself caused.