Residential Construction and Housing Supply - Motion to Take Note

Part of the debate – in the House of Lords at 8:57 pm on 24th April 2019.

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Photo of Baroness Walmsley Baroness Walmsley Co-Deputy Leader of the Liberal Democrat Peers 8:57 pm, 24th April 2019

My Lords, I shall focus on the word “sustainable” in the wording of the Motion, because I want to talk about two linked crises: the crisis of the housing shortage and the crisis of climate change.

The BEIS Select Committee looked into this on 12 March this year, taking evidence from representatives from Barratt, Persimmon and Melius Homes. The builders were asked what percentage of the houses they are building this year comply with the latest energy efficiency regulations. Barratt’s answer was 53%. The representative was asked, “Why only 53%?” He explained that the point at which you buy the land and get planning permission fixes the building regulations to which you must abide in perpetuity, so there are people still building to 2006 regulations.

It strikes me that that is a particular problem, given the phenomenon called land banking. It seems that if you buy some land, get planning permission and do some innocuous preparations, you can fix the regulations with which you have to comply, so you can bank your energy regulations as well as your land. That sounds like a good deal for the builders but a poor one for home buyers and the planet in an era when the standards of energy-efficiency regulations are rising. Surely this should change.

Public perception is that new properties will be substantially more energy efficient than older properties, in which case, the Select Committee asked, why did the Committee on Climate Change feel the need to point out that if builders actually built to the specification to which they should be building, consumers could save up to £260 per year on their energy bills? Are house buyers being misled into believing that their properties are more efficient than they are? The witnesses accepted that there is a performance gap between the energy performance certificate rating and the actual performance in use; this is something that the committee had dug into earlier. The witnesses made the point that homes that were designed to a B standard often turned out to be a C or D standard as built. It was put to the builders that this was mis-selling, similar to where someone buys a three-bedroomed house and it turns out to have only two bedrooms: they are being swindled. But, apparently, few buyers go back to the builder and complain that their energy bills are higher than expected. It seems that it is very difficult to make the comparison because of the complexity of the energy market. Do the Government plan to make it any easier for house buyers to check that they are getting what they paid for when they buy a new house?

Tools do exist for testing the thermal performance of the house at the point of sale. Indeed, I saw it done in my own house; I can say from my experience that I built a passive house and my heating bills are exactly within the range quoted by the architect and small builder. What is more, they checked this out again a year later to make sure the house was still performing—it is. The committee’s witnesses said they would be happy to be measured on this basis, so why do the regulations not insist that, instead of being based on a theoretical design, the EPC is issued on actual performance?

The Committee on Climate Change has stated that we need to decarbonise our homes by 2050. The builders were asked what percentage of the homes they built last year would need to be retrofitted to meet this ambition. The answer from Barratt and Persimmon was, “all of them”, since none was built to zero-carbon standards. But the small builder Melius Homes builds all its houses to this standard and still makes a profit.

Given that it could cost five times as much to retrofit a house to a zero-carbon standard than to build to that standard in the first place, we have one chance to get zero-carbon homes cheaply. The builders claimed that they are capable of building zero-carbon homes if that is what the Government want. However, the zero-carbon homes standard was scrapped. Can the Minister say why the Government are not reinstating it? The industry says it can do it, the planet needs it, so let us get on with it.

Cost is often raised as an issue. The committee asked about the extra cost of building to passive house standard and the reply was £10,000 to £12,000 per house. However, the climate change committee estimated £4,800 per home. It was agreed by the witnesses that this was probably ambitious but that, if it was at scale, perhaps it could be done. The committee then established that, at £10,000 per home extra, the total cost of building all Persimmon’s homes to zero-carbon standards would be £65 million per year, which happens to be only 10% of the amount paid to its senior leadership team last year. In other words, Persimmon could have built all the homes it built last year to zero-carbon standards for about 10% of what it paid the bosses. What will the Government do to ensure that scale builders put a little extra insulation into houses and a little less into the remuneration packages of their senior executives?

Finally, I would like to ask for some clarification about the powers of local authorities to grant planning permission only if the houses are built to zero-carbon standards. The Government have said that,

“local authorities are not restricted in their ability to require energy efficiency standards above Building Regulations”.

But some councillors are still confused and have been consulting the Passivhaus Trust on the matter. They point out that the planning system involves a number of considerations, including the three legs of sustainability: economic, environmental and social. They want to know whether they need to declare a local climate emergency in order to be allowed to give greater weight to the environmental leg in determining planning applications. They are of course very averse to judicial review. Can the Minister clarify this please?