Housebuilders

Baroness Brown of Cambridge Excerpts

Thursday 11th January 2018 Lords Chamber

[Baroness Brown of Cambridge (CB)]

My Lords, I thank my noble friend Lord Best for securing this important debate and for his excellent introduction. I want to talk not about the number of homes that we need but rather the quality of homes that we need, and to focus on whether we are building homes that are fit for the future—homes that, as we have heard, our people deserve. I declare my interests as vice-chair of the Committee on Climate Change and chair of the adaptation sub-committee.

I warmly welcome our Prime Minister’s focus on housebuilding and her strong message about the importance of homes in the renaming of the DCLG as the Ministry of Housing, Communities and Local Government. But carbon dioxide emissions from buildings make up a major and intractable part of our carbon budgets, so it would seem madness to build these essential new homes to building standards that mean they will need retrofitting in the near future if we are to meet our carbon dioxide reduction targets. In addition, we know that the climate is changing. We must expect, on average, higher summer peak temperatures and longer periods of high temperatures, leading to a growth in the number of heat-related deaths, especially among the most vulnerable groups, unless we have homes that can be kept cool and properly ventilated.

The studies reviewed by the Committee on Climate Change indicate that the average cost of delivering the proposed—and now withdrawn—zero-carbon homes standard would be an average of between £3,000 and £10,000 per house if it were to be done when the house is being built, and £10,000 to £25,000 as a later retrofit. Indeed, such retrofits would probably never achieve the same low level of emissions. Do we really intend to leave these retrofit costs—approximately three times the cost of building the house well in the first place—to our children? Is this another example of intergenerational unfairness?

Would the extra cost and challenge of higher building standards really be too much for our housebuilders? I do not think so. Let us look at some numbers, which we have heard a bit about already. In 2016-17, the top 10 housebuilders built almost 80,000 new homes, about 45% of the total new houses. They made profits of £4.53 billion on a turnover of £22 billion and paid their chief executives an average total pay of £3.1 million. That excludes the more than £100 million share bonus for the CEO of Persimmon, because it rather distorts the figures. If we take the average figure of £6,500 per house as the cost of meeting a zero-carbon homes standard—the halfway point between £3,000 and £10,000—building all these homes to this standard would cost an extra £0.51 billion, which is only 11% of the £4.53 billion profit. If housebuilders had absorbed all these costs, profits would still have come in at a very healthy £4 billion. As we have heard, Persimmon is the second-largest housebuilder in the top-10 list. Yesterday, the Times reported that it built 16,000 homes in the last year and allocated bonuses to its 140 top managers totalling £800 million. The extra cost of building all these homes to a zero-carbon standard would have been about £100 million. Would not a reduction in that impressive bonus pot to just £700 million still have allowed a motivating enough reward for a very good year for the company?

I have three requests of the Minister to help us move swiftly to future-proof our new housing stock. First, we should introduce as a matter of urgency a strong zero-carbon homes standard, and then ensure that the standard is actively enforced. The figures show that the industry can afford to do this. Secondly, within two years we should make Help to Buy available only on accredited low-carbon homes, thus making sure that the Government’s significant investment is safe in homes that will retain and increase their value in the future without the need for certain upgrading. Finally, we should allow housing associations that build low-carbon homes to finance the additional cost by taking a share of the savings that tenants will see in their heating bills—perhaps half the savings for seven years or whatever is necessary. I understand that this would currently be illegal, as housing associations cannot charge differential rents in this way.