Infrastructure Bill [HL]

Lord Jenkin of Roding Excerpts

Thursday 17th July 2014 Grand Committee

Making real progress on zero-carbon homes is vital if we are to meet our commitment to tackling climate change and our emissions targets. We would support a higher standard of zero-carbon homes than the coalition, ensuring that if people pay an uplift on a home due to it being zero carbon, they will benefit from an appropriate higher level of thermal efficiency than at present. The standard should be the one recommended by the Zero Carbon Hub. We oppose an ongoing small developments exemption. We would structure allowable solutions in such a way that developers are incentivised to prioritise onsite measures over external offsets. The noble Lord, Lord Teverson, has an amendment on that in due course. This could be done through the drafting of the primary and secondary legislation. In office, we would produce an energy in building strategy which combined the existing microgeneration energy efficiency and heat strategies. This is a sensible evolution that would ensure consistent priorities across departments.

[Lord Jenkin of Roding (Con)]

My Lords, I do not claim the expertise of all those who have spoken in this debate so far, but I would like to make one or two points in commenting on the debate that has just happened. I also begin by congratulating my noble friend Lord Ahmad on his preferment. It is extremely well deserved and we look forward to his increasing activity in this House.

The first point that occurred to me in reading the Government’s amendment and the documents that accompany it is that it is clearly a very different concept to that embodied in the Section 106 provisions of the Planning Acts. In that provision, as a condition of gaining planning permission, a developer has to make some other improvement, perhaps by the provision of affordable housing, public space or something of that sort. Clearly, there are some parallels and the discussion that has been held so far on the amendment suggests that the allowable solutions should be closely associated with the development under consideration. To some extent, that reflects the anxieties that have happened over some of the Section 106 conditions that were imposed, which were intended, sometimes, to promote a closer knit, cohesive community, embracing people of different living standards and backgrounds and so forth within a reasonable neighbourhood. Increasingly, developers found it easier to have their affordable housing some distance away thereby, negating the purpose of the planning condition. I hope that that cannot be regarded in any way as an appropriate solution.

Individuals who have a strong commitment to fight climate change and who engage, for instance, in air travel and wish to be able to say, for their own comfort, that they are offsetting their carbon emissions incurred by air travel is an entirely different operation and personal to the individual. Some people regard that as of great importance, and one has to admire their commitment. How effective it is I have no means of judging. But that is quite different from what we are considering here in the zero-carbon homes policies that the Government are promoting. One needs to recognise that on one side and the other, Section 106 and individual offsetting are quite different from what we are considering here.

It is right to remind ourselves about my second point. I am grateful to the Home Builders Federation, which has provided us with some information, some of which I was unaware of. I would be grateful to know whether the Government accept this statement. The federation states that in the UK:

“New housing built today is amongst the most energy efficient in the world and the process of working towards the implementation in 2016 of a zero carbon standard has led to great strides being made by the industry in reducing emissions from new homes”.

In considering these matters, we need to recognise that a great deal has been achieved already. It is a credit to the housebuilding industry and the building industry as a whole how much they are committed to achieving ever-higher standards and lower emissions in their work.

How much difference does it make to the individual? I am never quite sure. Some years ago, under the CERT programme for carbon emissions, I had my house insulated, cavity walls filled, much more effective loft insulation installed and various other things. It was not done under the Green Deal because it was before that, but it was said that it would reduce bills. It is quite impossible to measure that. As one gets older, one needs more house heating, particularly if one is at home all day like my wife. It may help, but I am never quite sure whether it has conceivably reimbursed what we had to spend. Although we got the insulation free as pensioners, we had to spend quite a lot on scaffolding and such things, which was not included in the CERT scheme.

The noble Lord, Lord McKenzie, asked how far the allowable solutions should be for the benefit of the local community. That needs to be carefully considered. If one can do that, it seems to me that there are advantages to it, but how you measure it I am not sure.

Finally on the question of the exemption of small sites, I do not think that those who have spoken so far recognise that there is a conflict of interest here. The tighter that you make the regulations on carbon, the more likely it is that you will stifle investment in housing. When considering the nature or length of time of the exemption, when this country faces a crisis in housebuilding—an amendment was moved by the noble Lord, Lord Best, that made this point very clearly—we must not risk scaring off people who are anxious to develop small sites but would find the cost of doing so to a high standard of carbon emissions would make it uneconomic, so that they back away and the site is not developed at all.

I should be grateful to hear from my noble friend to what extent the Government are taking account of that conflict in determining the nature of the small sites exemption. As may have already been said, I have been told that there is expected to be a consultation on the definition of the small sites exception, and I should be grateful to hear from my noble friend when that is happening, the nature of the questions that will be asked and the parameters in which it will be considered. All I say at this point is that it is important that we get that right and that, in the housing crisis that we face, we do not risk stifling housebuilding investment that might otherwise happen.

[Lord Best (CB)]

My Lords, I too, welcome the noble Lord, Lord Ahmad, to his new role and welcome the new clauses in the Bill. I want to address the points just made by the noble Lord, Lord Jenkin, and pick up the question of the exemption from the full requirements of the zero-carbon standard for small development, which is not yet fully defined.

First, it is extremely important that we encourage small and medium-sized enterprises to get back into business. They were very hard hit in the recession; they went out of business on a big scale when times were hard following 2008. We need to get them back into business if we are to achieve the 200,000 or 250,000 homes a year, or whatever it is, that we need to build. That almost goes without saying.

The big six housebuilders used to do 46% of all the housebuilding in the UK; they now do 70%. Seventy per cent of all new housebuilding is in the hands of that very small number of builders. We need to bring back those small and medium-sized builders. However, I doubt whether this measure is the way to do that. To think that exempting small sites means that small builders will come back into play is a leap of imagination. First, larger housebuilders of course sometimes develop small sites, particularly if they are profitable; or they develop larger sites but in phases. That means that if we choose a threshold of 10 homes, we will discover a whole series of schemes with nine homes being built over a period. Housebuilders like to do things in phases in any case. We may not address the SMEs when we address this. It is not about small builders; it is about small sites, and it may miss the point.

--- Later in debate ---

[Lord Ahmad of Wimbledon]

I will follow up with officials after today’s session and, if that is our intention, we will see whether we can deliver on that. I can do no more than reassure the noble Lord in that regard.

I turn to the various questions that were raised. My noble friend Lord Teverson raised the issue of the small sites exemption, which relates to the 50 units per site threshold. The Government recognise the potential impact on smaller homebuilders, and that is why we have decided on an exemption, as I have already said. The principle will be to ensure that the measure is targeted and proportionate to what we are trying to achieve. I have already said that we hope to issue the consultation shortly.

There are a number of issues that we all want to address specifically in the consultation—for example, the threshold and scope of the exemption and how it is applied. Regarding the site threshold, there has been much press speculation that it could be as high as 50 units. However, for the recent consultation on Section 106 agreements, the threshold was 10 units or fewer. This is likely to be nearer the figure that we consult on. In that respect, I cannot anticipate the Government’s final position but I can say that we will be looking closely at the conclusions of the consultation on the Section 106 proposals as we develop our thinking.

In relation to the timing of any exemption, I do not agree that primary legislation should be used—

[Lord Jenkin of Roding]

I was drawing a distinction between the Section 106 conditions of planning permission and what we are considering in this Bill. Do the Government recognise that they are not exactly the same? The Minister referred to them in almost the same breath, but they have rather different considerations.

[Lord Ahmad of Wimbledon]

I accept that, and I am fully aware of the impact and application of Section 106 agreements. There are currently two figures. There is a speculative figure in the press. We are developing our thoughts on this. I mentioned the Section 106 consultation—the figure of 10 is nearer to our thinking than 50—merely to give an indication. We will, of course, keep the situation under review. If it becomes clear that the time is right to review the exemption, we will do so, but we do not want to be tied down to a specific timeframe.

Amendment 93AB seeks to limit the off-site measures that a homebuilder can support to those within a five-mile radius of the development. While we are very keen that local projects are supported through allowable solutions, this proposal is not workable. We asked in our consultation whether there should be a spatial limit on off-site carbon measures. Views were evenly matched, but slightly more of those responding did not think the measures should be limited to just those in the vicinity of the development. While we do not want to prescribe that measures should be local only, we want local authorities to participate and local projects to be supported.

There are clear benefits for developers in supporting off-site carbon abatement measures in the locality of their developments. They give visibility that developers are delivering on their obligations. It can enhance the attractiveness of a development if local people feel that it is leading to carbon reduction in their area. In many cases, these projects may be the most cost-effective option. This will be good for the reputation of homebuilders and beneficial to local areas. What we are proposing will allow for local participation, but prescribing that by reference to a specific spatial limit will not work. Even if sufficient appropriate carbon abatement projects existed within five miles of every new housing development, should we force them to be supported at the expense of more cost-effective strategic projects elsewhere? It is likely to be to the detriment of local communities if it means that larger scale measures, such as larger scale community energy schemes, are missed. It would rule out local authorities working together to offer measures which might span more than one authority. Setting a five-mile radius in primary legislation would also end up in a confusing pattern of concentric circles of potential projects over the country which would be impossible to administer.

My noble friend Lady Maddock asked the obvious question. In building generally, we all ask ourselves whether it will happen. I am sure we could share stories about builders and deliverables. Her question was about allowable solutions and how they will be checked. We will build on existing processes in the first instance, but it will be necessary to consider a self-standing approach, which could happen in a number of ways. For example, retrofit is classified as building work. It will be subject to checks under building regulations as now or will be covered by the existing competent person scheme arrangements. This could be supported by a requirement to provide an updated energy performance certificate to show that the improvements are achieving the desired outcome. A mechanism for validating carbon savings already exists under the energy companies obligation, and there is scope to use this example to investigate a similar proposition to cover allowable solutions. Small-scale energy measures would have to demonstrate that they meet energy performance levels which could be converted to carbon savings. There are other quality assurance schemes for other types of measures which could also be called upon, such as the combined heat and power good quality scheme. There will be further consultation with the industry.

My noble friend also asked about energy efficiency and the fear that the consumer would lose out if the developer chose to use allowable solutions. All consumers will benefit from a minimum national standard of energy efficiency and carbon reductions in homes. They will also have good information on other technology used in homes further to reduce carbon emissions and energy costs. The allowable solutions policy benefits society as a whole by reducing carbon emissions across the country without imposing a disproportionate burden on anybody. I am sure that my noble friend agrees that if we look at how housebuilding, home sales and home rentals have developed over the past decade or so, energy efficiency has been at the forefront of much that is part of the offers which are considered.