Infrastructure Bill [HL]

Lord McKenzie of Luton Excerpts

Wednesday 5th November 2014 Lords Chamber

Moved by

[Lord McKenzie of Luton]

101A: Clause 26, page 26, line 29, at end insert—
“( ) The provisions in section 1(1A)(d) of the Building Act 1984 regarding action to be taken as a result of the building’s contribution to or effect on emissions of carbon dioxide shall apply to—
(a) all buildings and developments consisting of ten or more properties, or(b) from 2018 all buildings or developments of any size.”

[Lord McKenzie of Luton (Lab)]

My Lords, this amendment seeks to limit the small sites exemption to two years from 2016 and to abolish it thereafter and to require the threshold in the interim to be sites with fewer than 10 properties. The Government have sprung their small sites exemption on us with little or no consultation, although they are now consulting on the matter. In the mean time, it remains unclear what is meant by small sites or by the exemption. We were hoping to have some clarity on these issues in time for today, but, alas, no. I thank the Minister for his letter of 3 November, where he said that the Government had endeavoured to publish the consultation document and the government responses on the zero-carbon consultation for the House of Lords Report stage, but were, however, still working on the document. It would be helpful if the Minister could say more about when we will be able to see that.

As we debated in Committee, the rationale for any exemption from the zero-carbon homes standards is a bit thin. The Government have already lowered these standards. If there is any justification for a time-limited exemption for some sites, it is that, having announced it, it might be argued that some time is needed to move back to the single standard. However, the longer the uncertainty about the detail of the exemption continues, the less valid that point is. The Government have argued that the exemption will be of help to small builders who have more difficulty in responding to new regulations. While I am sure that we all wish to encourage small builders, this is not the best way to do that.

We have recently had the benefit of the report from Michael Lyons, covering a whole raft of interesting stuff on housing. Within the package of support for SMEs that he recommends, for example, are these points:

“Legislative change to permit ‘redline’ outline planning applications on smaller sites of fewer than 10 homes. Local authorities should identify small sites in public ownership in local plans, and work with … public landowners to make them available for purchase and development by SMEs. Local authorities and their New Homes Corporations, working with lead developers should offer more packaged … opportunities for serviced sites to help SMEs access the market, including in Housing Growth Areas”.

Therefore, there are other ways in which to help small builders. In any event, it was pointed out in contributions to our debate that it is assumed that only small builders build on smaller sites and that larger builders would not seek to parcel sites to take advantage of the small sites exemption. It is also the case that a significant number of homes are provided on smaller sites.

--- Later in debate ---

[Lord Ahmad of Wimbledon]

My Lords, first I thank all noble Lords who have participated in this debate, and in particular the noble Lord, Lord McKenzie, and the right reverend Prelate for their amendments, which have allowed us to discuss this important issue again.

I am conscious that Amendment 101A has already been discussed in Committee. I am of course happy to revisit the subject because of its importance, and in doing so I ask noble Lords to excuse me if I cover points we have covered before. From our previous discussions, and as my noble friend Lord Teverson has alluded to, I know that a clear consensus was emerging that in designing the zero-carbon homes policy we must ensure that smaller builders are protected from increases in costs that may make it more difficult for them to compete. In seeking to limit the scope of the application of off-site carbon abatement measures to developments of 10 or more dwellings, the amendment recognises that important principle. On that basis it is well intentioned and in line with the Government’s thinking on the issue.

With regard to the Government’s thinking, I am conscious that noble Lords would have expected a consultation paper to have been issued by now and in advance of this debate. Indeed, in various meetings that I have held in advance of this stage of the Bill, this was something we discussed. At this point I can only apologise for the delay which has occurred. I assure noble Lords in that apology that the Government are working very hard on the consultation paper, and we are very aware of the interest on this issue and the need to set out our thinking as soon as possible.

We recognise that achieving the zero-carbon standard could be particularly challenging for small builders. Smaller developers face extra costs in terms of land acquisition and purchasing. They also rely on an ability to identify and redevelop small sites or to assemble small parcels of land into larger opportunities. Research recently published by the National House Building Council on improving prospects for small housebuilders suggests that the availability of suitable small sites—which they indeed prefer—is declining. It also indicates that any extra regulatory costs can impact on the viability of development. We are concerned that if the costs of zero carbon lead to fewer small sites being brought forward, this will further hinder the prospects for small housebuilding firms.

Therefore, while welcoming the intention behind the amendment, it cannot be supported, principally because it would not provide the flexibility that we need on this issue. Putting a rigid exemption in primary legislation would not be the right way forward. There must be flexibility to respond to changing market circumstances and to listen to those people with the main interests in this area, the homebuilders and environmental groups. Our intention therefore is first to seek the views of those interested parties on how the exemption should work. Only after that consultation would we legislate, setting out the scope of the exemption through the building regulations and providing supporting guidance in that respect. Primary legislation is not required to exempt small sites. Section 3 of the Building Act allows for building regulations to make different provisions or to exempt prescribed classes of buildings from the requirements of building regulations. However, I recognise that the key point of the debate is the threshold to be applied.

The amendment proposes an exemption based on sites of fewer than 10 units. I mentioned during Committee that this was one of the options being considered. I say “options”, because we must leave room for respondents to offer up different options or evidence for consideration. We will also consult on the timeframe that should apply to any exemption. It is this area in particular where flexibility is a paramount consideration. What may be right at the time of designing the exemption may not be right further down the line, and the Government must have the ability to review the operation of the exemption appropriately. I hope that it is helpful to clarify these important points and that doing so provides some further reassurance in advance of the consultation being published. We do, of course, welcome noble Lords’ considered opinions and views as part of that consultation exercise, and I assure your Lordships’ House that they will receive a copy at the earliest opportunity.

The noble Lord, Lord McKenzie, asked about a response on allowable solutions from the Government that was published in July and provided to noble Lords ahead of Committee. I am not sure whether there has been a response, or if it did not reach the noble Lord. I specifically asked for it, and was assured that a hard copy was also sent to the noble Lord in this respect. If, again, he requires a further copy of that, I shall be happy to forward it on.

I now turn to Amendment 108A, in the name of the right reverend Prelate. As I said during the discussion on a similar amendment in Committee, this amendment will result in significant problems by prescribing energy performance levels in the Bill. We all share the desire to see energy-efficient homes built that help to reduce carbon emissions and fuel bills. We should not forget that this Government have made significant progress towards delivering on the commitment made by this and the previous Government to ensure that zero-carbon homes are built from 2016 onwards. Since we confirmed our commitment to the 2016 target for new homes to be zero carbon, we have further strengthened the requirements of the 2006 building regulations in 2010, and again in 2014, achieving a 30% total reduction. In fact, the most recent changes we made to the building regulations in 2014 will help to save homeowners an average of £200 on their fuel bills, compared to new homes built before we came to office.

Of course, we are not stopping here. As I have said, we have confirmed that from 2016 all new homes will have to meet even higher standards for on-site measures to be set out in building regulations. These will be set at a level equivalent to that required for a home built to the code for sustainable homes level 4 standard and will save homeowners on average £700 more annually when compared to a typical existing home. The right reverend Prelate talked of building to code 4. This can be done, which is why we think it is a reasonable standard to set. However, as shown by the Zero Carbon Hub’s as-built performance gap programme of work, there are challenges. We should set a realistic and achievable target, not one which pushes the industry to a point where it cannot deliver in practice.

To change the energy requirements for new homes, it is always necessary to consult carefully those affected. We should not forget that we are talking about a technical area that impacts across the whole construction sector. Additionally, the industry reports on building types that this amendment ignores and does not address, such as high-rise flats, because more work is needed. The categories listed in the amendment contain different building types and a rigid standard to cover them all. This may not work in practice. It may, but it is important to take the time to work through it in consultation with the industry. It would not be workable to deliver the proposed standard within six months. Even if it were, it may not be prudent to have such a rigid timeframe for delivery in primary legislation.

The independent Zero Carbon Hub recognises that further technical modelling is required. If, in the light of consultation, even slight adjustments were needed we would not be able to make them without new primary legislation. I assure noble Lords that the Government will strengthen standards and deliver zero-carbon homes from 2016. That is and remains a clear commitment on which we will be held accountable if we do not deliver. Between now and 2016 we will consult widely as to how the new proposed carbon compliance standard can be met. We will share that consultation with noble Lords.

My noble friend Lord Teverson and the right reverend Prelate the Bishop of St Albans asked about exemptions. The number of smaller housing developers competing in the market is significantly lower than it was prior to 2008. Smaller developers often face greater set-up and purchasing costs, compared to larger developers. New regulatory requirements often hit smaller developers earlier, as there are shorter lead times to starting development. With all this in mind, it is vital that the Government give the sector the support it needs, and exemption from the full cost of the carbon requirements is one way of doing so.

Let me also reassure the right reverend Prelate that we work closely with partners such as AIMC4 that have shown that it is possible to build homes to meet a higher level of energy efficiency. The work of that group has helped the Government in deciding to set the on-site requirement at around code level 4, as this should be affordable and achievable for the majority of developers. It is important to recognise that this work was limited in scope and did not extend across the full range of buildings such as flats.

The point was made that the setting of on-site standards could result in a watering down. We worked closely with the Zero Carbon Hub, whose work was hugely influential in helping the Government decide what further action to take from 2016. The hub did not recommend an on-site level for high-rise apartment blocks, recognising that further specialist work was required.

My noble friend Lady Maddock asked some specific questions about rowing forward and rowing back, as she described it, and said that some explanation was needed. I am sure she will appreciate that there are discussions taking place. I hope that my comments have somewhat reassured her that the commitment of the Government to achieve our objective when it comes to zero-carbon homes and to the policy that we have agreed from 2016 remains a priority.

I hope that my responses have been sufficient to reassure noble Lords of the Government’s position on both these amendments and that the approach I have outlined here, as well as in Committee, has demonstrated why these amendments may prove problematic in terms both of increased demands on the home building industry and of the mechanics of delivery. On the basis of these reassurances and accepting that we are still working towards the issuing of the consultation on zero-carbon homes, I hope there is sufficient to encourage the noble Lord, Lord McKenzie, and the right reverend Prelate not to press their amendments.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his response to my amendment. I think we recognise that putting material in the Bill reduces flexibility. The point is well made that these things will need to be dealt with in secondary legislation. The purpose of an amendment such as this is to get some debate and discussion going, as the Minister is well aware. He suggested that Amendment 101A, with its recognition of sites of fewer than 10 properties, was an acceptance of the policy. That was certainly not its intent. The key part of that amendment was that there should not be any exemption after 2018.

The consultation that I was probing was the one that was dealt with in the Minister’s letter of 3 November, which was the consultation on the exemption for small sites. If I made reference to allowable solutions it was not my intention. That was the consultation—knowing when it will happen and, more importantly, what is in it.

--- Later in debate ---

[Lord Teverson]

My Lords, this continues a similar theme. I tabled an amendment in Committee to try to get more rigour into ensuring that the building regulations that we have are met and complied with. There is very little point in our legislating if those standards are not met in practice. I quoted the Government’s own adviser, the Committee on Climate Change, which stated that there seemed to be a big gap between what should be happening with the thermal efficiency of homes and what was actually happening. I was not completely reassured by that, but I accept that that is mainly a role of local government.

I am trying move on to address the fact that it often takes—and certainly has over recent years—a long time for a planning permission to become a built-out and lived-in development. We have the situation—I look on it as an anomaly or rather a loophole—whereby the building regulations to which builders must build relate to the date of the planning permission rather than when the development is constructed and completed. If that is only within a couple of years, it makes no difference whatever. We have, however, a number of developments—at certain times more than others—when that stretches over a considerable period. I realise that planning permissions themselves have a shelf life. After three years, if they have not been used, they go into abeyance. However, I remind noble Lords that under that system, as long as you do a certain amount of work—you do not have to complete it—that planning permission remains live. That is something that is done very regularly to make sure that planning permissions are not lost.

I was very impressed by the Minister’s figure of £200 that would potentially be saved per annum by the moving up of building regulations by the Government. Of course, that illustrates very well the extra cost to residents of houses that do not meet those standards—either because they have been exempted under the small development regime that we talked about in the previous amendment or because houses are being built under building regulations that are several years old.

It seems to me that this is something that needs to be fixed—for consumers and certainly for the government strategy on fuel poverty and zero-carbon homes. So I am putting forward an extremely modest proposal that is a longstop: if developments have not been completed within six years of gaining planning permission, at that point they must comply with the building regulations of that time rather than those when the planning permission took place. I have tried to make this amendment as clear as possible. I hope it says that. I very much hope that it is in line with government policy and that this is something of a loophole that we would like to close—particularly when we have periods when building and construction developments take a particularly long time.

Indeed, I would ask whether there is a temptation sometimes to get planning permissions early. Where we have land banks, it perhaps means that construction is delayed but it almost gives a benefit to developers to hang on to undeveloped land. I would like to see this very sensible measure used as an incentive for building, particularly of dwellings when we have such a national housing shortage, to be started and completed within a reasonable period. I beg to move.

[Lord McKenzie of Luton]

My Lords, we should be grateful to the noble Lord, Lord Teverson, for raising a very important and interesting point about developments that are not completed within six years of the granting of planning permission. As we have heard, it requires the development to be carried out in accordance with current building regulations relating to conservation of fuel and power. This is an attempt to address the very serious point that we have delays in the completion of developments, particularly housing. Given the housing crisis we face in this country, the objective should be to encourage sites with planning permission to be built out as soon as possible.

This is one of the issues that the Lyons report addressed for us. Although this is not the occasion for an extensive discourse on that report, one of the interesting points it makes is that some 80,000 unbuilt homes have planning permission from 2010 or earlier. Some of these will be built to 2006 standards, and so be eight or more years out of date. One of the issues that this amendment raises is how practical it is retrospectively to amend the applicable building regulations. There will obviously be issues around homes that are partially constructed at the cut-off point. Getting homes built earlier is good for obvious reasons, although, of course, it does not necessarily do anything to raise the standards of applicable building regulations.

I might resort to going back to the Lyons report. Obviously, not all these recommendations are yet, or will become, policy, but under the heading “Use it or lose it”, it suggests that,

“the life of a planning permission should be reduced to two years with higher fees applying for renewal of expired permissions”.

That would present an alternative mechanism whereby people have to go back and face updated building regulations. Certainly, more substantive work should be required to count as the commencement of development. That is a problem the noble Lord identified. The report also suggests that,

“councils should have powers to levy a charge equivalent to council tax if land allocated in a plan with or without permission is not brought forward within five years”.

Compulsory purchase powers could be strengthened and streamlined to make it easier for public bodies to acquire land where it is not brought forward and where it is a priority for development, so there are alternative ways to encourage developments to take place and perhaps to realign the nature of those developments with updated building regulations. The noble Lord has raised a very interesting point which I am sure will get a full response from the Minister. One hopes that something could actually flow from this.

[Lord Ahmad of Wimbledon]

My Lords, I thank my noble friend Lord Teverson for tabling this amendment. I also thank the noble Lord, Lord McKenzie, for his comments.

I should say at the outset that I share the sentiments expressed on the objective of ensuring that more homes are built, and built according to better standards and in line with standards. My noble friend’s proposed amendment sets a six-year time limit on a development being built to the energy performance requirements in building regulations in force at the time that planning permission was granted for the development.

I should start by pointing out that, as noble Lords may be aware, it is not the grant of planning permission that is the trigger for the application of building regulations’ requirements but the submission of a plans application or a building notice, or an initial notice to the building control body. During my time in local government, I remember many applications that were challenging in that regard. Therefore, we think that the amendment as drafted may lead to confusion about what happens under planning as opposed to what happens under building regulations.

However, setting to one side the issues that may arise from the drafting of the amendment, there are important practical considerations about how new building regulation requirements apply to developments already under way at the time that the new regulations are introduced. It can take a long time to plan, design, finance and build a development, as noble Lords know. It is therefore correct that the building regulation provisions in force when the building regulations application is made remain those with which the development must comply. To provide otherwise would lead to unreasonable disruption, perhaps delay, and increasing financial burdens as there would be uncertainty about construction standards and a risk of disruption to the supply chain part way through the development.

For example, large developments such as the famous “cheese grater” building in Leadenhall Street, London, will take many years to build and complete—often longer than six years. If accepted, this amendment would mean that the technical requirements of those developments would need to be changed part way through construction. Forcing a development to change from one set of building regulation requirements to another half way through a project would cause real problems for builders, as I am sure my noble friend would recognise.

However, in saying that, I put on record that I totally understand and appreciate my noble friend’s concern that developers may play the system by submitting a building regulations application and then doing nothing or delaying the development and not having to meet any more up-to-date requirements that may have been introduced in the mean time. From my experience, I have seen that happen, too. The Government have recognised this issue and so building regulations generally require that whenever any changes are made to building regulations, building work in respect of any applications made before the coming into force of the new requirements must commence at the latest within 12 months—otherwise, the new requirements will apply.

This requirement was introduced in 2006. Before then, as noble Lords will know, the time limit was three years. This time limit is set in the building regulations. This gives the opportunity to adjust the time limit in light of the circumstances when new regulations are introduced. If we were to rely on changes to primary legislation, we would then lose the flexibility to respond. If we stated the time limit at an inappropriate point, we could cause real problems for housebuilding, as I have already outlined. It will be for the Government dealing with building regulations changes for 2016 to consider what time limit may be appropriate. I am sure that they will read this debate very carefully to see the issues raised and the views expressed. I believe that my noble friend recognises that the amendment as it stands focuses only on one specific area of building regulations, the energy performance requirements. The time limit which I have just described applies in respect of any change to the standards in the building regulations. Therefore I am sure that my noble friend recognises that it may lead to confusion for developers if different time limits apply to energy performance requirements than to other requirements of building regulations.

The amendment from my noble friend, as the noble Lord, Lord McKenzie, has said, raises an important issue. However, as drafted, it would not work for the practical reasons that I have outlined. I hope that I have set out in some detail the time limit which already operates in building regulations to tackle the risks of developers who seek to just get regulations in place for the sake of it. There will be an opportunity in the consultation on the 2016 regulations for energy performance requirements to be looked at. I hope that, in the light of the assurances and clarifications that I have provided, my noble friend will be minded to withdraw his amendment.