House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Seventh Report

3 Regulation and encouragement

10. The Government's primary regulatory tool for driving improvement in building standards is the Building Regulations, which set standards for construction and for some refurbishment and renovation works. Part L of the Regulations sets environmental performance standards, and recent changes have significantly raised these: the Government says the April 2006 revision required standards 40 per cent higher than those of the 2002 Regulations and some 70 per cent higher than those set in 1990.[18] The standards are expected to rise again in forthcoming revisions: by 25 per cent in 2010; by 44 per cent in 2013; and to establish zero-carbon in new build by 2016.

11. Although the Regulations largely apply to new build, improvements are required to existing stock for certain refurbishment and renovation works: standards fixed for particular components mean that windows, doors, hot water systems and boilers, for example, may need to be replaced when certain types of work—extensions, in particular—are carried out on an existing home. Although improved standards have already been mandated for 2010 and beyond, CLG will review the Regulations this year and further changes may be required once the European Commission has reviewed the Energy Performance of Buildings Directive in 2009.

12. The Regulations, having statutory force, have had a clear impact in raising standards. The Home Builders Federation states that a home built today is likely to be 40 per cent more energy efficient than one built just five years ago, and up to six times more efficient than the substantial proportion of Victorian housing in the stock.[19] The Association for the Conservation of Energy notes that the 27 per cent or so of buildings constructed before 1919 achieve an average SAP rating of under 41 (out of 100) while the bulk of properties built since 1990 achieve higher than 70.[20]

CONSEQUENTIAL IMPROVEMENTS

13. Inevitably, the main impact of the Building Regulations has been in the new-build sector, and the Government may need to consider the extent to which they can be used as a means of bringing about retrospective change to already-standing homes. At present, for existing homes, Building Regulations largely apply to any new or significant improvement to a house—the standards apply, for example, to an extension or a new conservatory. Dr Hywel Davies, Technical Director of the Chartered Institute of Building Services Engineers (CIBSE), told us that the Regulations currently have an impact on works done on only about 2 to 3 per cent of the stock each year, adding:

The first question therefore is whether there is any way of expanding the scope of the Regulations to cover more properties.[21]

14. The most obvious way to do this would be to require energy efficiency improvements to the whole house whenever householders carry out significant improvement, refurbishment or renovation work. Indeed, a proposal to require such "consequential improvements" was made before the 2006 revision of Part L of the Regulations, but the Government chose to introduce the provision only for premises larger than 1,000 square metres, thus restricting it in practice principally to commercial premises rather than private homes. Environmental organisations such as WWF and housing providers including Parity Projects are united in pressing for the introduction of a more rigorous "consequential improvements" provision in the 2008 revision of the Building Regulations, the latter suggesting that a reduction to 100 square metres would draw in most 3-bedroomed houses (thus accounting for around 60 per cent of the housing stock) whenever homeowners construct an extension.[22]

15. The former Minister for Housing told us that the Government held back on the proposal in 2006 because it did not have adequate data on the impact such a proposal might have on householders, saying, for example, that a householder who needed to build an extension or new bathroom using the Disabled Facilities Grant might have been required to make further costly and unplanned changes to the rest of their home. No steps appear to have been taken to gather that data, however, and no guarantee has been given that a consequential improvements provision will be introduced next time round. We recommend that the Government measure the impact of including in the Building Regulations consequential improvements provision affecting homeowners in time to inform the next Building Regulations review.

LOCAL AUTHORITY ACTION

16. The Government has also pointed out that local authorities possess planning powers and can, if they choose, set higher local standards than exist nationally.[23] In Essex, Uttlesford District Council has become the first local authority in the UK to do so on consequential improvements, requiring, as part of planning permission, that cost-effective improvements be carried out within six months of completion of, or first use of, a new extension. Individuals applying for planning consent receive a home efficiency report setting out the consequential works that will be required and a surveyor is required to certify within six months that they have been done. The former Minister for Housing told us she thought that "has considerable potential as an approach".[24] We urge the Government to follow the lead set by Uttlesford District Council in requiring homeowners who extend their homes to make consequential improvements to the rest of their property as part of the planning consent process. We recommend that Part L of the Building Regulations be amended to require householders making substantial improvements, such as building an extension, to ensure that the carbon footprint of their improved home is at least no greater than before.

Code for Sustainable Homes

17. In addition to the mandatory Building Regulations, the Department for Communities and Local Government introduced in April 2007 a voluntary Code for Sustainable Homes to influence the builders of new development. The Code sets standards at six levels, with developers receiving a certificate displaying the level of energy efficiency achieved in each property. In spite of being voluntary, the Code has been followed by most significant housebuilders and developers, and the Government intends from May 2008 to make it mandatory for sellers of new homes either to obtain a certificate setting out which level of the Code applies to the homes or a certificate stating that the home has not been assessed. These certificates will be included in Home Information Packs (HIPs) for the new homes.

18. The question arises whether a similar code might be possible to cover the energy performance of existing housing. The Sustainable Development Commission proposed the introduction of such a code in its Stock Take report 18 months ago, that being one of the recommendations to which the Government has not responded in spite of repeated requests from the SDC that it should do so.[25] Several witnesses to our inquiry have said the same, such as the Micropower Council, which notes that mandatory rules on gas boilers introduced a few years ago brought an instant improvement in the standard of boilers provided by suppliers, and the Royal Institute of British Architects, whose past President Jack Pringle told us a Code for existing homes should be a Government priority.[26]

19. The Minister for Housing rightly pointed out that the Code for Sustainable Homes, built as it is around such matters as construction standards, cannot simply be transposed into being a code for existing housing.[27] The introduction of Energy Performance Certificates, via Home Information Packs, will also, in the short term, provide homeowners with suggestions for improvements they can make. But the Government's slowness to focus on the problems and potential of carbon emissions reductions in the existing housing stock means that no code for existing homes has been prepared as yet. Following the successful introduction of the Code for Sustainable Homes, we recommend that the Government produce as a matter of urgency a similar Code for Existing Homes. We further recommend that that Code contain minimum performance standards, perhaps based on Standard Assessment Procedure ratings. These standards should apply to all housing stock, although differential ratings may be acceptable in the short to medium term, but no later than 2016, for social housing, privately rented stock and owner-occupied homes, all of which begin from different baselines. A separate standard might also be set, in the short to mid term, for housing constructed before 1919, which is currently the least energy efficient, but often most prized, in the United Kingdom.

Government programmes

20. While regulatory tools such as the Building Regulations and the Code for Sustainable Homes have been used to impel homeowners and developers to act to improve energy efficiency, the Government has also offered three main incentive programmes to encourage change. Decent Homes has resulted in some improvement in the social rented sector, although critics argue that the programme has not gone far enough and is something of a missed opportunity from the energy efficiency point of view. Warm Front has been targeted at lower-income owner-occupiers and tenants. Finally, the Energy Efficiency Commitment (EEC)—soon to become the Carbon Emissions Reduction Target (CERT)—has required energy suppliers, including the main gas and electricity suppliers, to promote and deliver energy improvements in households.

DECENT HOMES

21. The Decent Homes programme is arguably one of CLG's success stories. The Department has co-ordinated the investment of some £20 billion in improving sub-standard social housing, providing new kitchens, bathrooms and central heating systems to tenants, often in the most deprived parts of the country. The Department had intended to achieve the Decent Homes standard in all social housing by 2010; it now states that 95 per cent of homes will meet the standard by then. Work will by then have been done on about 3.6 million homes, aiding about 8 million people of whom 2.5 million are children.[28]

22. What the Decent Homes programme has not explicitly done, however, is concentrate on improving energy efficiency and measures that might reduce carbon emissions. That is not to say that no energy efficiency improvements have been achieved: between 2001 and 2006, the programme delivered central heating improvements to more than 700,000 local authority homes, while more than 600,000 received insulation improvements and more than 800,000 had double glazing installed.[29] It is to say, however, that more could have been achieved had energy efficiency improvement formed part of the Decent Homes standard directly, instead of arising as an incidental, if welcome, benefit.

23. The Housing Corporation notes that the Decent Homes standard "is a trigger for action, not an aspirational standard".[30] In other words, the programme set minimum standards, and social landlords were required to act only on properties that fell below them and only to bring those properties up to standard. For example, the Decent Homes standard requires loft insulation to a depth of 50 mm; but current guidance on efficient insulation suggests depths four or five times as great, and the Building Regulations require 250 mm. In fact, most local authorities have achieved more than the standard required when carrying out their work programmes, partly because of changing standards, partly because the raising of Building Regulation standards since Decent Homes was implemented required them to.[31]

24. The programme is widely seen as worth while for what it has achieved but a missed opportunity because of what it never sought to achieve. The Sustainable Development Commission, the Fuel Poverty Advisory Group and National Energy Action all believe the programme underachieved because specific energy improvement standards were omitted.[32] Parity Projects, which as a social landlord has carried out some of the works, notes that Decent Homes while "laudable in its aim to improve conditions … is far from effective as a means of reducing carbon emissions."[33] The Green Alliance, in work commissioned by the then Office of the Deputy Prime Minister, also criticised the programme for having "missed the opportunity to make significant carbon reductions in the existing stock, delivering only an anticipated half a million tonnes of carbon reduction by 2010."[34]

25. The Minister for Housing accepted that the programme could have delivered more, saying that the imperative for energy efficiency improvements had grown stronger after the standard was set in 2000:

If you were setting the Decent Homes standard now, you would probably do it differently, but we have the Decent Homes standard in place and it is important at the moment to get everybody to do it."[35]

The point now is whether the lesson has been learnt, and whether whatever replaces Decent Homes when the programme is completed in 2010 will require measures explicitly intended to reduce carbon emissions. The SDC recommends that

any future standard for social housing and vulnerable occupants should have a much greater focus on improving resource efficiency as well as ensuring homes can cope with a changing climate.[36]

The Fuel Poverty Advisory Group and the Local Government Association both recommend that a future programme aim to raise SAP ratings in relevant housing to a minimum of 65.[37] In 2004, we, too, recommended that a 'Decent Homes Plus' standard be set for the period following the end of the Decent Homes programme and that the new standard should include a "much more ambitious thermal comfort criterion which is in line with building regulations in force at the time when the new Standard is set."[38]

26. The Minister for Housing told us the Government has not yet decided what will happen after Decent Homes.[39] We recommend that the Government include specific energy performance improvement standards in any social housing improvement programme that follows Decent Homes in 2010. In particular, we recommend that any future programme contain a specific minimum, rather than average, Standard Assessment Procedure target for all social housing. We seek the Government's view on the Local Government Association's suggestion that that minimum SAP rating should be 65.

WARM FRONT

27. Warm Front is the Government's major fuel poverty programme in England, with total funding between 2005 and 2008 amounting to more than £850 million. Similar, though not identical, programmes operate in Scotland and Wales. The programme directly provides a range of heating and insulation measures to householders who qualify because of their income or because they receive a disability-related benefit. More than 1.6 million households have had work carried out under the programme since it began in 2000, and the Government expects 240,000 households to receive assistance this year, with around 100,000 receiving heating improvements.[40] The programme is also expected to save half a million tonnes of carbon each year until 2010.[41]

28. As with Decent Homes, the programme wins general praise for what it has achieved but with caveats entered about what more could be done. There are further concerns about the costs of installation works carried out for the Government by Eaga plc. In particular, several witnesses questioned the maximum grant available under the scheme, usually £2,700. Rochdale Borough Council suggests the £2,700 is often too little, sometimes by £1,000 or more, and that "vulnerable clients are by definition unable to meet these costs".[42] The National Right to Fuel Campaign and FPAG also identify pressures on low-income households, particularly given the difficulty of installing heating systems for under £2,700:

the overall percentage of households needing to find additional money was around 5% [but] where central heating was being installed the percentage of cases needing top up was about 32%.[43]

National Energy Action notes that this may result "in the worst cases, [in] the work not proceeding."[44] Given that those eligible for the grant include households with children and pensioners on means-tested benefits, this raises some concern. The Government is currently reviewing grant limits. It has previously considered not having a limit, but concluded that removing all limits might reduce, by "many thousands", the number of households that could receive help.[45] We recommend that as part of the Government's review of the maximum grant available under Warm Front limited flexibility be introduced into the scheme to allow the maximum level of £2,700 to be disregarded in cases where the most vulnerable households would not receive sufficient assistance to heat their homes adequately and as efficiently as possible.

29. Concerns have been raised more widely about the costs of installation works, and particularly the labour charges involved, most recently in a House of Commons Adjournment debate on 3 March 2008: the Government said that it was aware of such concerns, and had commissioned two independent reviews of prices; both found that Warm Front provided heating measures at significantly lower cost than in the private sector.[46]

30. The National Landlords Association, which represents about 5 per cent of landlords, identified two further potential problems with Warm Front. First, in privately rented properties, tenants rather than landlords are required to apply for grants. Since tenants will benefit from any increase in heating or reduction in bills, this is logical. However, since landlords have more interest than tenants in the long-term performance and maintenance of their properties, there may be a case for loosening that restriction. Secondly, a tenant living in a house in multiple occupation (HMO) is not eligible for Warm Front works if just one other tenant in the property is ineligible for a grant. The Government should loosen restrictions on Warm Front eligibility to allow tenants living in HMOs to have works done on their homes.

ENERGY EFFICIENCY COMMITMENT

31. Warm Front and Decent Homes concentrate on lower-income private households and the social sector respectively. The Association for the Conservation of Energy notes that householders who fall outside the two groups are not being directly targeted with information or for action.[47] The Energy Efficiency Commitment (EEC), which obliges electricity and gas suppliers to promote and deliver improvements in energy efficiency, in fact targets all households across the UK, but requires a substantial proportion of works undertaken to be directed at low-income households.

32. The EEC was instituted in 2002 and is currently in its second three-year phase. The first phase, until 2005, is estimated to have stimulated about £600 million of investment in energy efficiency and is predicted to save about a third of a million tonnes of carbon each year until 2010. Phase 2, which ends this year, is expected to save about half a million tonnes.[48] The suppliers—six major suppliers do the bulk of the work—have thus far largely concentrated on what is known as "low-hanging fruit"; that is, quick, familiar improvements with fairly rapid pay-back periods, such as cavity wall and loft insulation, and the installation of more energy-efficient appliances, particularly white goods such as fridges, freezers and washing machines, which are now energy rated from A+ to G. British Gas, for example, subsidised more than 13 million individual measures in 2006, ranging from wall insulation to giving householders low-energy light bulbs.[49]

33. The Sustainable Development Commission notes the success of the EEC in delivering such measures. Nicholas Doyle, who as project director for the housing association Places for People has been responsible for overseeing works done under the programme across the country, also praises the scheme for its practicality:

the Energy Efficiency Commitment is by far the simplest and most straightforward way of bringing investment into the existing stock… It is dead easy to do, it is not bureaucratic. It is managed by the energy companies who make it very easy to do.[50]

CARBON EMISSIONS REDUCTION TARGET

34. When the current phase of the EEC ends later this year, it will re-launch as the Carbon Emissions Reduction Target (CERT). The Government, in setting an increased carbon saving target for the scheme, says energy suppliers will be required in effect to double their current efforts and that this should both increase activity in established markets, such as those for insulation, and also encourage new development in markets for microgeneration technologies. In the Budget on 12 March 2008, the Government announced that the £2.8 billion programme is expected to see 2.9 million cavity walls filled, 2.7 million lofts insulated, 110 million energy-efficient light bulbs provided 90,000 homes switched to more efficient fuel systems (largely from electric to gas).[51] The Government is also committed to continuing to require some obligation from suppliers until at least 2020, and intends to review what can be done when CERT finishes its first phase in 2011.

35. Two specific concerns about CERT have been raised in our inquiry. First, the Environmental Industries Commission (EIC) points out that suppliers will be able to carry over additional work done under phase 2 of the EEC to meet the requirements they will be set under CERT, thus meaning that some of the new obligation has been met even before the programme has begun. EIC argues that a limit should be set on how much surplus the suppliers should be able to carry over in this way.

36. Secondly, the Association for the Conservation of Energy notes that the concentration on "low-hanging fruit" cannot continue for ever: at some point, every wall and loft will be insulated and every draughty door or window sealed.[52] The implication is that the supply companies will have to begin to move into provision of newer, less familiar and more expensive technologies; and the question is whether future phases of the programme can deliver as much for the same money as the two phases of the EEC have done.

Fuel Poverty

37. A third and more general concern arises from the fact that the Government has included specific targets for improvement in fuel-poor and low-income households within both the EEC and CERT. The supply companies themselves argue that this blurs the focus of the programmes, since much work has to be done with households that use the least energy and that therefore emit comparatively small amounts of carbon. Fuel poverty groups meanwhile argue that even more help should be targeted on vulnerable households.

38. A household is defined as being in fuel poverty if more than 10 per cent of its income is required to meet its heating and other energy needs.[53] The Government has a statutory commitment to eradicate fuel poverty in all vulnerable households by 2010 and in all households across England by 2016. Vulnerable households include those with members who are elderly, disabled, or have a long-term sickness, and those who are low-income families with children.[54] While the number of households in fuel poverty fell from 5 million in 1996 to 1.2 million in 2004, rapid rises in energy prices since 2003 have pushed the figure up again to an estimated 2.4 million, calling into question the Government's ability to meet its legal obligation by 2010.

39. Energy suppliers argue strongly that trying to meet the Government's fuel poverty target through the EEC and CERT blurs each of the two separate objectives of reducing fuel poverty and reducing carbon emissions. Under EEC, suppliers were obliged to target 50 per cent of their work at vulnerable households; under CERT, from later this year, the proportion will fall to 40 per cent. EDF Energy, the major electricity supplier, notes:

This means that a disproportionately high percentage of the UK's largest domestic household carbon abatement programme is being directed at households who generally use the least energy, and create the least carbon emissions. This carbon emissions reduction programme is therefore being significantly undermined by trying to achieve both social and environmental objectives.[55]

The Construction Products Association, too, states:

It is perfectly legitimate to help old and low income households to afford the installation of central heating, but it is wrong to suggest that this is in any way part of a policy to tackle climate change.[56]

And RWE npower believes that

the blurring of carbon and fuel poverty objectives within a single framework is producing a sub-optimal outcome for both objectives.[57]

40. These points undoubtedly arise because energy suppliers realise that they could meet the carbon reduction targets most easily at the higher-income end of the spectrum, where households emit more carbon because they can afford more heating and more appliances. They are, none the less, valid: if the primary purpose of CERT is carbon reduction, then those households are where the biggest reductions may lie. However, as the National Right to Fuel Campaign notes, the climate change agenda is not the only one in play, and actions that push fuel poverty down the wider agenda would both increase inequalities in living standards and guarantee that the Government failed to meet its fuel poverty eradiation targets in both 2010 and 2016. While it is to be hoped that the supplier obligation to be established for the period from 2011 to 2020 may be able to concentrate more fully on carbon reductions alone, the significant rise since 2003 in the number of households spending more than a tenth of their income on heating their homes justifies the continued inclusion of fuel poverty reduction aspirations within the three-year Carbon Emissions Reduction Target being set in 2008.

Data sharing

41. FPAG also suggests that local authorities should be enabled to target grants, programmes and information more effectively by being allowed to share internally data collected on benefit recipients. Councils who administer, for example, council tax benefit have a database containing the names and addresses of those who receive it and who, being of comparatively low income, may well be eligible for assistance under Warm Front, the EEC, CERT and local programmes. FPAG believes, however, that councils are being prevented from targeting assistance because of fears that using the information they already hold would breach data protection guidelines and legislation. Gill Owen, Chair of FPAG's public utilities access group, told us:

At the moment local authorities, through their departments which handle council tax and housing benefit, know where the households are that would be eligible for the Government grants… At the moment those bits of the local authority cannot share that information with another bit of the local authority that might be running a local programme to encourage people to take up those grants… We think that is silly, and that they should be able to share that information.[58]

42. The Local Government Association is urging the Government to clarify the legal position in this regard.[59] Rochdale Borough Council has called for a specific exemption within the Data Protection Act to allow councils to share information with "appropriate third parties" to allow the targeting of fuel poverty alleviation programmes.[60] We ourselves have made similar calls in the past, particularly in our Report on Council Tax Benefit in 2007.[61] The Government should take every step possible, including amending the Data Protection Act if required, to ensure that local authorities may use the information they hold to target households likely to be suffering from fuel poverty. It should also consider whether provision of data to appropriate third parties for the same purpose may be desirable and achievable.

Privately rented housing

43. Decent Homes has significantly improved energy performance in the social rented stock, even if this improvement has been incidental to the main purposes of the programme and perhaps less successful than it might have been. The private rented stock has fared less well and remains a decade behind the social stock in energy efficiency terms: since 1997, according to the Housing Corporation, average SAP ratings in the social sector have risen from 47 to 57 while stock in the private sector has risen from 41 to only 46.[62] The principal reason why private rented stock is less energy efficient than any other sector is as obvious as it appears: as David Salusbury, chairman of the National Landlords Association told us with commendable honesty, "the situation must have something to do with the fact that landlords generally do not live in the properties they rent."[63]

44. Private rented stock accounts for about 12 per cent of housing stock in England, compared with about 18 per cent for social rented housing and about 70 per cent for privately owned housing. What differentiates the private rented from the social rented sector most clearly is the sheer number of private landlords—some 13,000, approximately, compared to around 1,500 social providers. This in turn means that the vast bulk of landlords own only one or two properties, and in those cases usually as a straightforward investment, often a buy-to-let flat or small house. The essential difficulty in encouraging both the largest and the smallest individual private landlord to commission and pay for energy efficiency improvements in the homes they own arises from the fact that they do not generally live in them and do not therefore generally pay the lighting, heating and water bills. We recommend that the Government consider introducing a new Code for Existing Homes. This could set a minimum energy performance standard for privately rented housing, aimed, in the short term, at improving the sector's overall energy performance to at least the significantly higher level achieved in the socially rented sector, and in the long term at delivering the kind of carbon reduction necessary if the national 60 per cent reduction by 2050 is to be achieved. The Government should also consider ways in which it might be possible to enforce such a Code, such as introducing it for Houses in Multiple Occupation or through the private sector licensing system.

18 Ev282 Back

19 Ev 173 Back

20 Ev 100 Back

21 Q 165 Back

22 Department for Communities and Local Government, Government Response to the Communities and Local Government Committee's Report on the Department for Communities and Local Government's Annual Report 2007, March 2007, Cm 7335, p. 4 Back

23 Department for Communities and Local Government, Building a Greener Future: policy statement, July 2007 Back

24 Q 269 Back

25 Sustainable Development Commission, Stock Take: Delivering improvements in existing housing, July 2006, p. 16 Back

26 Ev 264, and Q 35 Back

27 Q 260 Back

28 Ev 287 Back

29 Ev 287 Back