Select Committee on Environmental Audit Twelfth Report

4  Code for Sustainable Homes and Building Regulations

The Code for Sustainable Homes

Background to the Code

33.  One of the Government's key housing and environmental policies, the Code for Sustainable Homes measures the sustainability of new homes against nine categories of sustainable design (including energy use, water efficiency, and waste), and grades each home using a 1 to 6 star rating system.

34.  The Code began as a recommendation made by the Government's Sustainable Buildings Task Group in May 2004.[51] In December 2004 a Senior Steering Group was launched to drive forward implementation of this recommendation; but as we noted in our last report on housing, "Unfortunately, it was to be another twelve months before a draft Code […] was published for consultation, in December 2005."[52] The Code was finally launched in December 2006, although developers were not able to choose to have their properties assessed against the Code until April 2007.[53] Finally, in May 2008 it became mandatory for all new homes to be rated against it. In fact, new homes still do not have to be inspected against the Code; although if developers choose to opt out from an inspection, their properties will receive a nil-star rating. Only in 2010 will it become mandatory for developers to meet the standards set out in the Code, and then only for one aspect, energy use. By 2010 new homes will have to meet a three-star rating in energy use (equating to a 25% reduction in carbon emissions from 2006 Building Regulations), by 2013 a four-star rating (equating to a 44% cut), and by 2016 a six-star rating (equating to the zero carbon standard). Given the requirement to make rapid cuts in carbon emissions, the Government should speed up full implementation of the Code for Sustainable Homes.

The effectiveness of the Code on driving demand for sustainable housing

35.  The Government believes there will be strong consumer demand for more sustainable homes.[54] The Environment Minister emphasised that: "The price of energy of course for the houses that are of higher energy efficiency is cheaper. […] I think that that variable has yet to feed through into the price of new homes. In future, of course an energy rating […] of a house will, we believe, have a beneficial effect on its attractiveness, if I can put it that way."[55]

36.  The Government believes that the mandatory rating of new homes against the Code will strengthen the impact of this consumer demand, by ensuring that homebuyers are supplied with information about the environmental features of all new flats and houses. The Housing Minister summed up the Government's hopes for the impact of the Code in a speech in February:

[…] People want to do the right thing, but they aren't always sure how to do that—and it's our job to make it easier. Consumer demand will be a critical part of driving this forward, offering a clear business incentive as well as an opportunity for business to do the right thing. For example, people are increasingly looking at factors like energy efficiency when choosing a home. After all, who doesn't want to save money on their fuel bill? […] 

That is what the code for sustainable homes is designed to achieve. It gives consumers the information they need to ask the right questions and demand the highest standards. […] I believe this will have a major impact on consumer demand and as a result, will help accelerate sustainable building and innovation in the sector.[56]

37.  We put it to the Ministers that the Government was pursuing a policy based on unproven assumptions about consumer preference. Making it mandatory for new homes to be rated against the Code—rather than making it mandatory for them to be built to certain levels of the Code—might not make a great deal of difference if it failed to affect consumer choice. The Housing Minister referred us to: "A recent Mori poll [that] showed that there was a public appetite for living in a more energy efficient home. In fact, I think something like 63% of people said they were willing to pay more to be assured that that was going to be the case."[57] Commissioned by the sustainability network Sponge, this survey in fact found that 64% of respondents thought that some sustainability features in new homes should be compulsory.[58] It also found that 52% were prepared to pay more for homes to be built to high environmental standards, but that 90% think that the Government should provide incentives to encourage demand.[59]

38.  The UK-Green Building Council thought that giving those homes that are not inspected under the Code a nil-star rating would provide a powerful incentive for developers to submit their buildings to inspection:

It was particularly important to ensure that all homes received a rating, so that buyers of homes that are simply built to minimum Building Regulations receive a 'nil-rated' home, and are made aware that their home is not a sustainable home built 'to the Code'. This should be an important part of increasing awareness, because if consumers remain by and large completely oblivious to the Code and what it implies, then we're not going to drive up demand for sustainable homes, which is so important for developers who need to get a payback on building to higher standards.[60]

By contrast, the National Housing Federation has criticised this as undermining the entire system, suggesting that many developers might be content to receive a nil-rating in order to escape a physical inspection of their properties, and related inspection fee.[61]

39.  It is not possible to predict what effects the mandatory rating of new homes against the Code for Sustainable Homes will have on the market, but we cannot be sure that it will deliver the necessary changes in consumer behaviour or developers' plans. We believe that the impact of mandatory rating might be undermined by allowing developers to opt for a nil-rating. We believe that a transformation in building design will only come about when new homes are required to be built to mandatory standards. We recommend that the Government makes further aspects of the Code, beyond energy use, mandatory from 2010 onwards.

Sustainable housing: costs and consumer demand

40.  The National House-Building Council (NHBC) referred us to a recent report which they said suggested that some aspects of low or zero carbon designs would be difficult to sell to potential buyers:

The report suggests that the real 'deal breakers' for consumers will be the additional service and maintenance responsibilities for microgeneration, water conservation and ventilation systems, the potential lack of gas cookers and fires and the restriction of water flow in showers. This is a crucial factor that, unless mitigated, may affect the Government's chances of meeting its own 2016 target.[62]

41.  The Energy Saving Trust (EST) also thought that essential features of energy efficient housing might prove novel or difficult to accept for some consumers, and that this would require developers and estate agents to educate potential residents:

[…] Whilst it is possible that some of these homes will have a traditional look, all will inevitably have design features and functionalities that will need to be conveyed to the householder. This may be as part of the sales process—for example, explaining why the home without a bath is still desirable, how to substitute children's bath time, etc.—or part of the after-sales service—for example, explaining why a bath or power shower should not be installed as soon as the new owner has moved in.[63]

42.  Richard Simmons from CABE, on the other hand, referred us to innovative energy efficient flats that were proving exceptionally popular with homebuyers.[64] Paul King of the UK-GBC told us that low carbon homes could be very popular, and that in fact the NHBC's report supported this conclusion: "on closer examination the evidence in that report sets out a much more balanced and, I would say, in some places positively optimistic view of the benefits that people perceive in terms of more energy efficient homes […]"[65]

43.  We recommend that the Government ensures consumers are educated about both the requirements and benefits of highly energy efficient housing. We further recommend that the Government work with the construction industry and bodies such as CABE, UK-GBC, and EST, to develop designs for low and zero carbon homes that are as easy to live in, while maintaining the specified level of energy efficiency, as possible.

44.  The Home Builders' Federation (HBF) believed that building homes to zero carbon standards may cost around £30,000 extra per home. HBF argued that, by subsidising affordable housing (via Section 106 payments)[66] and public transport and other infrastructure (through the proposed Community Infrastructure Levy),[67] private developers were struggling with a number of burdens.[68] The National House-Building Council echoed this: "The Government must recognise the competing objectives in the house building industry at present, with the Government having called for more, more affordable, and more environmentally friendly, homes."[69] This point was also recognised by English Partnerships (EP):

One difficulty the house builders have is meeting the costs of achieving Code Level 6 plus affordable homes plus EP quality standards plus Lifetime homes on the same development, which can leave zero profit margin and possibly negative land values.[70]

Partly as a result, EP was scaling back one of its pilot low carbon building projects: "EP's Carbon Challenge retains the ambition of up to ten large-scale pilot schemes. Given the cooling market and a weakening appetite for house building generally, we are focusing on getting developments under way on four initial sites for the time being."[71]

45.  One of the reasons given for the increased costs of zero carbon homes was a lack of skills and capacity in the supply chain. English Partnerships told us:

There is concern that many [small and medium-sized] builders will not have the skills, abilities or command of their supply chains to respond to higher levels of the Code. […] Firstly, there is a serious issue around skills in the work force to design, install and maintain these homes and technologies. Secondly, the supply chain for these products needs urgent development in the UK.[72]

Richard Simmons, chief executive of the Commission for Architecture and the Built Environment (CABE), told us: "If you look at Germany where they have the Passive House Standard, for example, it is possible to add triple glazing because it is mass produced, but in the UK so far that market does not exist."[73] Rory Bergin, the head of sustainability and innovation at HTA Architects, has stated:

[…F]or the size of combined heat and power system we are planning to use at Hanham Hall, there is only one manufacturer in the UK. So of course, it's not satisfactory having only one supplier of a product. There's also no UK manufacturer of a low-flush toilet, and the new [structural insulated] panels used in construction have to be imported from Germany.[74]

46.  Overall, the balance of evidence we received was optimistic that this situation would improve over time. Rory Bergin has stated: "I think it's inevitable […] as we do more of this we will see more manufacturers in the UK".[75] Richard Simmons told us, "I think we would also expect to see the industry responding".[76] Paul King of the UK-GBC argued that the additional costs of zero carbon homes would come down as the scale of building increased, and that the supply chain market was already developing: Barratt Homes, for example, had found "that actually there were certain technologies that were unavailable to them in terms of UK manufactured components six months ago, which today are now available."[77]

47.  Despite this confidence that additional costs would diminish in time, there was still a consensus that zero carbon homes would cost more to build, principally because of the need to build or fund offsite renewable electricity sources. John Slaughter of the Home Builders' Federation expressed concern that the prospect of reduced fuel bills might not be enough to outweigh the higher capital costs: "as we stand it remains the case that consumers probably would not give that much weight to those revenue benefits in terms of their purchase decision and the price they are willing to pay for a home."[78] Even more problematic, Jane Forshaw of English Partnerships suggested that, in practice, zero carbon homes might not lead to lower fuel bills: "There is that interesting twist that as you get higher up the Code these homes will be much cheaper to run but the cost of the energy infrastructure will be more, so perversely your energy bill may not be any less because you will have to cover the cost of the infrastructure."[79]

48.  We recommend that the Government clarifies what impacts the increased capital costs of low and zero carbon homes will make to their running costs and how costs will be paid for. In particular, we recommend that the Government urgently considers introducing feed-in tariffs as a way of making zero carbon homes more financially attractive to developers and homebuyers.

Monitoring and enforcement

49.  Increased attention on the sustainability of new housing should go hand in hand with interest in the monitoring and enforcement of design and construction standards. The UK Green Building Council said, "There is no point designing a 'sustainable home' if no checks are made to ensure this […] goal has been met."[80]

50.  Those parts of the Code for Sustainable Homes that will become mandatory in 2010 (relating to energy use) will be enforced by amending Part L of the building regulations, which set out compulsory standards for most new buildings in England and Wales. The original focus of building regulations was on the safety and structural soundness of buildings, but this has now been joined by regulations on energy efficiency and meeting the needs of disabled people. Building regulations are applied and enforced by the building control system; anyone wanting to carry out building work that is subject to building regulations is required by law to make sure it complies, and to obtain approval from inspectors, either provided by the relevant local authority or by private "approved inspectors". Breaches of building regulations may be prosecuted by local authorities.

51.  In 2005 our predecessor Committee found that while plans for new homes were generally compliant with building regulations, there was little evidence that the energy efficiency standards of the regulations were being met or enforced in practice. Evidence from the Building Research Establishment (BRE) showed that finished buildings were often less energy efficient than specified because of poor workmanship, in particular badly fitted insulation. This was rarely picked up because post-completion inspections were not always being carried out. Even where breaches were detected, it was difficult for local authorities to mount prosecutions, given the demands on their building control departments, and the requirement to begin prosecution within six months of becoming aware of a contravention.[81]

52.  When we looked at this issue again in 2006, the Environment Agency indicated that 30% of homes do not comply with building regulations, and told us that this figure could well be higher. The Agency also suggested that that there was a lack of training and resources devoted to building control, especially regarding energy efficiency. Overall, we concluded: "It was disappointing and frustrating to find that there had been no significant improvement in either compliance or enforcement of the building regulations."[82]

53.  In this inquiry we again heard a considerable amount of evidence that the building regulations and control regime was still inadequate in ensuring new homes were being built to mandatory energy efficiency standards. CABE, for example, told us: "The UK has been historically poor on enforcement of both planning and building regulations, with very few prosecutions or demolitions of significance as a result of breaches of regulations. For example, BRE reports that many buildings are still failing air tightness tests under part 'L' of the building regulations."[83] The UK-Green Building Council said: "Undoubtedly compliance, even against minimum building regulations, is currently problematic, with high failure rates. There is no easy solution to this and inevitably it will require institutional change in, and better resourcing of building control departments in local authorities."[84] The LGA expressed concern at the way in which developers were able to 'shop around' for building control inspectors; we infer from this the suggestion that the system is being undermined by developers being able to choose potentially more lenient inspectors.[85]

54.  Since our last report the Government has carried out a good deal of work in this area. There are currently reviews of both building regulations and building control, and we will follow the progress of this work with interest. We are pleased to note the awareness of problems with the current system reflected in the following passage in CLG's consultation paper, The Future of Building Control, issued in March 2008:

In particular, the Government is concerned that compliance in areas such as energy efficiency is often perceived to be lower than is the case for the traditional health and safety related regulation. Stakeholders also suggest that Building Control Bodies (BCBs) tend to focus on issues that are critical to safety (i.e. structure and fire) at the expense of newer regulations (e.g. those relating to sound insulation, air tightness and energy efficiency) because of pressure on resources, a lack of understanding and because they do not have enough up-front information about the project. It is also true that the public tend to be more concerned about life safety issues than energy efficiency.[86]

However, we also note the LGA's comments on the proposals in this consultation paper:

[building control] really is in many areas, particularly for the zero-carbon [target], the mechanism through which the Government's policy ambition is being delivered, yet the current consultation on building control does not seem to us to be taking a wider view of that kind at all and only comes forward with very modest proposals for improving the quality assurance of the building control process largely led by the building control sector itself.[87]

Overall, irrespective of the conclusions that CLG's reviews eventually lead to, we are very dismayed by the lack of urgency—especially considering how vital building control inspections will be to the entire zero carbon homes policy—shown by the Government in addressing the weaknesses in the current system. Bob Ledsome, Deputy Director of Climate Change and Sustainable Development at CLG, confirmed that whatever changes to the system as might arise from the current reviews would not be implemented until 2010.[88]

55.  We recommend that much greater emphasis is placed on energy efficiency and sustainability within building control, with the Government ensuring that extra training and resources are made available to local government where necessary. We also recommend that the Government urgently reviews ways of improving the rigour of inspections carried out by private approved inspectors.

56.  We also note CABE's argument that the current weaknesses in the system may become exaggerated as the standards required of builders rise from 2010 onwards:

Reliance on regulatory systems may simply encourage 'cheating' as standards become more difficult to achieve over the period towards carbon-neutral development. As well as the regulatory systems of planning, building, highways and development control, the Government should utilise a range of other instruments and incentives to support aspirations for mitigating and adapting to climate change in addition to [Planning Policy Statement 1 on climate change] and the Code.[89]

We recommend that the Government introduces much higher penalties for developers who fail to meet energy efficiency regulations in practice, and provides financial incentives for developers based on the number of properties that pass a post-completion site inspection.

51   Environmental Audit Committee, Sustainable Housing: A Follow-up Report, para 15 Back

52   Environmental Audit Committee, Sustainable Housing: A Follow-up Report, para 16 Back

53   CLG, "Code for Sustainable Homes", Back

54   Ev 91 Back

55   Q179 Back

56   CLG, "Quality of life, not just quantity of homes", speech by Rt. Hon. Caroline Flint MP, 27 Feb 2008,  Back

57   Q195 Back

58   Sponge, Eco Geek or Eco Chic? The desirability of sustainable homes, January 2007, para 1.1 Back

59   Sponge, Eco Geek or Eco Chic? The desirability of sustainable homes, paras 1, 1.1 Back

60   Ev 17 Back

61   "Loophole means new houses need not be green", Green Building, 5 May 2008 Back

62   Ev 51 Back

63   Ev 150 Back

64   Q69 Back

65   Q70 Back

66   "Planning obligations, also known as section 106 agreements, are typically agreements between local planning authorities and developers negotiated in the context of granting a planning consent. They provide a means of ensuring that developers contribute towards the infrastructure and services that local authorities believe to be necessary to facilitate proposed developments. Contributions may either be in cash or in kind. Planning obligations are also used to deliver affordable housing." Department for Transport, Local Government and the Regions (DTLR), Reforming Planning Obligations: a consultation paper, December 2001, para 1.1 Back

67   "The Community Infrastructure Levy (CIL) will be a new charge which local authorities in England and Wales will be empowered, but not required, to charge on most types of new development in their area. CIL charges will be based on simple formulae which relate the size of the charge to the size and character of the development paying it. The proceeds of the levy will be spent on local and sub-regional infrastructure to support the development of the area." CLG, Community Infrastructure Levy, August 2008, p 2 Back

68   Ev 47 Back

69   Ev 55 Back

70   Ev 37 Back

71   Ev 37 Back

72   Ev 38 Back

73   Q64 Back

74   "Architects gear up for broader challenge", Sustainable Business, March 2008, p 40 Back

75   "Architects gear up for broader challenge", Sustainable Business, p 40 Back

76   Q64, Q69 Back

77   Q64 Back

78   Q95 Back

79   Q77 Back

80   Ev 18 Back

81   Environment Audit Committee, Housing: Building a Sustainable Future, paras 113-4 Back

82   Environment Audit Committee, Sustainable Housing: A Follow-up Report, para 41 Back

83   Ev 23 Back

84   Ev 18 Back

85   Ev 73 Back

86   CLG, The Future of Building Control, March 2008, p 31 Back

87   Q152 Back

88   Q193 Back

89   Ev 23 Back

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