House of Commons - Environmental Audit

Select Committee on Environmental Audit Minutes of Evidence

Memorandum submitted by National Housing Federation

The National Housing Federation is the trade body for 1,300 independent, not-for-profit housing providers in England. Our members include housing associations, co-operatives, housing trusts and transfer organisations. They develop and manage more than two million homes provided for affordable rent, supported housing and low cost home ownership, housing about five million people as well as delivering a wide range of community and regeneration services. We campaign for better housing and neighbourhoods focusing on financial inclusion, environmental sustainability and maintaining independence for housing associations.

EXECUTIVE SUMMARY

1. From 1 April 2008 all homes built using government grants are required to meet the standards set out at Level 3 of the recently introduced Code for Sustainable Homes. They will then be required to meet Level 4 by 2012 and Level 6 (zero-carbon) by 2015.

2. Private developers are not obliged to meet the same standards. They will be required to meet the energy aspect of Level 3 of the Code (a 25% reduction in carbon emissions) from April 2010, Level 4 by 2012 (a 44% CO2 reduction) and Level 6 (zero-carbon) by 2016. Private developers are not required to meet the wider environmental aspects of the Code even in areas of high flood risk or water shortage. It is only the energy aspect which will be a requirement. They will therefore be building to lesser standards than housing associations, and working to a slower carbon reduction timetable.

3. We believe this twin-track approach by the government is seriously hindering the sustainable housing agenda and slowing the green technology industry. Effectively it is the non-profit making schemes that are "taking the hit" on the research and development aspects of the Code, with associations having to deal with expensive and patchy supply chains because components are not standard.

4. We are concerned that the opportunity costs associated with artificially high green technology costs mean that housing associations will be forced to cut back in other areas of spending, such as services for tenants or further property building. In effect this means building less homes per pound of grant, and at lower value to the tax-payer.

5. Until private developers are compelled to build homes to higher energy efficiency standards, the green technology industry will effectively remain on standby. Significant economies of scale cannot be realised until private developers commit to building greener homes as standard.

6. Housing associations are also being put at a competitive disadvantage because of the higher cost base of building new homes. They are less able to compete for available land, for example, due to having higher associated building costs.

7. We are also concerned about the impact of this twin-track approach on the environment. Research by the Federation shows that 8.5 million tonnes of carbon—the equivalent of 11m passenger flights across the Atlantic—could be saved if private developers were asked to build to the same environmental standards as housing associations.

8. The result of mandatory standards would kick-start the development of new technologies, resulting in more effective and more efficient products.

9. The Federation is also concerned that a lack of government commitment towards greener homes is adding to the problem of fuel poverty. Reduced fuel bills are of particular benefit to those on low and fixed income. This is critical for our tenants as a third of people living in social housing have incomes in the poorest fifth of the income distribution, and 70% are in the poorest two-fifths.[22]

10. Without a renewed commitment to sustainable housing, the Federation also believes there is a very real danger the government will miss its own target of making all new houses zero-carbon by 2016. There is simply not enough political will or progress in the industry at present to indicate otherwise.

11. We want the government to review the timetable for the implementation of the Code for Sustainable Homes and ensure private developers are brought into line with the environmental standards and timetable expected of housing associations.

INTRODUCTION

1. It is now widely accepted that unless we act now to tackle climate change future generations will pay the price as we change the world irrecoverably. As homes generate nearly 30% of the UK's carbon dioxide emissions building environmentally sustainable home will play a key part in England's effort to reduce carbon emissions.[23]

2. It is estimated that by 2050, "new" homes—that is, those built after 2007—will account for around 30% of all homes in the UK.[24] It is also likely that many of the houses built in coming years will be standing into the next century. It is therefore vital that all new homes are built to the highest sustainability standards possible.

3. Housing associations have been leading the way in providing energy efficient housing. In 2006-08 over 90% of new homes built by housing associations are expected to have met Eco Homes "very good" or "excellent" standards. Figures from Communities and Local Government demonstrate that only 2% of the homes built by private developers meet environmental standards.

4. For example the first social housing development in the UK to reach level five of the Code for Sustainable Homes has been officially launched in South Nutfield, Surrey. The Mid Street development, which achieves a 100% reduction of carbon emissions, has been built by Osborne on behalf of Raven Housing Trust. To achieve Level 5 of the Code for Sustainable Homes, the properties have been erected using a Structural Insulated Panel System, which contribute to a reduction in energy consumption in terms of U-Value, air tightness and increased thermal performance. Air leakage sealing is used to ensure heat is retained and the properties will run on renewable energy sourced from photovoltaic panels. Triple glazed windows and low energy lighting has also been fitted and all the sanitary ware is water saving. The homes boast further sustainable features such as biomass boilers, rain water harvesting and heat recovery ventilation systems.

5. Housing associations have a particular interest in ensuring their homes are energy efficient. Well insulated homes means lower fuel bills for our tenants, who are often on low or fixed incomes. With one in six households, or 3 million people, living in fuel poverty in England it is critical that all new homes are energy efficient.[25]

6. We believe that moving towards building zero carbon homes in the most equal, efficient and effective way will be vital to supporting the government's commitment to tackling climate change. This submission will focus on the Federation's concerns about the implementation of the Code for Sustainable Homes and its effect on housing associations and the green technology industry.

THE CODE FOR SUSTAINABLE HOMES

7. The Code rates the home against a set of nine environmental and sustainability criteria. The result is a rating for the dwelling as a complete package on a scale of one to six stars, with six being the highest level possible (net zero-carbon).

8. From 1 April 2008, all homes built with the help of government grant must meet Level 3 of the Code for Sustainable Homes, which includes a carbon reduction of 25% over current building regulations. From April 2012 housing associations will move up another rung of the Code and build to Level 4, including a 44% reduction in carbon emissions, and from 2015 the government wants all new homes built with government grant to meet Level 6 of the Code, meaning they will be zero-carbon.

9. The government has simultaneously decreed a different timetable for privately developed homes. Private developers will not be required to reduce carbon emissions by 25% until 2010. They will then need to reduce emissions by 44% from 2013 and 100% (ie zero-carbon) by 2016. At each stage of carbon reduction, therefore, private developers will be lagging behind the timetable set out for housing associations.

10. Additionally, private developers will not be obliged to meet the wider aspects of the Code for Sustainable Homes, only the carbon reduction component. There is therefore no current obligation on private developers to meet any set level of the Code, either at present or in the future.

11. The Federation argues that this twin-track approach to sustainable house building is unfair, unnecessary and detrimental to longer term environmental sustainability.

IMPACT FOR HOUSING ASSOCIATIONS

12. As a sector we are passionate about delivering zero carbon homes, and housing associations have led the way in building sustainable homes. Our concern is that the current government approach means that housing associations are having to meet extensive additional costs as a direct result of private house builders following a later timetable. Housing associations are not-for-profit businesses and this cost leads directly to a reduction in the provision of affordable housing and reduces the amount that housing associations have to invest in deprived neighbourhoods. Already our members are being outbid on land deals where private developers do not have to meet even level 1 of the Code.

13. The Housing Corporation has estimated that it will cost an additional £5,059 per home in building costs to achieve Level 3 of the Code.[26] The bulk of this cost will be for energy efficiency measures, at an average of £3,692 per home. This cost is already being met by housing associations in all new homes they build. For much needed affordable homes being built in rural communities the cost can often be much higher because the developments are not at scale and the sites can be off mains gas.

14. The present situation is that housing associations are facing the high costs for green technology alone. Private developers make up around three quarters of the market, yet are not obliged to build to anything higher than minimum building regulations, meaning that it is our members who are facing the bulk of the costs of energy efficiency upgrades.

15. Economic theory, along with practical evidence from abroad, suggests that as demand increases the price of energy efficiency measures—such as super insulation, solar panels and energy efficient boilers—will fall due to economies of scale and efficiency in supply chains.

16. Analysis commissioned by the Housing Corporation and English Partnerships suggests that, as the market expands, the cost of many green technologies will reduce by between 8 and 18% each time capacity doubles. Widespread take-up of products such as heat pumps and photovoltaic panels would lead to capacity doubling many times over, meaning a substantial reduction in prices. All developers would benefit from a fall in the price of green technology products, but it would particularly benefit housing associations who could invest the cost savings elsewhere.

17. If the whole house building industry was asked to build to higher standards, building firms will begin to buy such products in bulk, for example, and would invest in product development and specialist staff training.

18. A higher degree of certainty in the green technology industry will also allow producers to further invest in capital and staff.

ENVIRONMENTAL IMPACT

19. The domestic housing sector accounts for 27% of Britain's total carbon emissions, or around 41 million tonnes of carbon (MtC) each year.[27] Current building regulations ensure that new homes are now more energy efficient than ever before, however total emissions from housing will continue to grow as more houses are built. There are plans for two million homes before 2016, the year by which the government wants all new housing to be zero-carbon.

20. The Federation fully supports the government's house building programme. The point must be made that when considering the environmental impact of new homes, the social impact of not building homes must also be recognised, ie a continuation of the current housing shortage and associated problems.

21. The Federation has estimated that a total of 40MtC will be emitted over the lifetime of new homes built before 2016.[28] Around 21% of this figure, or 8.5MtC, would be saved if private developers worked to the same timetable towards zero-carbon housing as housing associations.

22. This unnecessary and preventable rise in emissions is entirely at odds with the Government's stated commitment to reducing carbon emissions. The Climate Change Bill currently commits to emission cuts of 20% by 2020 and 60% by 2050.

23. The Federation is very concerned about the future impact of climate change. We support the government's aim of cutting carbon emissions and we recognise that housing has a significant role to play in this. Our view is that more can be done to improve the energy efficiency of housing, both new and existing.[29]

24. The public agree. Research reveals that four out of five homeowners believe more environmentally friendly homes will help combat climate change and nine out of ten people believe the Government should provide incentives to encourage demand.[30] In a National Housing Federation poll last year 86% of the public supported our position that private developers should be meeting the same carbon reduction standards as housing associations.[31]

25. The building industry is also aware of the need for sustainability. A survey commissioned by the Chartered Institute of Builders in 2007 showed that 67% of their members believe the Government should be compelling widespread construction of low carbon buildings through tougher building regulations.[32] The same study showed that 98% of senior construction staff thought the industry had a role to play in tackling climate change.

26. An example of a housing association leading in innovative environmentally sustainable building is Devon & Cornwall Housing Association Oak Meadow development of 35 affordable homes in South Molton, Devon. Manufactured offsite using the Twin Frame© System, the construction is fabricated with a double-thickness timberframe wall and roof construction providing high levels of insulation and a reduction in thermal bridging. Residents of Oak Meadow benefit from healthy, comfortable homes that emit minimal CO2, use less energy and generate lower utility bills than the average house. The development secured the Sustainable Development of the Year Award 2005 (Building Magazine) and the Best Social Housing Development 2005 (National Homebuilder Design Awards 2005).

THE GREEN TECHNOLOGY INDUSTRY

27. Britain's commitment to renewable technologies has been poor, with just 2% of our energy currently generated from renewable sources.[33] This is the third worst performance in the EU, behind only Malta and Luxembourg.[34]

28. In 2007 Britain installed just 270 domestic photovoltaic microgeneration systems. The same figure for Germany, Europe's leading solar panel user, was 130,000.[35] In total Germany has 200 times the PV capacity of the UK, and at the present rate of solar panel installation in the UK (around 3 Mw each year) it would be almost 1,500 years until we reached Germany's current installed levels.[36] The price of solar panels in Germany is around half of that in the UK, which both reflects and exacerbates the buoyant solar panel market in that country.

29. The Federation is concerned that the green technology industry in the UK is still in its infancy in terms of sales, meaning higher prices for housing associations and other house builders currently buying the technology for use in new homes. Higher demand would lead to an evolving green technology market, thereby lowering product prices and encouraging innovation.

30. A healthy green technology industry would also have wider economic benefits. The expanding German PV industry created over 10,000 jobs in the country last year alone.[37]

31. In addition if the building industry were to build to the same environmental standards this would stimulate the development of new technologies resulting in more effective and more efficient products.

FUEL POVERTY

32. Britain currently has around 2.9 million people living in fuel poverty in England, with 2.3 million of those being the classified as vulnerable households.[38]

33. Whilst many of those living in fuel poverty live in older homes with poorer energy efficiency ratings, energy efficient new homes have an important role to play in tackling fuel poverty. For housing associations in particular, whereby many tenants are on low or fixed incomes, it is essential to build homes that will not incur high fuel bills.

34. The Federation has estimated that, using current energy prices as a base, an average Code Level 3 home will save around £70 each year in gas and electricity costs when compared to a home built to current minimum building regulations.[39]

35. The Federation has also estimated that the average cost of retro-fitting a new home built to minimum building regulations to match the energy efficiency of a Code Level 3 standard home is likely to be around £12,000.[40] Such a retro-fit could include measures such as super-insulation to walls, floors and roof, installation of a super-efficient combi boiler, upgraded double or triple glazed argon windows, a mechanical ventilated heat recovery system, extra sealing of windows, doors, floors and loft area to reduce air permeability, and other modifications as necessary.

36. The Federation therefore believes that building homes to 2006 building regulation standards when there is a proven capability to be able to build all homes to 25% higher energy efficiency standards (ie Code Level 3) is wasting an opportunity to reduce fuel poverty now and in the longer term.

37. For example a development by Nottingham Community Housing Association on a brownfield site in the middle of Loughborough included 13 3-storey large family rented houses and 37 apartments for shared ownership. The development has the technology to generate carbon-free electricity. Photovoltaic (PV) panels enable solar energy to be harnessed and consumed directly by the residents. The PV technology will provide up to 25% of the electricity used by residents—which represents a large saving on fuel cost, approximately £90 off an annual electricity bill.

RESPONSE TO CONSULTATION QUESTIONS

Consultation questions about the Code for Sustainable Homes have been included in the main body of the Federation's submission above. Below we have also responded to the wider consultation questions where they are relevant to housing associations.

ECO-TOWNS

As currently envisaged, how big a contribution will they make to reducing the environmental impacts of housing in England-both in their own right, and in the development of design and techniques that could be rolled out in other developments?

With more than 1.6 million people on waiting lists, and 90,000 households in temporary accommodation we simply need to build more homes. These numbers hide the desperate plight of many homeless and low income households. One of our members recently built six two-bedroom houses in a village in Wiltshire. 201 bids were received for these homes, with all applicants meeting the local connections and housing need criteria.

We believe it is wrong that those with a legitimate interest to be housed are drowned out by those whose interest is to ensure their homes are not affected by new housing. It is important that the voices of those who are homeless or overcrowded are heard and represented.

Our sector's had a keen interest in working with Government, local authorities and commercial developers in helping to meet the ambitious targets for ten new eco-towns. Our members' involvement in Northstowe, Cambridgeshire, a prototype eco-town, demonstrates how exemplars developed by housing associations can be rolled out to build exactly the kind of vision the Housing Green Paper talks about.

More significantly, associations have extensive expertise in leading large scale multi-million pound regeneration projects on the very towns and estates that were first lauded as "new towns" and architectural achievements in the 1960's and 70's. Our members know what works when designing new communities because they have intervened in estates where the market has failed to go to put right original design and mistakes of previous decades, creating mixed communities where they had previously been mono-tenure.

They have detailed knowledge on the design layouts, density arrangements and tenure splits that would be invaluable in designing the new eco-towns. Coupled with this, our members have the best track record on environmental design across the entire house building industry. They have been building to strict eco homes targets since 2003.

Eco towns may be unpopular with some local people, but our housing crisis is too great for us to duck this type of decision.

These new towns must be mixed communities, where people want to live, in places that make social and economic sense. They need to be places where businesses want to invest, and they need to have the right infrastructure in place.

GREENFIELD AND GREEN BELT DEVELOPMENTS

To what extent do, and should, planning controls protect greenfield and green belt land from development of new housing? How adequately are environmental considerations (for instance, biodiversity and rural landscapes) being taken into account in deciding the location of new developments?

England has a massive undersupply of new homes. If we are really going to tackle the housing shortage we should not rule out some limited development on greenfield sites, especially when in many cases this would only apply to land that has been used for light industrial purposes or is little more than abandoned scrub.

The existing planning controls in place (Planning Policy Statement 3) already emphasise brownfield development over Greenfield and we believe the policy is right.

What is more of a concern is the "creep" of planning policies which use environmental sustainability as a reason not to develop at all. Feedback from our members indicates this is of particular concern in rural communities. We are worried that the recent PPS1 on Climate Change enables environmental sustainability issues to be a potential loophole to avoid development in the countryside.

Planning authorities, including National Parks, should avoid thinking that any housing development undermines environmental policies. Indeed our members have pioneered the building of high quality environmentally sensitive homes in rural communities. We believe that increased car travel and energy issues on off gas sites compared to carbon emissions are outweighed through a reduction in emissions through a high build spec and on-going benefits (such as under-floor heating systems, water recycling, solar panels etc).

The Federation's call for a higher provision of sensitive rural housing has been formally endorsed by the Campaign to Protect Rural England (CPRE). The organisations have released a joint charter outlining the key actions needed to tackle the rural housing crisis.[41]

The case studies we have included with our submission demonstrate very high eco developments from timber frame homes in the Isles of Scilly to retro-fits in Cumbria.

INFRASTRUCTURE

What progress has the Government made, in the two years since EAC's last report on this issue, in ensuring that new developments are being built with adequate infrastructure in order to make them successful and sustainable?

We have specific concerns in two areas:

— firstly that in areas of high flood risk that private developers do not have to meet higher levels of the Code on the water requirements; and

— secondly that the current Planning Bill as drafted has not adequately thought through the new Community Infrastructure Levy (CIL). Nearly 50% of England's affordable homes are now delivered via the section 106 mechanism. The Federation is concerned that CIL will have the first call on developers as the statutory obligation and be factored into their "costs", thus reducing the potential contributions for affordable housing through the negotiated section 106 route.

April 2008

22 John Hills, Ends and Means: The Future Roles of Social Housing in England, ESRC Research Centre for Analysis of Social Exclusion, February 2007 Back

23 Communities and Local Government, Building a Greener Future consultation, Dec 2006. Back

24 http://www.housingcorp.gov.uk/upload/ppt/SD_Investment_Summit_12Dec07_20071212145529.ppt Back

25 Energy Watch, January 2008. Back

26 Compared to homes built to 2006 building regulation standards. Back

27 CLG Building a Greener Future consultation, Dec 2006. Back

28 Lifetime for modelling purposes taken as 80 years. Back

29 The Federation's existing homes policy is not covered in this submission. Back

30 The Sponge Sustainability Network, Eco Chick or Eco Geek? The Desirability of Sustainable Homes, 2006. Back

31 http://www.housing.org.uk/default.aspx?tabid=232&mid=1150&ctl=Details&ArticleID=808 Back

32 www.ciob.org.uk/filegrab/TheGreenPerspective.pdf?ref=539 Back