Examination of Witnesses (Question Numbers
81-99)
MR JOHN
SLAUGHTER, MR
DAVE MITCHELL,
MR LEWIS
SIDNICK AND
MR NEIL
JEFFERSON
20 MAY 2008
Q81 Chairman: Good morning, I am sorry
we are running slightly behind time. We have got about 40 minutes
but a lot of ground to cover, so we will try and keep our questions
concise and the more concise your answers are the more ground
we will be able to cover. We are grateful to you for coming in.
Because of the time constraints I will not ask, unless you very
urgently want to make an opening statement, if that is agreeable
to you.
Mr Slaughter: Yes.
Q82 Chairman: We know who you are
and you know who we are. Could I start by asking the Government
has set a target of two million new homes by 2016, to progressively
higher standards, and another million zero carbon homes by 2020;
are we on track to meet those targets?
Mr Slaughter: It is very hard
to say how far we are on track at the moment. We clearly face,
currently, a difficult market situation on the one hand which
the press is already indicating will probably lead to some reduction
in housing completions over the coming year or two, but I do not
think that should deflect us too far from looking at the feasibility
of the targets. Beyond that we are in principle aiming to get
there if we sort out a number of important issues which I am sure
we will come on to today. Our premise is that we believe it is
possible, if we get all the issues sorted out, to get to those
targets, but whether we can say today that we are going to is
impossible to say because we have not resolved a number of the
key issues. On the numbers, from our point of view, that is still
critically about the planning system and land supply on the one
hand. We are going to need a better land supply than we have had
over recent years if we are going to meet the targets, so we have
been pressing government very hard for the need for that to work
properly. Then on the environmental side there are a lot of issues
that I am sure we will touch on about the definition of zero carbon,
the nature of energy supply to zero carbon homes and many other
related issues, and they are all quite substantive, practical
issues that we need to sort out. We are aware of what they are,
but we have to be clear that they do need to be resolved. Very
briefly, the third issue is around regulatory cost where we have
drawn attention to the fact that looking on a long term basis,
not a short term basis, the industry is facing very substantial
cumulative regulatory costs, not just zero carbon but affordable
housing, infrastructure support and other objectives and we are
also in discussion with government about how those objectives
can be managed at the same time as providing a sufficient volume
of affordable housing.
Q83 Chairman: The NHBC has warned
about what it refers to as "waves of error" setting
in with more demanding standards throughout the housing market.
Housing associations, however, are being required to meet a very
steep trajectory towards zero carbon; if they can do so why is
it so difficult for the private sector, do you think?
Mr Sidnick: NHBC believes that
the zero carbon principle should be based on sound science and
currently in terms of renewable technology a lot of its development
is at a very early stage. Our primary purpose is to protect the
consumer and we do not want consumers to be used as guinea pigs
to trial technology, so there are a number of risks around the
technology point. On the consumer point the NHBC Foundation, our
research organisation, has carried out a piece of research to
get more information about what the consumer thinks of this agenda,
whether people actually want these homes—it is an area that
had not been investigated enough—and it found broadly that
there was a lack of awareness and understanding of the zero carbon
agenda. Our message is that we cannot go too fast too soon, that
it needs to be based on sound science and avoid putting risk to
the consumer.
Q84 Chairman: Given the significant
contribution towards greenhouse gas emissions that the housing
sector constitutes, and given the availability now of technology
which will certainly greatly reduce those emissions, surely it
is not a matter of whether consumers are demanding this, the fact
is that we have to accept tighter standards if we are going to
get anywhere near the national targets for carbon emissions?
Mr Jefferson: There is almost
a consensus forming about the way forward in terms of a very ambitious
target that has been set for zero-carbon by 2016. Along the way
there have been a number of incremental stop-offs—level
3, level 4 and of course level 6. In terms of achieving those
I think that the work that has been done over the past year or
so would demonstrate that the way forward is perhaps to do the
best we can in terms of fabric, insulation and airtightness which
will take us to broadly around level 3 or level 4 and then beyond
that we are into really providing renewables. Of course, the debate
at the moment is regarding whether those renewables should be
provided onsite, offsite or a mix of both, and whilst it is true
to say that there are renewable technologies which are more mature
and which are available on the market, a lot of these things,
as my colleague says, are in their infancy. That is something
that the NHBC Foundation is very interested in and produced a
report earlier in the year which compared 11 types of micro-renewable
technologies to see which ones were actually working, and it was
the case that the more established technologies such as solar
thermal collectors are working quite well whereas micro-wind,
for example, is not quite as advanced at the moment. In terms
of the next stages NHBC very much endorses the work that was launched
last week by the UK Green Building Council at the request of CLG,
which recognised that it is very difficult for some schemes—not
all but the average size of development is around about 26 or
27 units per scheme—and that actually to achieve level 6,
zero carbon, which is a very ambitious target, a large number
of developments would not be viable at level 6 unless there was
some provision for offsite generation. At NHBC we very much look
forward to the consultation which will be held during the summer,
and we will participate fully in responding to that to see the
best way forward in order to ensure that we make the most of the
challenges ahead. This is a huge investment for the UK and if
you were to assume that there are 200,000 homes to be built each
year going forward and if the incremental cost of reaching level
6 is £30,000 that is £6 billion a year. Beyond that,
if there are 240,000 built it is a matter of £7 billion,
a huge investment. There has been quite a lot of work done already
and there is a lot more to do, but I think it is to do with the
onsite/offsite generation issue which is the challenge for the
next period.
Q85 Dr Turner: Can I just follow
up those answers from you, Lewis and Neil, because it rather sounds
on the face of it as if you are making a rather feeble excuse
for dragging your feet on getting renewables in zero carbon housing.
After all, five years ago when I visited Japan I saw totally zero
carbon housing being sold commercially, off plan, very popularly,
with photovoltaic roofs, the works, no problem—it was routine,
not just in its infancy. Equally in Germany developments with
biomass district heating systems are routine, so why are you hiding
behind the assertion that these technologies are in their infancy
when they are not, they most certainly are not. There may be supply
chain problems in the UK but that is just something you have to
do something about.
Mr Jefferson: I would very much
like to say that we are not making excuses, we are not hiding
behind anything. I would like to say that NHBC has very much embraced
the agenda, we sit on the taskforce, we have signed up to memoranda,
we have done a considerable amount of work through the NHBC Foundation,
the research arm, and through the National Centre for Excellence
in Housing which last week unveiled the first level 6 home built
by a volume house builder, by Barratt, and we are delighted to
showcase what can be done. In terms of rolling it out, we have
also looked around the world, as you suggest, to see what other
countries do and what we have learned from that is that other
countries perhaps have different climates, also in terms of electricity
they are decarbonised by different degrees depending on where
we look. NHBC's experience, as the written evidence sets out,
is that when there is a step change—and this is unprecedented
in terms of a step change going forward—there are sometimes
problems and over the years NHBC has dealt with those problems,
perhaps most notably with precast reinforced concrete homes (PRC)
around about 20 years ago where the NHBC for Government oversaw
the repair of 17,000 homes which were not mortgageable under the
right-to-buy scheme; we oversaw those repairs. Over the years
we have been involved in those failures and our concern is to
look after the interests of consumers and to make sure that we
build on sound science so that home owners are not used as guinea
pigs. I would like to say that there are very much some established
technologies which can be used and there are other technologies
which are emerging; what the NHBC Foundation research found was
that it is very important that we use the right technologies in
the right locations of those 11 types. Also, at the moment, there
are additional costs involved as well; that is not NHBC's concern,
that would be a concern for the house-building industry, but I
would just like to say that we are not here to make excuses, we
do not think we are making excuses, we are just concerned to make
sure that homeowners of the future are brought into what they
are going to receive, that there are not any maintenance issues
regarding the renewable technologies which they receive in their
new home, that they know how to use it properly to its optimum
and to make sure we are not actually causing or storing up problems
for the future.
Q86 Dr Turner: This does not sound
like a very adequate answer to the question that I asked; after
all setting up a taskforce is the traditional British way of kicking
something into the long grass and making sure that nothing happens
for some time. I am not aware that the climate of Germany and
Japan is very different from our own, so what will work there
will work here. Can you substitute action for a taskforce, please?
Mr Slaughter: Can I comment on
this? Developers increasingly are but we have to be clear what
level of the code we are talking about, going back to one of the
earlier answers. To go to level 3 and 4 of the code we would agree
with NHBC that what people will primarily look at will be improvements
to fabric efficiency, so that that in itself does not necessarily
require a large use of the renewable technologies onsite or otherwise,
and it is when you go beyond that level that the technology issue
arises. I would also agree from my own knowledge and discussions
when we talk to an awful lot of people about this set of issues—and
our members are engaging very widely with the renewables industry
and the micro-generation industry too—there are some technologies
that are more proven than others, but to look at code level 6
solutions, which is what we are really talking about here, the
zero carbon solution, then even some of the proven technologies
to install them onsite now are very expensive—the Government's
own research has shown that—and so we have a combination
of issues about what is technologically possible at the moment
and what is financially viable in terms of affordable housing
provision. That is why in my opening remarks I touched on the
regulatory cost burden; we are looking at this as part of a wider
picture where if, as we believe at the moment, it might cost something
like £30,000 or possibly more per housing unit to provide
a zero carbon standard as is currently set out, then that is an
extremely expensive thing to do and does have implications for
other housing policy objectives.
Q87 Dr Turner: I cannot help thinking
that if we had a line-up of your German equivalents we would get
different answers and those different answers might be related
to the difference in the legislative framework that underpins
renewable energy in Germany compared with ourselves; would you
agree with that? If we had a legislative framework which incentivised
renewable energy more effectively, such as a feed-in tariff regime,
would you be giving us different answers?
Mr Slaughter: Quite possibly,
yes. I do not know whether the Committee has registered this but
we have actually publicly supported the case for a feed-in tariff;
we have discussed that with the Renewable Energy Association.
I know from my own knowledge of the energy industry that energy
market reform—which is not just a feed-in tariff, I think
we need to make a whole range of changes beyond that but the feed-in
tariff is part of the picture—is probably going to be critical
to achieving this objective successfully and affordably. We do
need to stress the affordability issue, because the problem from
the developer's point of view is that if the front-end capital
cost falls entirely on the new housing development up front then
that is a problem for all of us, not just for the developer, it
is a problem for wider housing policy objectives. It is only if
we get things like the feed-in tariff and wider changes to the
energy market that will really incentivise and support investment
distributed zero or low carbon generation and really promote that
through the regulatory regime that we will actually achieve the
twin objectives successfully because that will create a financial
basis on which investment will come in to provide the infrastructure
and networks to support local zero carbon supply, and that will
make it more manageable for developers and for the energy industry.
We need to have those energy market changes because especially
in the electricity market investment essentially follows the regulatory
rules.
Mr Jefferson: Chairman, can I
just express again that I very much agree with the point that
has just been made and also just express again, perhaps, the comparison
with elsewhere in the world because in the UK the level 6 target
for zero carbon is the most ambitious that we have found because
it includes the electricity that is required, as the Committee
knows, to run all the household appliances. The next level down
from level 6 is level 5, which is essentially a house whereby
the legacy left by the house builder is a home which provides
for itself in terms of space heating, water heating and lighting
and in level 4 you take off the lighting, so in terms of the use
of micro-renewables to achieve levels 4 and 5 we are beginning
to see that happen and, as my colleague from the HBF has pointed
out, you see it on rooftops around the UK now. The challenge going
forward—just to be clear why perhaps it is different to
elsewhere in the world—is about generating sufficient electricity
onsite, or maybe offsite depending on the consultation in the
summer, to run all those household appliances and, as we move
forward, it is absolutely right to look at generation more broadly
because we are into cost issues to do with how much we can charge
for fuel in 2016, and the debate at the moment is that it is better
done at community level rather than at the level of the home,
or maybe even larger so that you are dealing as you perhaps are
in Scandinavia where whole parts of cities have network systems.
I would like to be clear, therefore, about the contribution that
micro-renewables are making at the moment and where the next step
is in terms of achieving the ultimate step of level 6 zero carbon
by 2016.
Q88 Mr Hurd: Can I bring you back
to the issue of cost? There is clearly resistance on that attached
to the zero carbon option. Zero carbon is very easy politically,
we can talk about it, it is an easy language, but what I want
to get a flavour of is the cost/carbon benefit analysis between
5 and 6 in terms of stretching for 6, which is easy for us to
talk about. Are we in danger of losing sight of the cost/carbon
benefit between 5 and 6, i.e. would we get greater co-operation
and greater momentum and acceleration in the direction we want
to travel if we were to be slightly more relaxed about the end
game. Does that make sense in terms of the cost curve between
of 5 and 6 where you have got, I am detecting, real concerns.
Has anyone done a cost/carbon analysis to see if we were to go
a bit further down that curve we would actually make much further
progress because at the moment you are sticking in the mud?
Mr Mitchell: If I can just bring
you down to code level 4 at the moment, there was a Cyril Sweett
report that was done and it had a graph in it of costs coming
through the codes; there was a gradual increase in costs until
you get between code levels 3 and 4 and then it goes sharply upwards.
You mentioned code level 5, but if we bring it back to code level
4 that is when the sharp increase in cost occurs. If am brutally
honest, what happens then is you will find the house has been
developed thermally to such an extent that when you get to that
position you are starting to rely on things like photovoltaics
which are very expensive, and that is what is sending the costs
straight up. What we are seriously looking at is how much can
we do within the fabric of the house and then we can build on
that with renewables, but it is between code levels 3 and 4 that
there is a sharp increase in costs.
Q89 Martin Horwood: Some of my points
have already been made but I was really going to go back to Mr
Sidnick and challenge the idea that the science is not well-established.
I find that an extraordinary statement and it does sound like
you are making excuses really because geothermal energy is well
established and perfectly economic, this Committee visited the
Centre for Alternative Technology in Machynlleth in Wales last
week and saw a zero carbon house that was built 20 years ago.
Photovoltaics are, as you rightly say, expensive, but surely if
we were doing it on scale and the commercial entrepreneurial attention
was paid to it that it needs to be then we might see that price
fall quite sharply. Surely you can accept that other countries
are a long way ahead of us, and that the reason you have to make
such a step change is because Britain at a corporate level—I
am not saying it is the commercial sector's fault entirely—collectively
is starting from such a pathetically low base.
Mr Sidnick: Firstly, in terms
of making excuses, we support the objective of achieving zero
carbon homes and we are investing significant funds to help support
the industry to implement it, and we want to work with Government,
industry and other stakeholders to successfully deliver it, so
we are in favour of the objective, but there is a difference in
terms of looking at what technology exists and how mature it is
individually, looking at its application on the mass market and
the cost implications of that. That is where I think there is
a divide; yes, some of the technology exists effectively and we
can demonstrate that but how effectively can that be implemented
when you are building 200,000 homes a year, three million by 2020.
Q90 Martin Horwood: But as Dr Turner
said, that is already happening in other markets, is it not?
Mr Sidnick: But not to achieve
code level 6, to achieve a truly carbon zero home there are other
implications in terms of delivering that to the mass market.
Mr Slaughter: Just to add to that,
there is a supply chain issue at this stage. The supply chain
to deliver—going back to the earlier questions—levels
3 and 4 for everyone at the moment just is not there, so we do
need a little bit of time for the supply chain to come into operation.
There are some gaps that I think the serious economic and other
studies that we have seen on this subject have identified, things
that would be desirable but are not yet there like relatively
small-scale biomass CHP for example. There are things that you
would wish were there, therefore, that are not mature at the moment
and then there are the cost issues connected with developing the
supply chain and the installation and maintenance issues that
go with it. From a customer point of view we also need to be confident
that there is a service structure there for the future because
the equipment that we are talking about is going to have servicing
requirements, a lot of things that people are familiar with at
the moment. In the work that we are doing we are having to look
at all these issues and see how we can best promote that. The
other point, coming back to your question, reinforces what I said
to Dr Turner a moment or two ago about the energy market. What
we precisely do not have in the same way as some other countries
is a supporting set of measures that will help manage the investment
cost and the investment risk in some of these new systems in the
UK market context. It probably is not ultimately the most helpful
way to do things to have too narrow or too compartmentalised a
focus on what can be done just through new housing as opposed
to a wider set of measures taking on board, for example, our European
energy targets on renewables that are pretty stretching more generally.
Q91 Martin Horwood: That argues surely
for a tougher line on retro-fitting in existing housing stock
and not for any dilution of the targets for new housing?
Mr Slaughter: Absolutely, we are
not arguing for a dilution of the targets. What I am arguing for—and
we may come back to this in other questions—is what I call
a more clever approach to how we achieve all of these objectives.
If we look at this from the bigger picture perspective, we have
what we expect to be a 50% renewables target for the UK by 2020.
My understanding is that that should amount to something like
35% of our electricity coming from renewables by that time, it
is absolutely massive, and what I think we need to do is look
at how zero carbon homes can sensibly fit into that bigger picture
and be a catalyst for helping to achieve the wider objectives.
That is not a substitution for anything but simply as a country
surely what we want to aim for is a picture where we achieve the
best benefits for everybody on the most efficient basis possible.
Q92 Mr Chaytor: Can I press you on
this issue of the £30,000 additional cost. What is that made
up of; what is the balance between internal adaptations to the
building and offsite renewables?
Mr Mitchell: If we are talking
about the code, the £30,000 to get to level 6, of that £30,000
about £25,000 or £26,000 is on the CO2 element of the
code, but we are talking about other elements as well. It is a
substantial figure and that came out of the first Cyril Sweett
report which was published a year or two ago. We are awaiting
a second Cyril Sweett report, which should have been published
towards the end of last year, and I do not know whether it will
confirm those figures. Our own view is that it will probably be
higher than that.
Q93 Mr Chaytor: In terms of the home
that has been unveiled at the BRE in the last few days by Barratt,
does that match this estimate of £30,000 additional costs?
Mr Mitchell: It is an awful lot
higher because a lot of research has gone into that.
Q94 Mr Chaytor: But that is a one-off,
what is the extrapolation from that home in mass production, that
is the issue?
Mr Mitchell: They are working
very hard on that to try and bring those costs down to make it
a home that can be mass-produced.
Mr Slaughter: I do not think we
know the answer to your question, we honestly have not asked them.
Mr Jefferson: As I mentioned before
it was a joint venture between the NHBC and the BRE that led to
that house being built. The house builder has not revealed the
cost of building that home because it was a prototype. They are
hoping to take the lessons learned from building that house into
a range of house types that will be rolled out around the country
and they will choose the technologies that have worked within
the house. The one thing I will say about the home that was built
at the BRE is that because it was built in isolation and therefore
not connected to a centralised CHP system it relies on photovoltaics
to get to level 6, the stamp duty exemption level that was being
aimed for, so I would suggest that given the photovoltaics connected
to that house it would probably be, given current market prices,
in excess of £30,000. The house has been designed in order
that it could be connected to a CHP system in the future.
Q95 Mr Chaytor: You have commented
on the associated problems of the energy market but is not one
of the big issues also the way that we separate out the capital
costs of building from the revenue costs of building, and have
you done any investigation into the way in which the longer term
reduction in revenue costs can be incorporated into the purchase
costs via particular kinds of mortgages? Surely this is the issue
and the marketing advantage that some of these homes would have
with consumers. Is there discussion that some of these homes would
have with consumers. Is there any discussion between the building
industry and the mortgage industry as to how these lower revenue
costs can be captured and incorporated to avoid expense?
Mr Slaughter: We have had a few
discussions with the Council of Mortgage Lenders on this subject
and I think it is correct to say that ministers have also raised
the issue of green mortgages with the CML. I have to say that
the answer we have had to that question is that it does not appear
to be in practice a very attractive option on the whole to lenders
at this stage. Of course, the current financial market is particularly
difficult and I am really referring back to discussions before
the current financial situation got as stretched as it is, but
at that stage I do not think there was a lot of interest in terms
of the lenders and seeing how that would create an interest for
them to provide an attractive mortgage product. That is probably
connected to the fact that so far—we cannot pretend to predict
how this will change in the future—as we stand it remains
the case that customers probably would not give much weight to
those revenue benefits in terms of their purchase decision and
the price they were willing to pay for a home.
Q96 Mr Chaytor: In respect of the
current economic downturn and the credit crunch, what are the
implications for the big expansion of house-building that everyone
wishes to see. Do you think that the assumptions underlying the
three million new homes are still there, is it still possible
to deliver them given the current circumstances?
Mr Slaughter: The assumptions
are still there, the need for the homes is definitely there; the
immediate problem with the downturn is we literally have our members
talking to us about the fact that they have people who would like
to buy their homes who at the moment are unable to get mortgages,
so it is very much a finance-driven issue. We have raised this
as a matter of urgency with the Government and with others for
any assistance that can be provided, and the reason we are doing
that is because from our point of view this is a serious issue
for all of us because the consequence if the slowdown does continue
for too long is a loss of capacity in the industry, because the
industry cannot continue to produce at the level it has been producing
if there are not purchasers out there. If we lose capacity then
that will obviously have some impact in the immediate period on
the level of output. That in no way changes the figure in terms
of the supply situation: the household formation figures remain
the same, the need in principle for the two million or three million
homes is still there, but the problem we will have is a short-term
one of adjustment following the price slowdown.
Mr Sidnick: In terms of the need
for homes it is still there but in terms of delivering the supply
target NHBC's statistics on new starts have shown for quarter
one in 2008, the number of new homes registered to be built has
fallen 30% compared to quarter one in 2007, a significant fall,
which is having implications on the number of units being built
and will have implications for the final target, but the demand
is still there.
Q97 Mr Chaytor: Leaving aside the
availability of credit, the other factor underlying the economic
situation is the huge increase in the price of crude oil. The
fact is that oil has gone up from $30 a barrel to $120 a barrel
in two-and-a half years; are there longer term issues about assumptions
over numbers of housing, the kind of housing, the location of
housing, the nature of the infrastructure that we have not yet
taken on board? Does the impact of the oil price affect the impact
of property prices? We have got these eco towns springing up all
over the country; is this still a viable model with oil at $124
a barrel and possibly rising further?
Mr Jefferson: That is a very good
question. The research that the NHBC Foundation carried out which
we refer to in our submission was about consumer attitudes to
zero carbon.[6]
What the research found was that consumers were of course aware
of climate change and the issues surrounding it and there was
a desire to do things to improve the way people live their lives,
to reduce waste, to reduce carbon emissions. However, what came
out through that research, perhaps not surprisingly, was that
people's decisions are often based on financial issues rather
than anything else and in terms of asking a large number of home
owners if they would pay more for a zero carbon home we found
that roughly half the people interviewed would pay £6,000
to make a financial saving year in and year out, fewer as you
went up the scale and very few would pay £30,000 at present
day rates for level 6 but of course, as has already been mentioned
by the Committee, it is expected that that £30,000 will drop
in due course. As I mentioned earlier on, the price of fuel to
run a home or the price of fuel to run a car will influence decisions
on where people choose to live and the point you make about the
additional cost of living in a zero carbon home and living in
an eco town, these are all important factors because somewhere
along the line some of the incremental cost of moving to these
high levels will need to be absorbed. That is a big issue at the
moment because the three things of supply, affordability and sustainability
need to be quite carefully balanced over this period, although
in the longer term as our colleague from HBF has pointed out the
demand for homes will still be strong.
Mr Slaughter: If I could follow
up on that question, it is probably quite early in the process
for there to be a very clear understanding of the issues you are
raising, but they are certainly valid and I suppose, to be positive
about this, one of the things that I would look for the PPS on
climate change to do is to actually address these kinds of issues
and assist the developers. In some of these areas, because they
are actually extremely demanding and sophisticated issues that
you are talking about, most individual developments are really
very small and the large urban extension and so forth is the exception.
For those kinds of development situations I think we are going
to need a lot of help from enlightened dialogue with the planners
and a real emphasis on forward-looking spatial planning which
we would certainly support; that is what the planning system should
first and foremost concentrate on in the challenging future we
face.
Q98 Colin Challen: On the back of
a ten year house price boom most competent house builders have
made record profits—I have looked at annual reports and
I have seen the figures. On the back of that why should we not
expect house builders to share some of the burden of paying for
these extra things to make houses more zero carbon?
Mr Slaughter: They already are.
Before we get on to zero carbon, the industry in the last few
years has been making a massive contribution in terms of affordable
housing provision. Over half of the affordable housing that is
provided comes from the private sector through section 106 and
we would estimate that on current average provision levels that
is a contribution of something like £30,000 per housing unit
in itself. Then of course the industry is already contributing
a lot in terms of infrastructure provision, so part of the concern
I was raising in the introductory remarks about the future burden
of regulation was that you are adding the cost of zero carbon
on top of those other elements, and that becomes very difficult
to support in terms of land values. The issue going forward is
not about whatever profits have been made in the past, it is about
whether there will be a viable land supply, whether when you look
at all the value that is being contributed potentially from a
development to public policy purposes—and we are not knocking
the public policy purposes—what value is left in terms of
the sale of the land by a landowner to a developer? Figures that
we have looked at in broad terms suggest that that is a real challenge;
the prospective regulatory cost going forward in a few years time
could be in the region of £3 million per hectare, and the
average price last year from the Valuation Office for land for
residential development outside London was £2.9 million,
so if you are in that kind of territory we are simply saying that
there is an issue you need to look at. If the land is not viable
or of interest for the landowner to sell then the land will not
come forward and the housing output will be constrained because
of insufficient land supply.
Q99 Colin Challen: It seems that
every which way we turn the industry is sort of pleading poverty
really and I guess if we had asked similar questions five years
ago we would have had the same kinds of responses. Surely the
industry does have a greater responsibility and should not just
look to others to find a solution; as Dr Turner suggested earlier
what we are talking about should be seen as standard, so how will
you actually approach that in terms of internalising this behaviour
so that you can get the message across to your consumers that
it is simply a good thing to do to buy these houses and how we
should support them in making that choice rather than always relying
on legislation to force the pace?
Mr Slaughter: We do feel it is
essential to have the right national legislation in this field
because the reality of how the industry and the market works is
that land supply is critical and the land market is very competitive.
It is not possible for developers in general to be able to bid
effectively for land in the land market.
6 See Ev 49. Back
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