Code for Sustainable Homes and the Housing Standards Review - Environmental Audit Committee Contents

2  Costs and benefits

Cost to home builders

12. We examined the financial impact of CSH compliance on home builders. The Home Builders Federation (HBF) told us:

    Code level 5 and code level 6 are very expensive, on any analysis, but code level 4 is also an issue ... [The cost of CSH compliance] has been found to be a material fact and a material consideration in the assessment of the viability of Local Plan policy.[18]

It estimated that the cost of code level 4 compliance is "around £5,000 a dwelling".[19] It also highlighted the impact of "assessment fees, which are something like £400 a home."[20]

13. The BRE identified recent decreases in the cost of CSH compliance:

    In 2011 the Government published research on the costs of building to the Code. This showed that for homes built to Code level 3, average extra costs had fallen by almost three quarters in the previous three years falling from £4,458 in 2008 to £1,128 in 2010.[21]

When the then DCLG Minister Andrew Stunell MP published that research in 2011, he stated that "as the construction industry continues to build more sustainable homes, there is further potential for the costs associated with building greener homes to continue falling."[22] More recently, DCLG published a volume of case studies on the CSH in August 2013, which concluded "that code level 4 can be achieved relatively easily by experienced developers and designers".[23]

14. A consortium of local authorities questioned the figures that underpin the HSR and cited new research indicating that the cost of CSH compliance has fallen dramatically:

    Per dwelling costs of meeting CSH level 5 have fallen from a range of £16,500 to £23,000 in the 2011 study to £6,500 to £10,500 today (a reduction of around 55%). The equivalent range for CSH level 6 is £28,000 to £38,000 in the 2011 study to £15,000 to £26,000 today (a 40% decrease). The principal driver of the cost reductions at the higher Code levels is the reduction in capital cost of photovoltaics (a technology that features highly in energy strategies that meet the mandatory CO2 emission reduction requirement). The latest cost data suggest that total installed costs of PV systems at the scales relevant for dwellings have fallen by [more than] 60% over the past few years.[24]

We asked DCLG to comment on that apparent decrease in the capital costs associated with the installation of renewable energy technology. It replied that "whether some of those costs are correct or not rests on some very recent work that was undertaken by Element Energy and Davis Langdon ... We have not had a chance to look at that report in detail."[25] Before drawing any conclusions, DCLG must examine the September 2013 study by Element Energy and Davis Langdon on the cost of CSH compliance with particular reference to the apparent decreases in the capital cost of installing renewable energy. It should share that assessment with us, publish it and take into account our comments before winding down the CSH.


15. DCLG highlighted the impact of bureaucracy on home builders:

    A substantial part of the rationale is about removing unnecessary bureaucracy ... This is not just about the standards, but the bureaucracy itself. The impact assessment talks about £28 million of annual cost to the industry that could be removed by introducing a more streamlined approach.[26]

The HSR impact assessment spelled out how bureaucracy adversely affected home builders:

    As the majority of these standards are not owned by government, the owners of these standards can update their standards with no advanced warning or transition time. This means house builders are operating in an ever changing and unpredictable environment meaning they have to invest a great deal of time ensuring they keep up date with the ever changing landscape of standards.[27]

16. The argument that unexpectedly shifting standards create damaging uncertainty for developers does not apply to the CSH, because, unlike other codes and guidance, the CSH is owned by DCLG. If the CSH requires updating, DCLG can make the necessary amendments and provide home builders with appropriate notice. We agree with DCLG that extraneous red tape should be cut. DCLG told us that "the review looked at 1,500 pages of codes, of which the Code for Sustainable Homes was 300 [pages]."[28] DCLG can significantly reduce red tape while maintaining and developing the CSH as a tool to drive sustainable home building.


Local choice

17. The HSR consultation set out how the proposed national standards will be applied:

    These 'nationally described standards' will be adopted, as now, through local development plans and neighbourhood plans, under current planning powers, including enforcement and appeal powers ... When finalised (post consultation) each standard will carry with it a needs test i.e. the evidence criteria which local planning authorities would have to demonstrate to Planning Inspectors if they wish to apply a particular standard in their area. The test will be rigorous. The clear aim is that authorities will only be able to adopt standards that are strictly necessary and justifiable and will not default to adopting them all because they are seen as nice to have.[29]

18. Councillor Ed Turner from the LGA explained how that needs test would restrict local choice on sustainable development:

    If we want to apply any particular standard, including really quite basic things, above Building Regulations then we have to examine our plans, there is a rigorous test, and we can only do it if it is strictly necessary and justifiable, which seems to me a very high bar.[30]

The BRE echoed that point:

    The consultation proposals would restrict the ability of local planning authorities to adopt proactive strategies if they are essentially limited to applying regulations and possibly one or two national standards. It would also run counter to the Government's stated aim to allow greater local choice.[31]

19. The LGA expanded on its concerns about DCLG's proposed needs test:

    If there was a baseline that people agreed with, above Building Regulations but which reflected where most Local Plans are or should be, then that is a good debate to have and could be quite a positive thing. But to say we have to go back to base, so that every local authority sees all of its hard work chucked out of the window, you would have to go through a whole re-examination process, which would be very costly and there would be a hiatus. No doubt there would be some really good and expensive debates in front of planning inspectors, with lawyers arguing whether the Local Plan has primacy or the Government's housing standards. It is a very disappointing state of affairs to get back to square one in terms of decent standards.[32]

20. DCLG's proposed needs test on the application of sustainability standards by local authorities risks becoming a lawyers' charter. It could curtail local choice, delay the construction of new homes, drive down standards of sustainability and compel local authorities to incur unnecessary legal fees. The Coalition Agreement stated that the Government would "return decision-making powers on housing and planning to local councils."[33] The proposed imposition of a national standards set on local authorities is not congruent with the commitment to localism in the Coalition Agreement.

21. We questioned whether local authorities might use the CSH to limit development in their areas by imposing unreasonable strictures on developers. The HBF told us that it does not "seriously question the fact that the code and local policies are generally adopted with the best of possible reasons."[34] The LGA explained why such an approach would be unlikely to succeed:

    It would not work, because at the moment if you have a standard—and for that matter, say the Government's process goes through, hopefully with improvements, you would still have some standards and then you would need to justify those as part of your Local Plan examination. Your plan has to be sound, so any local authority trying to stymie developments in that way would be barking up the wrong tree.[35]


22. In the HSR consultation, DCLG indicated that it favoured the abolition of the CSH and the introduction of "a nationally described standards set as a stepping stone en route to integrating standards into Building Regulations."[36] We heard several concerns about this proposal. The LGA summed up the problem, when it told us that "simplification is good but you still need appropriate local flexibility. Above all we need a decent baseline on standards."[37] It is not clear whether the proposed national standards set will be sufficiently flexible to be applied usefully across a range of local circumstances, while simultaneously imposing meaningful standards of sustainable construction.

23. Some 50% of local authorities refer to the CSH in their Local Plans, which allows them to specify CSH compliance as a condition of granting planning approval.[38] A consortium of local authorities highlighted the value that it attaches to local standard setting:

    The use of the CSH certification scheme as a planning policy requirement is strongly supported by Local Planning Authorities who have benefitted from the CSH as a tool to deliver sustainability standards above Building Regulations in their areas. The removal of the CSH is seen as a backward step which will compromise the achievement of sustainability standards at a local level.[39]

DCLG also acknowledged the practical value of local choice:

    There will be reasons why you might want to apply a higher water standard in an area of water scarcity than in other parts of the country. Likewise, in terms of security, there may be reasons why a locality should have higher security requirements.[40]

24. The LGA explained its concern that some local authorities will be compelled to reduce their commitment to sustainable development to comply with the proposed regime:

    If you look at the options as they are described, it implies there is some baseline above Building Regulations as they currently are. But if you read the rest of the document carefully, particularly in the introductory section, that does not apply. Unfortunately, standards will be substantially lowered and local authorities will be barred from adopting higher standards outside the national frameset. That is regrettable.[41]

The LGA added that "at the moment what is being proposed is not a decent baseline standard; it is no standard."[42]

25. The HBF took a different line in arguing that the CSH had served its purpose and should be superseded by national standards:

    The absolutely key elements of the code in terms of performance are energy and water. Both are already in national Building Regulations. The national Building Regulations have moved forward and you have the zero carbon homes policy, so there is a real question mark about whether the code has not in fact already performed its useful function.[43]

Similarly, DCLG referred to the relationship between Building Regulations and the CSH, stating that "the majority of code homes that have been built have been built to code level 3 and that is the 2010 building regulation standard on energy, so the Building Regulations have caught up with the code."[44] DCLG also cited the zero carbon homes standard, which will apply to all home building from 2016 (see paragraph 28). It pointed out that "the requirements for code level 5 will be in the zero carbon standard that will be introduced from 2016."[45]

26. Standards of sustainability in Building Regulations have evolved to follow the CSH since its introduction in 2007. That twin-track approach embedded a degree of sustainability in all new homes, because Building Regulations are universal. For example, once-difficult-to-achieve lower-level CSH standards on energy have been successfully embedded in Building Regulations. DCLG does not need to introduce new national baseline standards, because Building Regulations, as currently constituted, already provide an effective baseline. Beyond that, the CSH is a flexible means of delivering sustainability in line with local circumstances and local choice. As new technologies come to market, sustainable development evolves and local circumstances change, the CSH can continue to set a mark for Building Regulations to follow. The single-track approach of simply setting standards in Building Regulations is undesirable, because it would not include a higher standard to drive incremental improvements and to measure progress, a role which is currently fulfilled by the CSH.

Transposing the CSH into national standards

27. DCLG told us that it was "drawing on elements of the code and proposing they are explicitly brought forward into the new standards set."[46] We heard concerns about exactly which elements of the CSH will be embedded in the proposed new standards and whether the HSR proposals will undermine progress on sustainability in the home building sector.


28. Energy and carbon emissions are one of the nine categories of development assessed by the CSH (see paragraph 5). The Government is committed to ensuring that all new homes constructed in the UK are zero carbon from 2016. According to DCLG's current definition, zero carbon homes must be zero-rated for net carbon emissions from energy use, using either on-site generation or off-site mitigation measures.[47]

29. Following recent changes to Building Regulations in relation to the zero carbon homes target, the HSR consultation proposed the elimination of CSH energy and carbon emissions assessments:

    For new homes (and other buildings), the government is committed to Building Regulations as the way to drive up energy performance standards ... Building Regulations have surpassed the lower levels of the Code and are now set at between Code levels 3 and 4. The government has set a clear end point for strengthening Building Regulations, with the zero carbon standard the equivalent of Code level 5 ... the government's conclusion is that the Code has been successful in doing its job in terms of pointing the way forward. In light of this, the government does not now see a need for levels or separate carbon and energy targets in the Code.[48]

30. The zero carbon homes policy was introduced in 2006 and set a trajectory of change up to final implementation in 2016. One virtue of the CSH is that it sets objective standards. In March 2011, the Government removed unregulated emissions from plug-in appliances from its definition of 'zero carbon', which meant that the zero carbon homes standard was reduced from the equivalent of CSH level 6 to the equivalent of CSH level 5.[49] The zero carbon homes standard was further diluted by the recent revision of Part L of Building Regulations, which will be implemented in 2014. That revision was intended to be a key milestone on the way to achieving the zero carbon homes standard in 2016. However, the 2014 Building Regulations standards can be achieved by slightly improving fabric, so they will not incentivise the use of renewable energy technologies. That means that home builders must bridge a significant gap on energy and carbon emissions to reach the zero carbon homes standard in 2016. We heard that that gap may be insurmountable.[50]

31. The Association for the Conservation of Energy told us:

    The new Part L of the Building Regulations has not gone as far as anticipated in terms of the minimum standard it sets for new housing ... [It] did not impose strict enough carbon reduction targets to incentivise the integration of on-site renewables (such as solar energy systems, heat pumps and biomass boilers) into new properties . Nor did it go as far as anticipated in driving improved energy efficiency in new homes ... This means that Part L has now for the first time diverged from the roadmap to 2016, and is actually situated much closer to Code level 3 than level 4.[51]

32. The Renewable Energy Association identified that the introduction of allowable solutions—mitigating emissions through offsets—"is a major departure from the original principle that future homes should be truly 'zero carbon'."[52] The LGA pointed out that that means that "councils will no longer be able to require that, where viable, a proportion of energy required by new development should be generated by onsite renewable sources."[53] Taken together with the intention set out in the HSR to amend the Planning and Energy Act 2008, which allows local authorities to specify the installation of on-site renewable energy, this is a further example where the HSR consultation proposed the curtailment of local choice on sustainable development (see paragraph 18).[54] [55]

33. The specifications around the zero carbon homes target have been watered down to such an extent that the proposed standards in Building Regulations now fall some way short of the higher levels of the CSH. There is no guarantee that further dilution will not occur in the run-up to the implementation of zero carbon homes in 2016. DCLG must maintain CSH energy assessments as a tool for local authorities to lever in renewable energy until Building Regulations deliver genuinely zero carbon homes, which was the original target and is defined by CSH level 6.


34. Construction materials are another of the nine categories assessed by the CSH. We heard that DCLG will not include materials standards in its proposed new national standards set. The BRE commented:

    The materials standards in the Code have been successful in encouraging manufacturers and others in the supply chain to enhance and demonstrate performance in terms of both life cycle impact and responsible sourcing. This has resulted in significant investment which will be put at risk if these standards are dropped.[56]

35. We heard that British manufacturers have invested in skills and product development to meet CSH standards. Wienerberger, which manufactures building products, highlighted how long-term investment in sustainable building products might be affected by DCLG's proposed new regime:

    There are concerns that total abolition of any standards related to 'Materials' could lead to downgrading of the considerable work done in recent years to improve the responsible sourcing of construction products and could stifle innovation in the drive towards low carbon sustainable housing.[57]

36. The Alliance for Sustainable Building Products raised the issue of how materials were addressed in the HSR:

    In contrast with other issues such as energy in use, accessibility, security, water, space and process/compliance, a working group on construction products and materials was not established [in the HSR]. The government currently believes materials issues (and by implication their embodied impact) is best left to the market. There appears to be no intention to include products and materials in a Nationally Described Standards set (thereby missing an opportunity to influence behaviour at the key commercial pressure point of product selection).[58]

37. The development of sustainable construction materials to regulated standards also provides an export opportunity. The Construction Products Association pointed out that "sustainability represents an important business opportunity for UK manufacturers and represents market growth and export potential. Regulation and Standards are required to drive this forward."[59] Materials make an ongoing contribution to sustainability. For example, a well insulated home will contribute to reducing energy demand throughout its lifetime. In addition, a lack of regulated standards risks inhibiting green growth and green exports. DCLG must maintain and develop the CSH assessment standard on sustainable construction materials.

18   Q1 Back

19   Q3 Back

20   Q4 Back

21   Building Research Establishment (CSH 025 BRE) para 3 Back

22   DCLG, Announcement, Building greener homes costing less each year (August 2011) Back

23   DCLG, Code for Sustainable Homes Case Studies: Volume 4 (August 2013), para 10.1 Back

24   Bristol City Council et al (CSH 017) paras 911 Back

25   Q51; Element Energy and Davis Langdon, Cost of building to the Code for Sustainable Homes (September 2013) Back

26   Q49 Back

27   DCLG, Housing Standards Review, Impact Assessment (August 2013), p 6 Back

28   Q46 Back

29   DCLG, Housing Standards Review, Consultation, paras 2931 Back

30   Q39 Back

31   Building Research Establishment (CSH 025 BRE) para 8 Back

32   Q22 Back

33   HM Government, The Coalition: our programme for government, p 11 Back

34   Q17 Back

35   Q17 Back

36   DCLG, Housing Standards Review, Consultation (August 2013), para 39 Back

37   Q10 Back

38   Q29 Back

39   Bristol City Council et al (CSH 017) Summary Back

40   Q56 Back

41   Q28 Back

42   Q39 Back

43   Q16 Back

44   Q67 Back

45   Q68 Back

46   Q68 Back

47   Off-site carbon mitigation measures are known as "allowable solutions". Back

48   DCLG, Housing Standards Review, Consultation (August 2013), paras 221-223 Back

49   Renewable Energy Association (CSH 003) para 1.3 Back

50   Renewable Energy Association (CSH 003) paras 1.1 to 1.7; Association for the Conservation of Energy (CSH 008) paras 1 to 8; Centre for Sustainable Energy (CSH 010Back

51   Association for the Conservation of Energy (CSH 008) paras 13 Back

52   Renewable Energy Association (CSH 003) para 1.10 Back

53   Local Government Association (CSH 028) para 3.23 Back

54   DCLG, Housing Standards Review, Consultation (August 2013), para 220 Back

55   Planning and Energy Act 2008, section 1 Back

56   Building Research Establishment (CSH 025 BRE) para 22 Back

57   Wienerberger Ltd (CSH 033) para 1 Back

58   The Alliance for Sustainable Building Products (CSH 004) Executive Summary Back

59   Construction Products Association (CSH 023) para 4 Back

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© Parliamentary copyright 2013
Prepared 20 November 2013