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
It estimated that the cost of code level 4 compliance
is "around £5,000 a dwelling".
It also highlighted the impact of "assessment fees, which
are something like £400 a home."
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.
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."
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".
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.
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."
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
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.
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.
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]."
DCLG can significantly reduce red tape while maintaining and
developing the CSH as a tool to drive sustainable home building.
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.
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.
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.
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.
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."
The proposed imposition of a national standards set on local authorities
is not congruent with the commitment to localism in the Coalition
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."
The LGA explained why such an approach would be unlikely to succeed:
It would not work, because at the moment if you
have a standardand 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.
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."
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."
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.
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.
DCLG also acknowledged the practical value of local
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.
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.
The LGA added that "at the moment what is being
proposed is not a decent baseline standard; it is no standard."
25. The HBF took a different line in arguing that
the CSH had served its purpose and should be superseded by national
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.
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."
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."
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
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."
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
ENERGY AND CARBON EMISSIONS
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.
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
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.
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
31. The Association for the Conservation of Energy
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.
32. The Renewable Energy Association identified that
the introduction of allowable solutionsmitigating emissions
through offsets"is a major departure from the original
principle that future homes should be truly 'zero carbon'."
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
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).
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
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.
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).
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."
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
18 Q1 Back
Building Research Establishment (CSH 025 BRE) para 3 Back
DCLG, Announcement, Building greener homes costing less each year (August 2011) Back
DCLG, Code for Sustainable Homes Case Studies: Volume 4 (August 2013), para 10.1 Back
Bristol City Council et al (CSH 017) paras 9–11 Back
Q51; Element Energy and Davis Langdon, Cost of building to the Code for Sustainable Homes (September 2013) Back
DCLG, Housing Standards Review, Impact Assessment (August 2013), p 6 Back
DCLG, Housing Standards Review, Consultation, paras 29–31 Back
Building Research Establishment (CSH 025 BRE) para 8 Back
HM Government, The Coalition: our programme for government, p 11 Back
DCLG, Housing Standards Review, Consultation (August 2013), para 39 Back
Bristol City Council et al (CSH 017) Summary Back
Off-site carbon mitigation measures are known as "allowable
DCLG, Housing Standards Review, Consultation (August 2013), paras 221-223 Back
Renewable Energy Association (CSH 003) para 1.3 Back
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 010) Back
Association for the Conservation of Energy (CSH 008) paras 1–3 Back
Renewable Energy Association (CSH 003) para 1.10 Back
Local Government Association (CSH 028) para 3.23 Back
DCLG, Housing Standards Review, Consultation (August 2013), para 220 Back
Planning and Energy Act 2008, section 1 Back
Building Research Establishment (CSH 025 BRE) para 22 Back
Wienerberger Ltd (CSH 033) para 1 Back
The Alliance for Sustainable Building Products (CSH 004) Executive Summary Back
Construction Products Association (CSH 023) para 4 Back