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SWM Comment: Scrapping the 2016 low carbon standards for new development

What we know

On 10 July 2015, the government published ‘Fixing the foundations: creating a more prosperous nation’ a plan for increasing Britain’s productivity. Amongst a number of wide-ranging changes, the report states, ‘The government does not intend to proceed with the zero carbon Allowable Solutions carbon offsetting scheme, or the proposed 2016 increase in on-site energy efficiency standards, but will keep energy efficiency standards under review, recognising that existing measures to increase energy efficiency of new buildings should be allowed time to become established.’ The announcement did not specifically mention proposals for zero carbon non-domestic buildings, but it has been widely interpreted by the industry as signalling that these have also been scrapped. It is not clear where this leaves the UK in fulfilling its requirements under the Energy Performance of Buildings Directive to move towards nearly zero energy buildings. This announcement was made with no consultation and came as a surprise to much of the industry. SWM was finalising an event in September with Encraft on this topic with DCLG speakers, who also appear as surprised as everyone else about the announcement.

National reaction?

Julie Hirigoyen, chief executive of the UK Green Building Council, said

 “Let us be in no doubt this announcement is the death knell for zero carbon homes. It is short-sighted, unnecessary, retrograde and damaging to the house building industry which has invested heavily in delivering energy efficient homes. Britain needs more housing but there is no justification for building homes with a permanent legacy of high energy bills.

“The Government has not consulted the house building industry sufficiently on this sudden announcement. This arbitrary and regressive action was not mandated by the Conservative Party manifesto. Just last year the Conservative-led coalition Government enabled the allowable solutions policy in legislation. This stop-start policy making approach gives industry no confidence in the Government’s vision for a low carbon economy and condemns new home owners to higher energy bills.”

Paul King, managing director of LendLease Europe, said “Industry needs as much policy clarity and consistency as possible in order to invest and innovate, and after almost 10 years of commitment and progress, UK house builders and developers have come a very long way. It is therefore extremely disappointing that the government has today removed a world-leading ambition for all new homes to be zero carbon from 2016.”

However the move was welcomed by the Home Builders Federation who suggested that zero-carbon standards would have cost purchasers in the order of £2,500 per home. Sources: Design Buildings Wiki

What do our members think?

SWM Member, Matthew Rhodes, Director of Encraft:” The government decision to back out of the longstanding commitment to zero carbon homes and allowable solutions demonstrates a complete lack of understanding of the drivers of industrial growth and productivity in the UK construction sector and the strategic challenges facing the UK. Our economic future is being sacrificed in the interests of short-term political expediency and easy headlines. Industry needs a clear and stable regulatory structure to support investment; and construction needs increasingly high quality standards to drive innovation, motivate builders to tackle skills gaps and to address the market failures in the property sector. Allowing builders to get away with delivering poor quality housing by abandoning the established path to higher specification buildings contradicts and undermines the government’s stated aims to increase skills and productivity and reflects an unthinking approach to some of the most serious and challenging issues facing the country.  SWM Member, Rob Lambe, Managing Director of Willmott Dixon Energy Services, said: “Since the original Zero Carbon announcement Willmott Dixon has been supportive of setting a long term trajectory enabling industry to invest with confidence. This announcement seriously undermines industry confidence in government policy and will diminish future investment.”

So what does this mean for the West Midlands?

Our previous policy and delivery work has shown that:

  • That low carbon construction is one of the three strengths of the  West Midlands set out in our joint-Local Enterprise Partnership Investment Prospectus which we are using to attract investment here.
  • That any successful export market of low carbon goods and services relies on the initial stimulus of a home market, often driven by legislation.
  • Our business members regularly tell us that for them to innovate and develop new solutions they require the long-term certainty to invest in a future market. The long-term cross-party support for phasing in of the low carbon building standards was seen by many as a good example.
  • Our recent events with members has show that although challenging there are many successful pioneers meeting these new standards for new and existing buildings.
  • There was a willingness to set up a local energy efficiency fund for larger development sites in the West Midlands that couldn’t meet the 2016 standards so needed to invest in other community measures locally. SWM had been approached by several developers in setting up a scheme and we were planning to develop this at an event in September. This is now cancelled.

Therefore we expect to see a future two tier approach to new development:

  • Tier one – in areas in the region where there is competition to develop sites and capacity left in local councils to drive up standards, long-term outcomes and identify the right development partner that has already invested in the skills and technologies for low carbon – we will continue to see buildings built to last.
  • Tier two – in areas of the region where there is low market demand and no capacity within a local council to drive local standards and aspiration, expect to see a continued downward spiral of buildings not really fit for the present, let alone the future.

This will unfortunately reinforce the economic geography and divide across the UK, and stifle the market place and innovation for a key West Midlands low carbon business sector. It is the equivalent of telling our local automotive industry that moving towards efficient engines is bad for global competitiveness.

Is there an upside?

As a positive, solutions orientated organisation it has taken us a week to think of the ‘upside’, hence the delay in this post. However there are some positives:

  • The new ‘energy leaking’ homes that will be built will stimulate the growing community energy market, as there was a risk that super efficient housing with onsite generation would undermine this market.
  • We think we will see the rise of the ‘challenger house builders’ those organisations who have already invested in the ability to build to high standards and need to generate some new income streams and don’t hold 20 year land banks. Step forward the progressive Housing associations and smaller house builders.

Of course we will continue to work with our members and networks to promote sustainable building good practice and raise aspirations on what is possible and what we should all expect as we seek to build a better future and foundations for all. Dr Simon Slater, Chief Executive Sustainability West Midlands

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