Kick out this absurd policy
Buy a new home from a small company. And guarantee higher fuel bills, increasing emissions and general confusion between regulators and consumers. Sounds like a poor deal all round, both for the purchaser, and the marketing prospects for smaller construction companies?
I would agree. But nonetheless Communities Secretary Eric Pickles seems determined to foist this absurd proposal onto the marketplace as soon as possible.
Since 2006 it is has been agreed policy among the three major political parties that all new homes built from 2016 should emit zero carbon. This became legally binding (albeit by 2019) under the 2010 recast of the European Energy Performance of Buildings directive.
Nonetheless, Pickles’ Department is maintaining that: ”it is necessary to determine which housing developers in England should benefit (sic) from an exemption for the requirements to deliver zero carbon homes.”
What justification is Pickles offering? The sole argument provided is that lowering energy saving requirements for smaller builders might improve their financial prospects. No market research is provided to back up this assertion: the only study he cites in support, from the NHBC Foundation, reaches no such conclusion.
Instead, the main concerns of smaller builders centre around the availability at a viable price of suitable development sites, acquiring finance, and the speed of planning approvals. At most, 4 per cent of small builders feel that reducing the levels of building regulation requirements might be of interest – a proportion felt by the NHBC Foundation to be too small to merit further consideration.
But not too small to stop Eric Pickles seizing upon it, as a (spurious) justification for allowing small developments, of up to 10 new homes, to be built to lower energy saving standards than is required normally under Part L of the Building Regulations. On last year’s figures, that would have meant 21 per cent of new homes would have been constructed to waste extra fuel.
This creates a two-tier approach, with two standards of housing, with small builders now associated with an inferior product. This will be a nightmare for Building Control officers to oversee effectively, directly contradicting current deregulation policies aimed at simplification.
It will also cause big problems for the supply chain, as different products and services will need to be delivered to differently defined new homes. Fragmentation leads to a lower potential for cost reductions than that which is generated by consistent volumes.
Precisely the opposite outcome
With small builders making up the smaller part of the marketplace, it is inevitable that this market will be less well served. Which in turn will penalise smaller builders by offering lower and slower cost reductions – an outcome that perversely would be the precise opposite of the one Pickles is ostensibly seeking.
Using ten homes as the differential between “small” and “normal” developments will inevitably lead to gaming, where larger sites are divided into smaller ones, in order to qualify for the exemption. The artificial division or staging of sites to attract the exemption could well slow down the building of new homes: again, the very opposite of what Pickles purports to want.
Similarly, gaming could well take place regarding which companies qualify as “small developers.” The standard definition is 49 employees or fewer. It would be all too easy for larger companies to decide to create subsidiary companies to qualify for these energy saving exemptions. Indeed, it is already common industry practice to deliver developments through so-called “special purpose vehicles”, in practice arms’ length subsidiaries of volume house-builders.
From an ecological point of view, the consequent reduction in projected emission savings from future new homes is of real concern. Within ten years, projected savings would become 370,000 tonnes of CO2 less than currently projected. And that assumes that the proportion of “small” developments remains at the current 21 per cent- rendering the entire justification for this market interference by Pickles completely redundant.
This profoundly silly policy has as yet been ill-publicised by Pickles. I should like to believe that it is because he is deeply ashamed of having come up with it. But it is more likely that he wishes to slip it under the wire before the May election, hoping it can then earn a day’s cheap headlines as an initiative claiming to “reduce regulatory burdens on small businesses.”
The more sensible view is that taken by the official Committee on Climate Change. In its statutory report to Parliament on meeting carbon budgets, it states: “No rationale has been provided for the exemption for small developments. It is not clear why the economics of efficiency measures or low-carbon heating should significantly differ from larger developments.Therefore, this proposal should be dropped, unless the Government can show clear evidence of its value.”
Pickles has produced no such evidence. This foolish policy should be dropped forthwith.
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