The short answer to that is, yes, there will be timescales, but I will get back to the noble Baroness with details about our thinking. It would seem odd to have a situation whereby conditions are set down which do not have time limitations, otherwise it is an open-ended situation. My understanding at the moment is that we still need to set those timescales, but the idea of a timescale is very much in our current thinking.
Amendment 93AC seeks to set a minimum price of £90 per tonne which homebuilders would need to pay into the fund that we are proposing. This would effectively set a floor price for allowable solutions, something only 22% of those who responded to last summer’s consultation thought the Government should do, compared with 59% who thought the Government should set a ceiling price or price cap for allowable solutions.
The consultation sets out three price cap scenarios for allowable solutions: low, which is £36 per tonne of carbon; a middle rate of £60 per tonne of carbon; and, at the higher end, £90 per tonne. As I am sure all noble Lords will agree, getting the price cap correct is crucial. If we set it too low, there is a risk that carbon abatement measures may not be available at or below that price. However, if we set the price too high, we put at risk housebuilding viability, which could seriously stifle much needed future housebuilding provision. I am sure I speak for all noble Lords when I say that none of us wants that.
We received a great deal of conjecture about the pros and cons of the different price caps from the consultation, but received little new evidence to inform that choice. However, it was clear that homebuilders have strong concerns about potential costs and the impact on housebuilding. The Government have therefore committed to undertake further analysis on these impacts before a decision is made. None the less, we know that a price of £90 per tonne of carbon will mean an allowable solutions cost in the range of £2,000 to £3,000 per dwelling, which is by no means an insignificant sum. It was supported by less than half of the consultation responses, and by only 10% of builders and developers. The majority of those who responded to the consultation said that the price cap should be reviewed every three years. That seems a sensible suggestion, and we have agreed to it. However, setting a price in primary legislation would mean finding parliamentary time and an appropriate legislative vehicle every three years to do so.
Amendment 93AD proposes to include in primary legislation a list of carbon abatement actions that may be supported. Last summer’s consultation sought views on whether the Government should set a statutory list or use a criteria-based approach to identify suitable carbon abatement measures. Of the responses, 74% did not support focusing on particular types of measures, and there was a consensus that being too prescriptive would stifle flexibility within the market for allowable solutions. We would be concerned about describing measures in primary legislation. Indeed, including lists of measures in secondary legislation can also inhibit flexibility. We also discussed whether a criteria-based approach might be adopted, so that if a measure met those criteria, it could be supported.
The criteria proposed were: complementarity, such that measures should complement but not displace projects supported separately by other government programmes; market additionality, meaning measures which would not otherwise have been brought forward by the market; cost effectiveness, whereby measures should bring forward cost-effective carbon abatement; verifiable carbon savings, whereby measures should be capable of delivering verifiable carbon savings; and, finally, being of demonstrable benefit to UK citizens. More than 60% of respondents to the consultation considered that these were appropriate criteria.
We also set out a list of potential measures in the consultation, including three of those suggested in this amendment: retrofitting existing private buildings; retrofitting existing public buildings; and connecting existing private buildings to a community heating scheme. The installation of charging points for vehicles, although not included in the list in the consultation, is another measure which we think would be appropriate. The Government will certainly look to provide further information on measures which could be supported, for example through guidance. However, it is our belief that listing measures in primary legislation could, as I have said, reduce flexibility and potentially stifle new measures being brought forward.
My noble friend Lady Maddock raised the issue of not having information on secondary legislation. We want very much to embed this in building regulations because that is the system which homebuilders understand. It means that we can use existing legislative structures and building controls rather than having to invent new compliance bodies. That is why we are taking powers in the Building Act to amend the regulations rather than developing a completely separate set. This is an innovative approach to delivering carbon abatement measures and, as I have said, we want to avoid being too prescriptive in primary legislation. There was also a question about why no secondary legislation is already available. The Government want to work further with industry and others who would need to be informed on the details of the implementation before we put down secondary legislation. I can look into what further information can be made available for discussion at later stages of the Bill.
The noble Lord, Lord McKenzie, said that often when we look at such issues it is a case of, “Yes, that’s good but should we go further?”. The Government have strengthened energy performance requirements
for new homes significantly. Indeed, we have strengthened them by more than 30% since we came into office. We have reduced energy bills by £200 on average and are saving carbon. As part of the journey to zero-carbon homes, we now propose further to improve those energy requirements, typically by 20% across the housing build mix. While some might say that we should go further, we have had to strike a balance between what is feasible to raise standards for new homes without imposing excessive costs and unrealistic levels of ambition on homebuilders.
The noble Lord, Lord McKenzie, quite rightly raised the issue of the environment vis-à-vis growth. Evidence supplied by the UK Green Building Council shows that the cost of delivering a zero-carbon home is between £3,500 and £5,000. This is a significant amount of extra money for developers to find. It would not be right, in a still recovering economy, suddenly to require them to find this extra money for every new home delivered. Since 2010, the Government have taken gradual steps towards delivering zero-carbon homes. From 2016, they will be delivered via the right combination of on-site and off-site measures. We will, of course, keep that combination under review.
The noble Lord, Lord McKenzie, also referred to setting the on-site standard and its watering down and asked whether the Government have proposed a weakened on-site energy performance standard rather than the level recommended by the Zero Carbon Hub in the consultation. We have strengthened the energy performance requirements for new homes significantly since we came into office—I have already alluded to this—and as part of the journey to zero-carbon homes we now propose further to improve these energy requirements, typically by 20% across the housing build mix.
Amendment 93AAA deals with two important aspects of the zero-carbon policy commitment: first, how we will set the carbon compliance standard and, secondly, what action we will take to update the House on that policy. Perhaps I may deal with the issue of reporting first. Noble Lords will know that there is an existing provision in the Sustainable and Secure Buildings Act 2004 which can meet the intent of this amendment and would not need the introduction of additional administrative requirements and costs. Section 6 of that Act requires that a biennial report on the sustainability of the building stock is produced and laid before Parliament. It specifies that the report must include building regulations made in the reporting period, changes in the energy and carbon efficiency of the building stock and an estimate of the number of buildings at the end of the reporting period. The intent and content of this existing reporting requirement under the Sustainable and Secure Buildings Act lends itself to the provision of information about zero-carbon homes, and this could offer a less cumbersome way forward to providing and making available to the House and more widely the information being sought. It is also right—and the opportunity exists—for noble Lords to ask for further information through parliamentary Questions.
In relation to the carbon compliance standards that developers may have to meet before applying any allowable solutions, noble Lords may know that we
have already set this in line with the requirements of the code for sustainable homes level 4. Homes built to this level will need to have even better levels of insulation, triple-glazed windows and renewable energy systems, such as solar panels. This will reduce carbon emissions by another 20%, compared to current standards across the range of new home types, and reduce fuel costs for homeowners even further. We anticipate annual fuel bills for new homes to be around £700 less than the average existing home.
Noble Lords must not forget that the requirements of the building regulations are already very demanding to meet from a technical viewpoint, and solutions do not come cheaply, particularly for smaller developers, as noble Lords have said. Although we must meet our environmental obligations, we must do so while increasing housebuilding to help to meet the needs of our growing and ageing population and maintaining economic growth. Proposals to raise the regulatory requirements from 2016 will come at an extra cost, which must be manageable. It is on that basis that I argue that a carbon compliance level set at the code for sustainable homes level 4 is the right approach.
I am aware that some consider that the levels we are proposing from 2016 do not go far enough or that we are watering down our ambitions for delivering zero-carbon homes. These views do not take account of the need to balance our green and growth policy ambitions, as I have explained. I am clear that the steps we are taking achieve that necessary balance. We will, of course, keep the position under review, and it may be appropriate in the future to move further to tighten the on-site requirements.
I turn to Amendments 93AE and 93AF. Amendment 93AF seeks to ensure that all regulations made in relation to the off-site abatement of carbon dioxide will follow the affirmative procedure. As we have discussed, we propose to bring forward new building regulations, which are made under the negative procedure. It is my understanding that the Delegated Powers Committee has considered our amendments and has not expressed any concern regarding legislation that would be delegated from it. In particular, it has not recommended the affirmative procedure. However, I reassure noble Lords that the Government already use well established consultation procedures before laying new building regulations. In fact, the Building Act requires the Secretary of State to consult an independent expert panel, the Building Regulations Advisory Committee, on any new regulations before they are laid. The Secretary of State is required also to consult other bodies representative of the interested parties concerned.
The noble Lord, Lord McKenzie, asked a general point on the price cap and further analysis. Further work will be done over the coming months. It is a complex area, as I am sure that the noble Lord recognises, and we cannot commit to a date, but we recognise the importance of resolving the issue.
On the issue of consultation and the Committee on Climate Change, the committee will undoubtedly be an interested body, and we would welcome its views. It already has a formal role to report each year to Parliament on the extent to which government policies,
including zero-carbon homes, are sufficient to meet carbon budget targets. There is already a statutory mechanism for the committee to provide its view on the adequacy or otherwise of the zero-carbon homes standards and other government policies, so there is no need make it a statutory consultee in the Bill.
I trust that I have covered all the questions. My noble friend Lord Jenkin asked about the Home Builders Federation’s statement on new homes. I reassure him that we recognise it and commend it as well.
A raft of issues was covered, and I thank all noble Lords for their contributions. I hope that the explanations I have given have provided some reassurance on the concerns raised and the points made. I recognise that after digesting my detailed explanations, noble Lords may wish to come back at a later stage. We will reflect very carefully on the further information that can be made available to the Committee to help further consideration.
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