My Lords, first I thank all noble Lords who have participated in this debate, and in particular the noble Lord, Lord McKenzie, and the right reverend Prelate for their amendments, which have allowed us to discuss this important issue again.
I am conscious that Amendment 101A has already been discussed in Committee. I am of course happy to revisit the subject because of its importance, and in doing so I ask noble Lords to excuse me if I cover points we have covered before. From our previous discussions, and as my noble friend Lord Teverson has alluded to, I know that a clear consensus was emerging that in designing the zero-carbon homes policy we must ensure that smaller builders are protected from increases in costs that may make it more difficult for them to compete. In seeking to limit the scope of the application of off-site carbon abatement measures to developments of 10 or more dwellings, the amendment recognises that important principle. On that basis it is well intentioned and in line with the Government’s thinking on the issue.
With regard to the Government’s thinking, I am conscious that noble Lords would have expected a consultation paper to have been issued by now and in advance of this debate. Indeed, in various meetings that I have held in advance of this stage of the Bill, this was something we discussed. At this point I can only apologise for the delay which has occurred. I assure noble Lords in that apology that the Government are working very hard on the consultation paper, and we are very aware of the interest on this issue and the need to set out our thinking as soon as possible.
We recognise that achieving the zero-carbon standard could be particularly challenging for small builders. Smaller developers face extra costs in terms of land acquisition and purchasing. They also rely on an ability to identify and redevelop small sites or to assemble small parcels of land into larger opportunities. Research recently published by the National House
Building Council on improving prospects for small housebuilders suggests that the availability of suitable small sites—which they indeed prefer—is declining. It also indicates that any extra regulatory costs can impact on the viability of development. We are concerned that if the costs of zero carbon lead to fewer small sites being brought forward, this will further hinder the prospects for small housebuilding firms.
Therefore, while welcoming the intention behind the amendment, it cannot be supported, principally because it would not provide the flexibility that we need on this issue. Putting a rigid exemption in primary legislation would not be the right way forward. There must be flexibility to respond to changing market circumstances and to listen to those people with the main interests in this area, the homebuilders and environmental groups. Our intention therefore is first to seek the views of those interested parties on how the exemption should work. Only after that consultation would we legislate, setting out the scope of the exemption through the building regulations and providing supporting guidance in that respect. Primary legislation is not required to exempt small sites. Section 3 of the Building Act allows for building regulations to make different provisions or to exempt prescribed classes of buildings from the requirements of building regulations. However, I recognise that the key point of the debate is the threshold to be applied.
The amendment proposes an exemption based on sites of fewer than 10 units. I mentioned during Committee that this was one of the options being considered. I say “options”, because we must leave room for respondents to offer up different options or evidence for consideration. We will also consult on the timeframe that should apply to any exemption. It is this area in particular where flexibility is a paramount consideration. What may be right at the time of designing the exemption may not be right further down the line, and the Government must have the ability to review the operation of the exemption appropriately. I hope that it is helpful to clarify these important points and that doing so provides some further reassurance in advance of the consultation being published. We do, of course, welcome noble Lords’ considered opinions and views as part of that consultation exercise, and I assure your Lordships’ House that they will receive a copy at the earliest opportunity.
The noble Lord, Lord McKenzie, asked about a response on allowable solutions from the Government that was published in July and provided to noble Lords ahead of Committee. I am not sure whether there has been a response, or if it did not reach the noble Lord. I specifically asked for it, and was assured that a hard copy was also sent to the noble Lord in this respect. If, again, he requires a further copy of that, I shall be happy to forward it on.
I now turn to Amendment 108A, in the name of the right reverend Prelate. As I said during the discussion on a similar amendment in Committee, this amendment will result in significant problems by prescribing energy performance levels in the Bill. We all share the desire to see energy-efficient homes built that help to reduce carbon emissions and fuel bills. We should not forget that this Government have made significant progress towards delivering on the commitment made by this
and the previous Government to ensure that zero-carbon homes are built from 2016 onwards. Since we confirmed our commitment to the 2016 target for new homes to be zero carbon, we have further strengthened the requirements of the 2006 building regulations in 2010, and again in 2014, achieving a 30% total reduction. In fact, the most recent changes we made to the building regulations in 2014 will help to save homeowners an average of £200 on their fuel bills, compared to new homes built before we came to office.
Of course, we are not stopping here. As I have said, we have confirmed that from 2016 all new homes will have to meet even higher standards for on-site measures to be set out in building regulations. These will be set at a level equivalent to that required for a home built to the code for sustainable homes level 4 standard and will save homeowners on average £700 more annually when compared to a typical existing home. The right reverend Prelate talked of building to code 4. This can be done, which is why we think it is a reasonable standard to set. However, as shown by the Zero Carbon Hub’s as-built performance gap programme of work, there are challenges. We should set a realistic and achievable target, not one which pushes the industry to a point where it cannot deliver in practice.
To change the energy requirements for new homes, it is always necessary to consult carefully those affected. We should not forget that we are talking about a technical area that impacts across the whole construction sector. Additionally, the industry reports on building types that this amendment ignores and does not address, such as high-rise flats, because more work is needed. The categories listed in the amendment contain different building types and a rigid standard to cover them all. This may not work in practice. It may, but it is important to take the time to work through it in consultation with the industry. It would not be workable to deliver the proposed standard within six months. Even if it were, it may not be prudent to have such a rigid timeframe for delivery in primary legislation.
The independent Zero Carbon Hub recognises that further technical modelling is required. If, in the light of consultation, even slight adjustments were needed we would not be able to make them without new primary legislation. I assure noble Lords that the Government will strengthen standards and deliver zero-carbon homes from 2016. That is and remains a clear commitment on which we will be held accountable if we do not deliver. Between now and 2016 we will consult widely as to how the new proposed carbon compliance standard can be met. We will share that consultation with noble Lords.
My noble friend Lord Teverson and the right reverend Prelate the Bishop of St Albans asked about exemptions. The number of smaller housing developers competing in the market is significantly lower than it was prior to 2008. Smaller developers often face greater set-up and purchasing costs, compared to larger developers. New regulatory requirements often hit smaller developers earlier, as there are shorter lead times to starting development. With all this in mind, it is vital that the Government give the sector the support it needs, and exemption from the full cost of the carbon requirements is one way of doing so.
Let me also reassure the right reverend Prelate that we work closely with partners such as AIMC4 that have shown that it is possible to build homes to meet a higher level of energy efficiency. The work of that group has helped the Government in deciding to set the on-site requirement at around code level 4, as this should be affordable and achievable for the majority of developers. It is important to recognise that this work was limited in scope and did not extend across the full range of buildings such as flats.
The point was made that the setting of on-site standards could result in a watering down. We worked closely with the Zero Carbon Hub, whose work was hugely influential in helping the Government decide what further action to take from 2016. The hub did not recommend an on-site level for high-rise apartment blocks, recognising that further specialist work was required.
My noble friend Lady Maddock asked some specific questions about rowing forward and rowing back, as she described it, and said that some explanation was needed. I am sure she will appreciate that there are discussions taking place. I hope that my comments have somewhat reassured her that the commitment of the Government to achieve our objective when it comes to zero-carbon homes and to the policy that we have agreed from 2016 remains a priority.
I hope that my responses have been sufficient to reassure noble Lords of the Government’s position on both these amendments and that the approach I have outlined here, as well as in Committee, has demonstrated why these amendments may prove problematic in terms both of increased demands on the home building industry and of the mechanics of delivery. On the basis of these reassurances and accepting that we are still working towards the issuing of the consultation on zero-carbon homes, I hope there is sufficient to encourage the noble Lord, Lord McKenzie, and the right reverend Prelate not to press their amendments.