Housing and Planning Bill — House of Lords, 2016-03-08
Topic: Housing
Robert Andrew Stunell (Liberal Democrats, Centre to centre-left): My Lords, I support the amendment. I do so as somebody who in the other place proposed the Sustainable and Secure Buildings Act, which was the foundation for the changes to Part L which were introduced in 2006, and also as the Minister who preceded my noble friend Lord Foster in the department in 2010 I am disappointed to find that the arguments that were going on between the Department for Communities and Local Government and the Treasury at that time appear still to be burning. Those arguments were repeatedly put and repeatedly refuted, yet this time the Treasury has come out on top. This amendment provides an opportunity to revisit that, and I hope that the Minister will take away the spirit of this debate as well as the substance of the amendment. The problem is that there is a completely false tension between quantity and quality in housing. There seems to be a very firm grip in the Treasury on the concept that, if it is cheaper to build, more homes will be built and, as good building costs more than bad building, it is obvious that you have bad building rather than good building in order to get more building The Minister gave us some figures on Thursday which she described as the, "implied first-time price of new build".—[Official Report, 3/3/16; col. 1014] She went on to distinguish that from "demand price". I am not quite sure what the difference is, and I am not quite sure what the first-time price of new build is, but for the south-east of England she gave an implied price of £352,000 for a property which would be affordable and within the scope of the starter homes project. That is an interesting figure because it highlights the fact that something approaching £250,000 of that price is nothing to do with the construction of the house, which will be about £100,000, and everything to do with the land price, which is actually what drives house prices universally. The construction cost is a minor part of the house price cost that the retail purchaser has to pay. It does not set the retail price, let alone whatever the demand figures are, which I strongly suspect would be higher sums of money than the Minister gave us last Thursday. The costs of complying with this amendment per house are trivial in relation to the construction costs, let alone the total retail price at which a house will be put on the market I will be interested to hear what the Minister’s brief tells her is the right figure for the extra cost of zero-carbon homes. I would be astonished if it did not have such a figure in it; mine always did. If there is one thing that history tells us, it is that that estimate will be too high. I say that because back in 2010, when the original improvements were made—I say "original"; perhaps I just mean original to me—and that 30% rise in building standards that took place in that five years was initiated, the UK Green Building Council, which has already been referred to, estimated that a typical cost addition would be £5,000 per home. The Treasury disbelieved those figures and believed that it would be an additional £10,000 per home, and it was those figures that were hotly debated between the departments and which formed the basis of impact assessments and so on at the time Actually, the cost per home has turned out to be £3,000 lower than the Green Building Council assumed and only one-third of the cost that the Treasury assumed. A £3,000 price differential in building a house is absolutely lost in the noise of housebuilding, purchasing and disposal. The cost is marginal, as the noble Lord, Lord Krebs, rightly said—something around 1% of that south-east London house going on the market, at a time when house prices in the south-east are rising by something like 6% a year. Indeed, if they were not, there would be some kind of political backlash because people would fear that their houses were losing value. So the barrier to more private sector building is not construction costs. Rather, it is the knowledge that, if a home is completed next year rather than this, the seller will be 6% better off because of the rising price of land and of sales. The very last thing that a developer wants to do is to produce so many houses that the price falls next year; indeed, you can see with some building in the centre of London that that is exactly what is happening. So the quality versus quantity argument, which is the only slightly tenable point of view in this U-turn, is not actually credible or realistic On the other side, there is the reputational risk to the Government. "The greenest Government ever—not!" is the message that seems to be coming through, and that is a really sad outcome, both for the present Government and for the country. There is an environmental risk because so much CO2 comes from our housing stock. As the noble Lord, Lord Krebs, eloquently put it, if we put up another 1 million homes alongside the 22 million that we have at the moment, and deliberately make them of lower quality than we could, then that affects not just the environment but our international reputation regarding, for instance, last year’s Paris agreement There are economic and social risks as well. Poor energy efficiency means higher costs to those poorer householders who are going to be moving into the starter homes that the Government want to see built. People whose income is so stretched that without the starter home they would not be able to get into the market are going to be saddled with an extra £1,200 a year of running costs simply because of this U-turn. It occurs to me that this sort of process usually takes longer than Ministers hope, and that those starter homes will start to come on to the market in a significant way in about 24 months’ time, which is of course pretty much the time when interest rates will no doubt also be rising, so their mortgages and fuel prices will go up but their energy efficiency will be deliberately lower than it needs to be I ask the Minister to have a rethink, to go back and yet again have a good push back at the Treasury, and to ensure that by Report we have a rather better picture of what the Government intend to do to be the greenest Government ever.