Cynulliad Cenedlaethol Cymru

Bore da. Good morning. Can I welcome all Members to the meeting? Can I remind people to set their mobile phones to silent? And if you could turn off any other electronic equipment that may interfere with broadcasting equipment. Are there any declarations of interest? No. We've had apologies from Dawn Bowden.

Can I welcome our three people who are giving evidence in the third evidence session on low-carbon housing? Can I ask you to introduce yourselves, please?

I'm Neville Rookes from the Welsh Local Government Association. I'm the policy officer for environment.

I'm Roisin Willmott. I'm from the Royal Town Planning Institute—I represent it here in Wales.

I'm Andrew Sutton. I'm the past president of the Royal Society of Architects in Wales, and associate director of the Building Research Establishment.

Okay. Are you quite happy for us to move straight into questions? Okay. If I can perhaps go first. Do you think there's sufficient political will and determination at the Welsh and UK Government levels to deliver transformative change to low-carbon, high-energy efficient housing? Is there a desire to do the things needed to make housing energy-efficient and even turn houses into small generators? Who wants to go first?

I was going to say that I did actually have a short opening statement. I missed that bit. Apologies.

Sorry, I did say, 'Are you ready to go straight to questions?', but a short opening statement—please do it.

Yes, sure. Thank you. Sorry. There are just a couple of bits that I jotted down. A few starting facts that I'm sure you'll have heard, but just to reiterate: more than three-quarters of the homes that will be standing in 2050 have already been built. Of the built existing homes, a significant proportion cannot physically be upgraded to achieve a near-zero energy demand. Of the unbuilt future homes, even in areas where they can be net energy generators, they cannot generate enough to offset the demand of the built existing homes. This means that, regardless of how hard you push the unbuilt future homes, we will still have to solve the problem of supplying energy to Welsh homes. And regardless of how hard you push the decarbonisation of the built existing houses, we will still have to solve the problem of supplying energy to Welsh homes. Since homes cannot solve the problem, we must assume that this major challenge is solved beyond our homes, unless we are to face the drastic world of unmitigated climate change. This means we should ask: what roles do we need Welsh homes to play in a future scenario where we have largely resolved our energy supply problem?

So, a few more relevant points: our housing stock averages more than 100 years old and at current replacement rates homes built now will have to last even longer. Our energy generation has broadly predictable peaks and troughs that do not align with peaks and troughs in our energy demand. The future impacts of technology and social change mean that working, commuting and leisure patterns are difficult to predict.

I would suggest six key words for any future home. First: space, flexibility and quality. Space and flexibility together are the most important to ensure our homes are pleasant, flexible and that residents value them. These benefits will be felt by each and every future generation for as many centuries as the homes stand. Quality is the third of those three. We don't currently build quality homes in the UK, and we only sometimes design them. Hidden beneath all the common explanations for this, I believe this failure comes back to a lack of oversight. Our industry has had many decades of self-certification and deregulation and, as a result, we build homes with practically no independent checks or validations on any of the design, construction or performance.

The last set of three words: reduce, balance and generate. So, all current and future homes should reduce their energy demand as far as practical. This means that less energy will be required over the 100 or hundreds of years. They should balance the misalignment between energy generation and energy demand. Whatever future energy solution we may have, it appears that any combination of renewables, nuclear or any other generation will not align without our energy demand, so the balancing is important through thermal mass, hot water tanks, batteries and other measures. And finally our homes could generate, but not if this means sacrificing any of the previous five. We must assume that the vast majority of a Welsh home's century or longer life will occur in a low-carbon world, since we must achieve this in the next few decades. So, generate where we can, but not as a substitution for long-term space, flexibility or quality and not as a substitution for a lifetime reduction in energy and not as a substitution for their ability to balance.

Thank you very much for that. Shall I read out my opening question again, then? [Laughter.]

It is really: is there sufficient political will and determination at both Welsh and UK Government levels to deliver the transformative change to low-carbon, high-energy efficient homes that we believe we need? Who wants to go first?

The suggestion has been made already. [Laughter.]

I think that the challenge that is issued to the public sector to be carbon neutral by 2030, which the Cabinet Secretary challenged the public sector with, and the carbon budgets required within the Environment (Wales) Act 2016 would suggest that there is certainly desire, if not a determination and will by the political representation. But what must happen is it must be facilitated by the political will and determination. The political will needs to be there and to be demonstrated to be there. I think, if we go back to a few years ago, there's the example where there was an opportunity to reduce or to improve energy efficiency in new build by 40 per cent, but due to the pressure that was put on the politicians, that was reduced down to, or compromised down to, 8 per cent or 9 per cent. If there is political will and determination, that cannot happen again.

Don't you want to say what a good job Swansea council have done in the very low-carbon housing that they've started to build as the first of their council houses?

Sorry. Say it again.

Swansea council: they've started building council houses in Milford Way, and they've created very low-carbon housing. That's an example of local government achieving.

It is. Yes, I will accept that there are examples, but the political will at a local level and the political will at a national level are perhaps different, but influence each other.

Okay. Fine.

I certainly think that there is a will in Wales, perhaps less so in the UK. But certainly in Wales, there is a will. I wonder whether we're becoming detracted, or distracted, by the Well-being of Future Generations (Wales) Act 2015, which is a good Act, but I just wonder whether that's providing too much of an overarching viewpoint and people aren't delving into the detail more on what that's aiming towards. So, we're still trying to come to terms with that Act, I think. We need to delve into that more and be more specific about the issues that we can to deliver it.

I think I broadly agree with Roisin and Neville. I think there is a will. I think there's a will for the nice media-friendly bits. I'm not sure there's as much of a will for the unpleasant and unpopular bits, which will ultimately need to come through because we're changing the way we build and the way that we live in our homes. So, there will be some bits that won't be popular, and there is perhaps less appetite for them.

Okay. Dai Lloyd.

I think there historically has been relatively little evidence that homebuyers and, indeed, tenants put a value on low-energy or climate change mitigating properties. I think that is changing. There is more evidence now of brown discount than there is of green increase—that people will pay a little less for a low-performing property. In the rental sector, of course, the minimum energy efficiency standards regulations will be slowly jacking up to improve that. There are issues about whether that's enforced. Local councils currently have the obligation to chase landlords who don't enforce the MEES standards, and I'm not aware that they have resources assigned specifically for that task. That might be a useful function. In the buying market, there is an issue that we don't have much evidence to demonstrate that there is a price premium, and that, of course, is the real trigger for house builders. It was also the trigger for why I came up with the idea of the LENDERS project to change the way that mortgages are lent, which I'm very pleased to say is making the most progress in Wales, and with the Welsh Government. But that is, again, looking to address the issue from a different perspective. It's suggesting that, actually, what people really care about is their income and their disposable income, and if we can address climate change in terms that work in that fashion, we're most likely to have success.

Diolch. 

I don't have an awful lot more to add. I think Andrew's succinctly answered that. We do see a rise in people fixing on, perhaps, renewable energy schemes, like the amount of solar panels and things, so it shows a willingness. And I think people are more interested in their disposable income, so energy pricing. If you look at the media, most of the conversations are about the price of energy rather than saving energy. So, I think that needs to be more of a focus.

Just expanding a little bit more from what Andy was saying there, I think change needs to be better. There needs to be, primarily, a benefit to the householder, the tenant or the buyer that means something to them—whether that’s financial or whether it’s health or warmth. An altruistic reason is very noble, but I don’t think it’s necessarily a motivation for many people. With the Help to Buy-type schemes, could energy efficiency be a clear part of those, so that if you’ve got improved energy efficiency, then those properties have got a greater chance of being supported through Help to Buy?

I think one of the things—. Consideration is not always taken on to the running costs of an energy-efficient home. The price that is asked doesn’t necessarily reflect that there’s going to be fewer outgoings as well. Recently, I think it was last month, the London School of Economics put a report out on green mortgages, which identified that energy-efficient homes are 32 per cent less likely to default on mortgage payments. So, the reduction or lowering of running costs provides more disposable income, therefore, there’s more reliability in paying and affording mortgage repayments. Greater energy efficiency, increased chance of mortgage payments; it benefits both the buyer, and the developer and seller—it’s actually creating a market that helps both.

Sorry, just one other point. That type of thing helps both new and old properties; it’s not just on a new build.

I think there is an issue here, and certainly the volume house builders are in the market, so it is an economic market for them. If the costs go up—perceived costs of construction—they will look for different markets, potentially, whether there is still a market here. But whether that’s a reason for not requiring those standards is another issue. Will other people, other organisations, a different model, perhaps, come in to replace it? So, maybe that could be the focus to look at on that side.

A lot of the volume house builders, certainly their main market is England anyway, so I think they would prefer to have a system that is comparable across the two areas and then they don’t have to redesign and work to two different sets of standards; that would certainly be for their benefit. But whether that’s right for what we want here in Wales is a different issue.

Simon. 

I just wanted to follow up—

Are you moving on from that issue of whether the builders are deterred?

I was going back, slightly.

Simon's going back. Simon and I are going back, then we're getting on to whether it's deterred.

Well, as long as I can come back and press on that bit.

Certainly, David. Simon and I are both going back.

Yes. I’m just going back one step to an aspect of Dai’s question that I just wanted to explore a bit more, which is about whether consumers, or house owners, are prepared to live in the kind of housing that we’re talking about as low-carbon housing. So, to give an example, for some obscure reason I was looking at a cooker hood being used in a house that—a passive house, in essence—and it didn’t extract the air, it recycled the air. I was just thinking how many people would want a cooker hood that didn’t send the greasy air outside, but actually recycled it back into the home. Once they understood that was part of the design of how you maintained this low-carbon house, how many would be thinking in those terms, in the way that they use the house? It just struck me as quite a big gap in the way we use housing at the moment, the way we live. I've visited houses that've been designed to certain standards only for tenants in those houses to complain that they had nowhere to dry their clothes indoors, for example—lots of things come out; they're niggling little things, but they are things that maybe are putting people off feeling comfortable.

Now, at the moment, this is still at the very wedge end, the narrow wedge end, of where we're going, but the question I wanted to ask is whether we're—even with this inquiry, to a certain extent—obsessing a little bit about perfection and not looking at the broad swathe of things that we could just be doing to mostly everyone's homes just to get that 40 per cent, 50 per cent, whatever, and whether our slight obsession with the newest and the brightest and the shiniest is not really helping us design something that can help people in the stock we have now. That's a question for the architect.

How long have we got? [Laughter.] I'd break that question into a couple of bits. Yes, I think there is an undue focus on the perfection, if you will, by your terms, and I think, particularly, the distractions of some particular ways of achieving that very high level of performance. So, the cooker hood example: I'm frantically trying to remember the obligations for Passivhaus in detail, but I don't think that would be in there. It's an extraction, so, in the same way that a toilet wouldn't need to have a recirculation, you'd extract it. So, I think that's a quirk of the design, not a requirement—I would need to double check the details, but, from guesstimates—.

There are numerous ways to deliver low or zero carbon. I designed an off-grid house for a farmer at Maes yr Onn that is off grid. He has a biomass in the basement, he has ventilation, he can open his windows, he has 3m ceilings, he loves it—at least, he told me he loved it, but I guess, then, he would. But it can be done in a number of ways and I think we do tend to pick certain flags and wave them and say, 'This is the answer'. Now, that's not strictly true; there are a number of good ways of doing it.

The physicists love the Passivhaus solution, which is a well-known one. Some of the occupants are less keen. It may or may not be entirely appropriate in a maritime climate like Wales, but, certainly, it can demonstrate that it can be done. But I think the last point was probably the key one: it may well be obscuring us actually doing a lot of good, smaller works to all of the homes we already have, and a small gain across a lot of homes is worth a lot more than a big gain on a few homes.

David.

Yes, I just wanted to get some idea of how vulnerable we are to the large house builders in that they may just not respond to a regime of higher standards in this area, they'll sort of decease in terms of their activity in Wales. Housing standards of rigour were first brought into England and Wales in the 1930s. We had a boom in house building in the 1930s—it had no deterrent effect whatsoever. It also saw small and medium-sized enterprises coming into the market at great number, the development of smaller sites as well as larger ones. It seemed a very balanced approach, which was more or less the model until the 1980s. So, I'm just wondering why you think adjusting standards—. We're not talking about radically different, probably, from what will pertain in England and Scotland—you know, why do you think that's so likely? And wouldn't it just open up the market for SMEs? We're building a record low number of homes. It's not as if we're in a booming market and they can say, 'Well, fine, you go off and do that. We won't be bothered, because we can build elsewhere'.

We're already facing some instances with the major developers not building.

Well, they're land banking, aren't they? That's their ingrained behaviour; it's not a response to us talking about these standards.

But also, within TAN 21, looking at the development of sites and ensuring that there's a five-year supply of land, there is a viability associated with that, so, if there are barriers to the building that can't be overcome within the five years, if it's not going to be profitable, then it's not classed as being viable. There are certain sites that are viable that are identified by the developers, but the developers are still not, for whatever reason—and they don't necessarily give a very good reason at times—starting building on those viable sites. So, with it being linked—with the building programme, then, being linked to the local development plans, if the builders and the developers are not building this year, it increases the target for next year, which gives it a kind of perverse—. The fewer that are built, the more we need to build.

I don't really want to speak on behalf of the volume house builders; I'm sure they've submitted their own evidence, anyway. I was referring to how they've betrayed the market, really. I think we can do more in Wales to help SMEs, mainly in terms of providing them with support and advice on how they can engage in the planning system and bring forward small sites. That's particularly relevant across most of Wales, because most of Wales won't attract the volume house builders because you don't have the numbers, the populations and the need for large sites, either. That's mainly a south-east Wales issue, and some of the north Wales areas as well.

So, there is an issue with whether they want to have different standards here, but I think there's also, perhaps, a trick that we're all missing, and that is persuading or informing buyers of housing about the importance and the benefits to them of low carbon, the energy saving, et cetera, and the bigger picture about climate change as well. So, maybe that is something that then the house builders would have a market demand for and that they would sell to that. So, perhaps that's something that is outside the planning system and more on the marketing side of things that could be worked on.

I think Mr Rookes was hinting that builders at volume have such small margins at the moment that they wouldn't be able to respond to this, but I'm very sceptical about that interpretation, I have to say.

There is an issue with viability, and we do have to wonder—. The viability argument's been winning for the last few years, and that means lower standards in all sorts of different issues, or providing contributions to support those new developments, et cetera. So, there is a need to readdress that balance, I think, and there is a question about the amount of money that's paid for land. That's often cited as the viability problem—because they paid so much for the land. So, maybe landowners need to understand that they can't expect such a high amount of money for land.

I think I'd echo some of the answers previously. House builders are, fundamentally, fairly simple creatures. They have shareholders, they deliver a return to their shareholders, they'll behave very predictably. That is both a strength and a weakness. We know what they'll do; unfortunately, we don't necessarily like it. Whether or not they work in Wales, we will still have a demand for homes, and that would suggest that we will still, ultimately, have a mechanism of supplying those homes. We have got smaller scale regional and SME builders. We may not be able to meet that demand for homes with a supply at the price we currently can, for all the reasons around land value and, indeed, land banking, because there's an element of whether we have access to the land. There's perhaps some compulsory purchase if you're going to be drastic about it—there's your political will, again. But, if we have a demand, which we do, then we will ultimately have a supply. The question is: can we afford it? That, again, comes back to whether or not we need to deal with the interim measures of coming off the addiction, if you will.

I was going to talk about land values, but I'm glad you did, because land values can be up to half the price of a house. We're talking about minor—. Tell me if I get any of this wrong. We're talking about minor additional costs in the building, and the land could be up to half the cost. Certainly, even 20 years ago, in the west of Swansea, people were paying £1 million an acre. That really is the problem, isn't it? It's the price people are paying for land, compared to other parts of the world.

If I may, the land value—I'm slightly oversimplifying, but, in essence, the land value is worked out by the amount you can sell the total properties on it subtracted by the cost you think it will cost to build, and the remainder is the land value. So, the land value is tracking the house property values, and, as the house property values skyrocket, the land values—. Because the construction costs don't particularly change, apart from abnormals and whatnot, the rest is land value, so the land value will skyrocket as the prices skyrocket, which they've been doing.

Or, if we add additional costs, the land values will drop.

Ultimately, yes. The interim hiccup will be that the land that's already purchased will then be comparatively overpriced.

But isn't it in volume builders' interests to keep housing supply at such a level that demand outstrips it in order to keep prices high? If it got it the other way round, the basic economics of it—if you had oversupply, prices would drop; they've got undersupply, prices go up. Isn't the aim of builders, as you've just said, to maximise profit? Keeping supply low, or below demand, means that you can keep the prices up.

I'm not an economist, but that would seem to be my basic understanding of economics.

And the last question goes back to what Dai Lloyd asked at the beginning of his questioning. I cannot believe that anybody wants to live in a cold, damp house and pay a lot more for it. You haven't heard me say it, but everybody else in this room has heard me say it: it's very expensive to be poor, because you end up paying more to keep a damp, cold house moderately warm than every one of us in this room is paying to keep our houses warm. So, I can't believe my constituents who live in these cold, damp, privately rented houses are actually choosing to live in them for any other reason than that's the only house they can get hold of. Surely, we ought—. I go back to what you said earlier on to Dai Lloyd—we ought to be enforcing, at the very least, ensuring that houses are dry and wind and waterproof. Any comments or—?

I think that would come down to the control of the rental sector rather than the construction, more so. Because, if there's a demand and people have got the ability to pay, then landlords would upgrade those properties.

I think there's probably an education issue as well. Yes, maybe people are looking for carbon-efficient, low-energy housing. Maybe it's so that they've got disposable income, or more disposable income, those that can afford it. Those that can't would still like to do it, but there's an element of education needed, an awareness. You can give people a smart meter. Some people will look at a smart meter and go, 'Okay, so I'm saving this much money', others would look at it, maybe if they're in the state of fuel poverty, and go, 'I'm using all that—I've got to turn it down, because I can't afford it'. So, it's the same piece of technology that is being used in two different ways and there needs to be that education as to how those things can be used.

Gareth Bennett.

Thanks, Chair. When we had an earlier panel of experts, there were concerns about planning issues, particularly relating to the understanding about zero-carbon homes at local authority level, and did the planning officers and the other council officials know enough and have enough understanding of this. So, do you recognise this as a problem, and what changes do you think need to be done to the planning system to help in that way?

I would say, first of all, that's probably a very general statement, and without the specifics I couldn't necessarily address those. But there are a number of factors to be considered in planning decisions, and it's not just the energy efficiency. Obviously there is the design, there's heritage, there's the built environment considerations, et cetera, and part of that—. The decisions that are made from a planning perspective, often an element of compromise from all sides is needed, and there is usually a solution and a willingness, probably, by all parties to actually address and find what that solution is. With compromise, people don't always get exactly what they wanted in the first instance, and I'm not saying that is what the basis of this comment was, but certainly it may be that it's, dare I say, sour grapes in some instances, that people didn't actually get it who provided the information.

Secondly, you cannot look at planning in isolation. If there are different calls for evidence—. There will be things for active travel, there will things for schools, there will be things for infrastructure, there'll be flood mitigation and drainage, all of which are affected by planning decisions. Developers, section 106 agreements, will help contribute towards all of those. So, the bigger picture, which is probably what local authorities and local planning authorities have to look at. The idea that there's a lack of understanding at local authority level—maybe there's too much understanding of the whole picture and not just one small element.

Roisin, what were your thoughts on that? 

Yes, I might have something to say on this. [Laughter.] We think that there are the skills within local authorities. What we have to understand is that some of the technology behind this is evolving all the time and new for everyone, even people who work in renewable energy or energy-saving sectors as well. So, everyone is always on a learning curve. But within local authorities, I think there is a general understanding. What there is a problem with in local authorities is the resources available to them—to spend time to be able to consider applications. So, that is a very big issue and something that we're looking at at the moment. We've commissioned a study with Welsh Government on the value of planning and what that can produce. So, later this year we'll be publishing that, which will demonstrate to local authorities: 'Actually, invest in your planning services because they are very important, and will bring about other outcomes such as low carbon or many other corporate requirements.' 

So, there are the skills there but there is a need for skills across the board, so not just the planners, it's the developers, it's the clients, it's the constructors, and I'm sure Andy might have something to say on that angle. And I think we also need to understand that in trying to achieve zero carbon, we shouldn't just focus on the building itself as well—we need to look at the design of sites. So, you can orientate houses et cetera to be more energy efficient without putting on any of the specific construction requirements within a single house, and also where the houses are built. So, it's all very well to have the most energy efficient house on the side of a mountain, which is 20 miles along a track that you need a 4x4 to get to. That's defeating the object of having a zero—. You may need  zero-carbon house there for another reason. So, we need to look at where we put houses and whether they're accessible by active travel, by public transport, and reduce that kind of carbon as well. So, we need to look at more issues. 

The last thing on this—the skills within local authorities, and Neville's commented on this already, that low-carbon issues are one part of the whole array of things that a planning officer and a planning committee will need to balance to decide on a specific application. 

Andy, what were your thoughts on it? 

I think I'd broadly agree with Roisin and Neville. Planning is possibly the most important step in the construction process—in fact, it is the most important. It decides, across a broad remit, whether if the house is low carbon, whether it's actually low carbon because you travel to work every day or because you've nipped to the shops down the track—all of these things. It's a far broader aspect. It determines whether or not we actually will have a community or a series of isolated homes. It's all of those things, and I think the issue is largely around resource. I think there are the skills in the planning system. I think they're probably under-resourced, and I think there should perhaps be capacity to broaden that. I also feel that there should be more prescription earlier in the planning system. I think we leave it rather too late in the process for some of those aspects, but that drifts into other areas of my other issues with planning. But in essence, yes, we do have a planning system that can be made to work, it just needs the resources. 

Thanks for your answers. I've gone back to the little bit more specific evidence that we had that there was a specific issue that was raised to do with guidance that is given to councils from the Welsh Government, which is fine, but in actual practice it may differ from council to council. A specific issue that was raised was possibly—. You raised the lack of resources—possibly there is a drive in some councils to generate fees for planning departments through planning permission. I think the point was planning permission may not always be needed in all cases, but they try to generate fees. Does that strike anyone as a problem or not?  

I've certainly never come across that. 

I think it's something that the Law Commission report coming out at the moment on the Welsh planning system is suggesting corrections to anyway.

I think the other thing as well is that if there are issues where developers are looking for something to be undertaken with a planning authority, there are certificates of lawfulness that they can demonstrate that, actually, it is a permitted development and doesn't require planning permission. And likewise, if works are undertaken using permitted development rights, if a local planning authority then sought enforcement action because these things had been implemented—there's a means of appeal against any enforcement notice as well. So, it's almost a hollow argument that if people are complaining that charges have been made, there are the mechanisms on a legal basis for them to challenge. 

Simon. 

There's still one aspect of this that I just want to test out because we've had a little bit of evidence around how it operates, the interface between planning and building regulations at the actual level of construction. I think, Andrew, you mentioned this in your opening remarks. I paraphrase, but you were suggesting there wasn't the right level of checking going on so that you might have a set of building regulations that are intended to reach a certain level, but whether they're actually being thoroughly checked—. Do we know that the house is going to perform in the way it's supposed to perform? There are a lot of press reports at the moment about new house building not being to a very high standard anyway, without us thinking about the higher standard that more energy efficient homes would have.

So, I suppose it is really to Andrew Sutton and Roisin Willmott more, but I'm happy to seek anyone's views on how this particular interface between building regulations and planning is working. Is that actually being robust enough at the delivery level to ensure that we are getting, in effect, what the consumer's paying for, but what Welsh Government is paying for as well, because a lot of this is subsidised to a certain extent?

I think there are two parts to that. If I answer the first one, and then pass it on to Andrew for the second part in terms of the robustness of the building regs and that side. I think planning and building regulations are separate. Within a local authority, they're often managed or overseen by the same person as well, so there is that interface and that management at a local authority level. So, I don't think there are issues. I think it's something to be aware of with new legislation, new policy that may emerge. There was—. Where it could have been muddied in the past was when we had TAN 22, which has now gone, before building regulations were devolved to Wales, so it was a way that the Minister used planning to try and achieve something that is better delivered through building regulations. So, that was using the tools available within the devolution settlement, but that has now passed on this particular issue. So, at the moment, I think things are clear in the two. Going back to what I said before about trying to achieve zero carbon, it doesn't all need to be through insulation or renewable energy. It is about how you design a site, and that is very much at the planning stage that it needs to be done, so very much at the start of when a developer first looks at the site and designs that site out, rather than trying to adjust it later on in the development. 

We don't get the homes that we think that we do, so that's a true statement that you started with. I would like to see, as I said, a slightly more prescriptive planning approach, in that, by signalling early and possibly even before planning applications by LDPs, and perhaps even the new national framework, signalling early areas where we expect to have energy generation or energy use—locations near, for example, waste-to-energy plants where there is excess heat that could be used—. That should be signalled early in the planning system so that the sites are identified and subsequently then purchased in the knowledge of the requirements on those sites. That means that the planning system can set the bar, and then the building regulation system can check the bar. And what we're not doing at the moment is necessarily getting that integration right, and we're certainly not resourcing our local authorities to be able to do the checks. And, indeed, we've got approved inspectors that can be resourced externally.

So, I think we need to more sophisticatedly set the bar, but we do then need to go back and check and we're not currently doing that.

And should it be local authorities that continue with the building regulations side of things? Obviously, you can understand why planning should be at the local authority level because there's local interest and the need to reflect local democratic decision making. It's constant—planning is a constant source of e-mails for all of us, as you can imagine, and I understand that, but when we're talking about national objectives, are we still happy that building regs are held at the local authority level? Is that the most appropriate level for the task that we've set ourselves here?

To read into the question slightly, I suppose the alternative to local authority would be the private sector delivering it, which is the arrangement we've currently got. You can have approved inspectors to sign off buildings or you can have—

That happens with large commercial developments.

Yes. And I think, when Jimmy Carr pays his accountant, he expects him to give an answer that he likes, so the person who pays usually has a significant impact in the result. That I think might be read into the impact if an independent local authority might be the validating body or other parties.

I certainly don't see that being a problem with it remaining with local authorities, though. There isn't a particular issue. If I could add in and perhaps elaborate on what Andrew said about local development plans et cetera: that is a good opportunity to provide, particularly if you're looking at district heating schemes et cetera—. And perhaps there may be sites that are along the border of a local authority, so that could be where strategic development plans, which are yet to get started in Wales, could really contribute towards providing perhaps regional energy generation development to support the larger developments as well.

I think certainly regulation needs to be there, whether it's, yes, in its current position with local authorities—that makes sense, because it's linked then to the LDPs and to the developments there. If it went on to a national basis or whether it remained at a local level, the issue of funding, and whether it will be funded and sufficiently funded to be effective, or some of the arguments or complaints that it takes time for things to be implemented at a local level, if you multiply that to a national level, you've probably got an even longer queue. I think, generally, and Andy’s made reference to this, house builders are motivated by profit and risk. If something’s going to increase the profit or it's going to make it cheaper for them to build, they'll embrace it. If it's going to—. With the likes of low-carbon initiatives, there needs to be an awareness as to why it's been brought in and the links, and if it adds costs to the developers and reduces their profits, then regulation is needed in order to enforce them to actually deliver to the standards that we want, and not necessarily what they want.

One other point I think I'd like to make is that there was a report from the British Board of Agrément, which identified that certain energy-efficiency measures that were introduced through Arbed on some of the schemes up in the Valleys were determined as being necessary by unscrupulous suppliers, shall we call them, which was payment for the sales representative, for the surveyor, for the installer and for the confirmation and assessment at the end. They were all dependent upon the installation of a particular and specific type of measure being introduced. Surprisingly, there were an awful lot of those. 

On interventions made, there is probably a need for independent surveyors and assessors to really enforce whether that's just the local authorities or others—there needs to be that independence that confirms that the right intervention and the right measure is being implemented and introduced and, at the end of the process, that it has been introduced in the way that was intended and that it is working efficiently.

Okay. Joyce.

On that, and staying on that theme, we've had an awful lot of houses that have been retrofitted with damp proofing and other things that are supposed to make them better places to live, only to find out now that they really are worse places to live, because the methods that have been used—and you've described some—haven't been particularly useful to the tenants. So, moving forward, I think that's created mistrust, I think it's fair to say, particularly in the public sector. So, I'm addressing it to you. How are we going to change that mindset that now permeates the communities that have got houses that are having to be redone because of the really poor work that was done? How are we going to go about educating those people to trust us? Because I'm sure that everybody here has some examples where that has happened, and now people are sort of—all the moisture has been locked into their house, they've got mould growing everywhere, which is a health hazard. So, you know, I suppose the next question to that is—and I suppose that Andrew sort of said it—we need to step back a bit and look at what really is out there, what's beneficial, and what's appropriate to those buildings. So, those are my questions.

I think, yes, what we should do, as opposed to what we can necessarily do—but what we should do is address what can be done to all of the homes in the existing housing stock, and that can be done, to an extent, by type, but it will then need to be down to the individual property. So, we would need to produce route maps, if you will, for the way to upgrade properties so that they are properly considered, so that ventilation is considered hand-in-hand with airtightness, so that we don't seal the moisture in, so that the occupants are actually remembered as the reason the house is there in the first place, so that we can track how far that property can go in terms of its sensible energy measures that will reasonably push it to the point that it can get to. And we do that in the context of what we want to retain by our architectural vernacular and our character and our communities, but we are aware how far we need to push. 

And I think if we do that, then we set up a framework that allows for all properties to know where they can go. There will be some issues over the ones that we discover can't go as far as we perhaps need, and there'll need to be a safety net put in place for them, or some consideration of those that we accidentally blight by condemning to say they'll never get past a D rating or something, and the value then takes a hit. But, for the majority of homes that we can get further than that, I think the route map will help.

I think we then need to remember that we have an existing stock that, more so even than the new build, is maintained largely by SMEs who don't necessarily have the skills or the time or perhaps the inclination—but certainly the time—to be able to gain new skills to deliver things correctly. They are paid on a visible outcome, not necessarily on a thoroughly checked and independently verified outcome. So, as a result, the vast experience from those, getting small-scale works done, is that it's done probably badly, when you take it apart, and it's not necessarily delivering across all the things that it should do. We need to address that, so that perhaps comes back to the independent validation or verification and checking. Perhaps that's before, but I think that self-certification at the end is not really going to deliver the right outcomes if you really do care about whether or not that insulation behind the cavity wall or in the cavity wall is in the right place. 

So, we have quite an array of challenges, but I think we need to start by having a clear map for where the properties can go sensibly, and then we need to address, in the correct order, the sequence of measures, and then those measures need to be installed by people who have oversight upon them so that it's done correctly.

And bearing in mind that 80 to 90 per cent of the properties, as Andrew referred to in his opening gambit, that are currently occupied are still going to be occupied and in use in 2050, let alone 2030. And, from that perspective, we need to get it right, and it's not just a piecemeal approach; we need to get the right people around the table to make sure that the whole process of improving and installing energy efficiency measures, where they are necessary and where they are needed—that we get the right people around the table and establish a Welsh approach that says, 'This is how we're going to do it.' 

Going back to the very first question on whether there is a determination element, I think there's an element of determination due to the fact that you are getting letters from constituents regarding many of the issues—that determines that there is a need for a political will as well as a technical and a skilled will to actually deliver energy efficiency in that 90 per cent of houses. 

Would it help if we had rules on permitted developments that were clearer in terms of retrofitting, so that planners are not coming to the conclusion of does it need planning permission or doesn't it—that the rules were clearer on what retrofits needed planning permission and which ones didn't?

I think the rules are relatively clear. There is always the fall-back, as Neville referred to before, of the lawful development certificates. Those can be used. I think many retrofits, certainly internal improvements to a house, don't need planning permission. I think where there's been the requirement for planning permission in the past on retrofits has been external cladding. That's certainly been something that's required. I remember there was an Arbed scheme that didn't get planning permission for that and it was changing the complete character of the streetscape, so much so that the cladding was coming out beyond windowsills, et cetera, so changing the character quite significantly, and it required planning permission, let alone building regulations, on the quality of that side. So, I think the permitted development is relatively clear at the moment.

I'm not sure it's clear to all individual planners who are making these decisions. I'm sure the chief planning officers all know it, and I'm sure that you know it, but as you know most decisions are done by relatively junior planners who then pass it up the line for it to actually get signed off, but the effective decisions are made by relatively junior planners. I'm not convinced that all of those know it. Are you?

Yes, I think so. I think they have structures within local government. They can go and ask a senior officer for advice on that. The people that are affected in the properties can pick the phone up as well and speak and get advice. Again, if they don't feel that they need planning permission, then they can go for the certificate of lawful development, and then if they don't like the outcome of that, there's always the appeal process et cetera.

Thank you. Joyce.

No, it's been answered.

Okay. On to David Melding.

Thank you, Chair. I'd just like to talk a bit about the skills and capacity of the building sector. This is at construction site level, I suppose. For the last 10 years, since the onset of the great recession, in England and Wales, we've had the lowest peace-time building rate for a century. That means, in Wales, we've not quite built 7,000 homes a year. I think all the projections, if we're going to recover that up to a trend that meets current demand—we could be looking at 12,000 plus a year. Professor Holmans's report indicated something of that magnitude. We may even have to make up more ground because he probably envisaged that we would already be increasing capacity. So, presumably, we have a fairly low skills base at the moment, simply because we're not building much. Do you think that that is a really deep structural problem? Or, within a five or 10-year period, could we be getting back up to a level of house building that we saw in the more productive years that preceded the great recession?

No, I don't think it's a deep structural problem. There are two related more structural problems, but the actual supply of skills to sites I don't believe is actually the root of it. There are two more important problems that relate. One of them is construction sites' perception in terms of persuading people to come into construction. It rains outside. It's sometimes cold. These things are off-putting compared to a warm and cosy call centre or whatever it may be. So, construction needs to work harder in that aspect to attract people in. But actually, delivering the skills is not a problem. The various 'biblical' skills and the more technological and newer skills are all fairly well established trainable courses that don't take a remarkably long time. If there is the interest in coming into construction, people can do it.

I think the problem we see in terms of sites is back to the oversight. We do have a structural problem over the belief that we as a nation—as the UK nation—have decided that oversight costs too much and that we can get rid of that, save ourselves a few pennies, and we'll still get exactly the same quality. That's not true, and that's where I think that what we see on site as a skills problem is often actually an oversight problem. The skills are capable of doing what they are asked to do, but if nobody checks, they might knock off early. 

Are there any different views, or would you say that it is within the realms of practical policy development to, in a 10-year period, aim for a much higher level of house building, of which more, we would hope, would be carbon efficient or even neutral?

I think, probably just expanding from what Andrew said there, the skills within the building trade cover a whole remit. There's not a deficiency in all of them. There are certain skills that perhaps are needed, and that is where the gap is. But to have a general statement—'There is a skills gap'—seems to suggest that, if we wanted to build 12,000 homes we haven't got anybody capable of creating with bricks and mortar.

What sort of timescale would be involved to create a workforce that could build up to 12,000? I suppose that that's what some policy makers are struggling with. You can't do it next year, obviously, but does it take 10 or 20 years? What's reasonable?

It's on the periphery of what I might call my expertise. The site skills themselves are not the longest lead-in period. The design skills, the planning skills: these are longer lead-ins. So, to increase the capacity, you need to increase the capacity across the whole of the system. So, to get good planners in, to get good building control officers in, that takes perhaps longer. But again, that's, to some extent, through back to the oversight point that we need people with enough experience to know when it's being done right and know when it's being done wrong. 

Then the second question, to develop this issue of skills—. In terms of retrofitting and new carbon-efficient buildings, they are often modular and use very modern materials and different skills—perhaps not so much bricklaying, though I dare say that will still go on—but more mixed materials and higher technology, and construction off-site. Do these present any great problems? Or, in your view, if you're interested in a career in construction, you move with the times, and people quite like being trained and developed in new techniques. What would your view of that be?

I couldn't comment on the construction side, but certainly from a planning perspective, I think planners are open to new types of construction method, et cetera. Whether councillors are willing to go along that route if it goes to a planning committee decision—I mean, they might be. It probably varies, but certainly, planning officers would be open to that side of things.

But most planning decisions are devolved to planning officers, aren't they, in most local authorities?

Yes. Certainly a high percentage, because they are small developments. The majority of decisions are small householder extensions, when you are talking about numbers of applications. Certainly, when when it gets to 10 or more houses, it goes to the—

I suppose that what I'm driving at is that we don't face a current workforce that is obdurate and reluctant to engage in new practices. It's like any other workforce out there. With good leadership and training and appropriate rewards, it's not mission impossible.

And then, what's your view of—I suppose for planning, it would be higher education, but FE is involved in construction skills. A recent bit of information that I had from the local college here, Cardiff and the Vale, is that they have very high demand, actually, for their construction courses. I don't know if that's the same around Wales, but it does indicate to me that there is an appetite in further education to ensure that they are able to supply these courses and that the evidence is that there's probably going to be a good level of response from people who are seeking to enter the labour market—if any of you have views on that. Am I being too sunny and optimistic or—?

My limited involvement—. We're involved with the Construction Wales Innovation Centre initiative from University of Wales Trinity Saint David and the partner FEs and the CITB, who have put funding in to deliver training for the construction industry through that mechanism. They're building a new scaffold training centre; we've not had one in Wales—one's being built in Swansea. They are delivering courses across Wales, and they have got good uptake and are hitting targets. So, I'm not aware of any shortfall and I certainly don't think that the new skills that we need for potential new forms of modular, off-site or whatever other forms of construction we may choose to favour—they are not rocket science.

Thank you.

Jayne.

Thank you, Chair. In their written evidence, RSAW and WLGA raised the issue of a quality mark for energy efficiency, and the amount of confidence that could give to homeowners and to occupiers. Is this an area where you think that Welsh Government could act now?

Yes.

Not in itself a quality mark just for the sake of a quality mark. Any quality mark needs to encourage good practice and recognition. And if I go back to the issue that I mentioned about mortgages, the mortgage issues, if there are—clearly, if an energy efficiency quality mark would enhance the opportunity for buyers to get mortgages, improving it in terms of the buying market, then that is what a quality mark should be used for, not just, 'Aren't we good? We've got a mark' on the side of the building, or on the bottom of headed notepaper that says, 'Aren't we good? We've got a quality mark.'

I'll expand on my 'yes'. [Laughter.] Yes. I think a quality mark needs to actually be trusted by the people living in the home so that it does what it says, and that involves a level of checking and oversight to ensure that it has been done correctly and that it was the correct thing to do. We had this, in a way, with the innovation I worked on on mortgages. We were working with Principality Building Society and Nationwide Building Society and others, and the concern was: 'If we lend on this, how do we know that it will be done?' At the moment, some lenders are unsure whether or not the additional lending goes on those improvements or actually goes on a holiday somewhere, and they don't necessarily need to know at the moment, but, if they are taking the energy benefit into account when they're lending the money, they need to be confident that they're getting that energy benefit for them to make a prudent decision over lending. So, we need to de-risk that process, and the way to do that is to actually introduce some concept of quality into what the construction industry delivers that isn't currently there and, unfortunately, that's not the cheapest solution. 

And, just following—. My last question is: do you think the private rented sector should be brought under the Welsh housing quality standard, and do you think that standard is ambitious enough to deliver high energy efficiency housing? It's not as succinct as your last answer was.

As my last answer, okay. The Welsh housing quality standard perhaps would benefit from an update in a few areas, but the aspiration of a quality standard is a good thing. I think you would need to have a real look at the impact of whether or not residential private rental could be encompassed, given the nature of the stock that currently exists. It's likely to lead to a lot of that stock falling either non-compliant or just falling out of the rental market because it simply cannot be made compliant with the Welsh housing quality standard. I think in private rental, actually, we have been handed by the UK Government—or by Europe, in truth—a reasonable mechanism through the minimum energy efficiency standards. I think enforcing that properly and perhaps encouraging a ratcheting up towards the 'C' that's targeted for 2030, maybe sooner than that, would be an existing mechanism that could be used. It's not as broad as the Welsh housing quality standard in terms of what it covers, but, in terms of the drive to low carbon, that would well be one mechanism you've got. 

Ok, thank you.

Could I add—? We don't really have a view on the kitemark, although I suppose it's—. How robust that kitemark is—it will be fine when the house is first constructed, but, 10 years down the line, if it hasn't been maintained, do you have to do reapply for the kitemark, et cetera? But also, not to put all the eggs in one basket, if you like, for a kitemark in—. Don't forget about how you design a site throughout, bringing in district energy systems, et cetera, which would probably be very difficult to build into a kitemark, but those could be where you have more energy savings and more efficiencies on a larger site, or just-a-few-houses site.

Chair, I think my last question has been answered. 

Okay. Can I raise—? You said about houses may drop out of the private-rented sector, but, if they drop out of the private-rented sector, they'll move back into the owner-occupied sector. That's not necessarily a bad thing, is it?

We have fewer mechanisms to improve the quality of homes in the owner-occupied sector than we do in the private rental sector, so, from the energy perspective, that's a bad thing. It's the hardest sector to get to. For all sorts of other reasons, it's a very good thing, but, from the purely energy answer, we have fewer mechanisms to change those homes; the hardest sector to get to is the privately owned homes. Everyone loves their wallpaper.

And the last question is: if you could tell us there's one thing that could be done that would improve energy efficiency in Wales, what would you ask for?

High energy prices. [Laughter.]

I think we know what category that response is in in terms of political will. [Laughter.]

The unpalatable truth.

Yes. It's not something I'd wish for, certainly, and would cause all sorts of other problems, but I think it's people understanding the impact of their energy use.

I think I'd echo Roisin's wish, but, accepting it's a real answer, I think I would probably say that measures being delivered correctly and installed correctly in the correct place: the correct measures, in the correct place, correctly installed. So, actually doing what we say we'll do, as an industry, would be what I'd wish for.

I think we need to be looking at things from a holistic perspective in that just low-carbon housing isn't going to meet the carbon budgets, active travel, in itself, is not going to, flood mitigation is not going to, infrastructure is not going to by itself, but the whole, holistic approach to low-carbon energy efficiency, and there's already a challenge in the Well-being of Future Generations (Wales) Act 2015, 'a more prosperous Wales', which is, effectively, an innovative—not easy to say—and low-carbon society. And there's the challenge for everybody.

David.

If we've just got time, and I apologise if this takes you a bit beyond your own areas of expertise, would you like to anticipate a technological breakthrough in terms of a lot of these targets we're setting in a generation, really—2050, I think, was one of the main targets we have in terms of carbon neutrality? My thought would be, in microgeneration, solar offers a lot of opportunities where wind, obviously, doesn't. Unless you live on a farm or a large detached house somewhere you're not really going to put your own windmill up. Or am I just flapping around trying to find panaceas? But it seems a lot has happened in terms of the development of solar and even in our occluded climate it's becoming more viable, but—. There we are, shoot me down if you think it's wrong.

I would say, yes, there's a lot of potential energy from the sun and the various means that we can harness that are, obviously, renewable and therefore the way to go. There's issues over when that generation occurs, and I think if you think of this as an energy problem, or that aspect as an energy problem, rather than a problem around houses, if you were asked to solve that as a purely energy problem, would your solution be to give hundreds of thousands of unskilled people who have no time to really worry about it a little tiny bit of generation that is inefficiently converted to the grid, and then put that into a one-way network that’s intended to push power out rather than shift power around in a two-directional fashion? I suspect that might not be your answer. Your answer might be, actually, we need to introduce some scale to this, we need to introduce some foresight and infrastructure planning that allows us to understand where our homes are, where our demands are, and where our supply opportunities are. And then we need to introduce the right professional management structures that will actually generate and control the systems and maintain them for their life, and probably even have some sink funds to ensure that, at the end of their life, they don’t sit useless in a field or on a roof, but are replaced and upgraded as technology enhances.

So, if you think of it as an energy problem, I think the answer you come up with might be different to the answer that we might currently be thinking about.

Any more hopeful comments?

I would suggest that it’s more on a district level that you need for your energy generation, and look at the savings within individual houses—that would be the way I would go. So, reducing our energy use.

There are plenty of examples in Germany of the Energiewende system, whereby, when new developments and new houses are being built, there is a requirement that there should be renewable energy generated from them, whether it is solar panels on the roof or whether it's glass panels on balconies that are photovoltaic—there are wind turbines—such that there is an element of self-sufficiency. Perhaps if you extend it to a new development, that should be energy self-sufficient, or as near to energy self-sufficient, so that it's not placing any more demand upon coal-fired power stations, fossil fuels in general—that it is fit for the future, then, and not a further demand upon the already limited capacity of (1) the National Grid and (2) the generation that is not low-carbon. 

Thank you very much. We've gone over time, but I thank you very much for the advice and information you've given us. It's been very helpful and will certainly inform our final report, so thank you very much for coming along.

Thank you.

We've got to note three items of correspondence.

Could I just ask, on one of them—?

Please. I was going to—. Yes. Do you want to raise it in public or in private?

It's okay to raise it in public, it's not—.

Yes, fine.

It's the letter on bovine TB. We asked for a report back, I think in a year's time. The response from the Cabinet Secretary, I just want to be clear what it's saying, because it sort of suggests that she'll report back in a year, but that she will decide when the year starts. [Laughter.] If you see what I mean. So, I'm not quite sure if that's quite sufficient for our needs, really.

Is she going to design a new calendar? Is that what she wants to do?

Well, she's kind of suggesting that.

She could go pre-Gregorian [Laughter.]

It could be yes. The Julian calendar is all wrong.

We will seek further clarification.

Yes. I just want to make sure that she doesn't decide, 'Well, we haven't had enough data'. Basically, she seems to be suggesting that we don't have enough data, but 'When I get enough data, then I'll start the year'. Maybe I'm wrong, but—

We'll ask for clarification, because to me, a year starts from the date you write the letter.

I was expecting that we'd want something back 12 months after the actual programme had started.

I would agree. I have lots of questions from this reply, but they will be mostly asked in Plenary.

Well, can I move a motion under Standing Order 17.42 to resolve to exclude the public from the meeting for items 6, 7 and 8? Agreed?

Agreed.

If no-one objects, the meeting is now in private.