National Assembly for Wales

Bore da. Good morning. Can I welcome all Members to the meeting? There are two Members who aren't present yet but we're expecting them to come later. Can I just remind people to set their mobile phones to silent and turn off any other electronic equipment that may interfere with broadcasting equipment? Any declarations of interest? No. We've had no apologies or substitutions so we are expecting two more Members to join us later. 

Now can I welcome the witnesses? Can I ask you to give your name and job title for the record? If you'd like to make a short opening statement, you're welcome to; otherwise we'll go straight into questions. Take your pick. We'll start from the left. 

Hello, I'm David Thorpe. I'm patron and founder of the One Planet Council, and I also work with the Calon Cymru Network and I'm a lecturer in one planet development at the University of Wales Trinity Saint David, Swansea, in the architecture department. 

Hi, I'm Dr Jo Patterson. I'm from the Welsh School of Architecture at Cardiff University. I'm a research fellow.

I'm Chris Jofeh. I'm a director at Arup, just down the road from here, and I'm Arup's global buildings retrofit leader. 

Can I thank the three of you for coming along today? If I can perhaps go to the first question, what action should the Welsh Government take to support the decarbonisation of new build housing and what should they be doing to deal with existing housing stock? I realise they're two different questions in that it's easier to deal with new build than it is to retrofit. 

Shall I go first?

Yes.

Okay. I'll take the retrofit first. Firstly, I think the retrofit strategy should take advantage of triggers. Upon resale and when other work is being done, there's an opportunity for a whole-house refit to the best available standard at reasonable cost, perhaps approaching Passivhaus as far as is practicable. This may need a change to planning conditions for home upgrades. Retrofits should be mandatory at these points, supported by standards and enforcement.

There's a need also for the promotion of the value of investment and challenging of the financial barriers through more demonstration projects, with dissemination of the energy and cost-saving results. This means that a market needs to be created for investors in energy efficiency, as there is for energy-generation plants. That is being supported by projects such as the investor confidence project.

Therefore, there needs to be support for improved government incentive mechanisms and financial packages and credit streams, the development of investment support and a matchmaking support mechanism and service, and support for builders and retrofit companies by giving them the ability to successfully approach funding mechanisms with project investment proposals that are of bankable quality.

Councils have a role, as well, to play to encourage street-by-street retrofits. We need to ratchet up efficiency requirements for landlords, and the present standard of an E grade on an energy performance certificate is just not good enough. We need full value added tax relief on decarbonisation measures applied to new and existing housing stock—that's insulation materials and appliances, using renewable energy, doors, windows, and so on.

Now, moving on to new build, I think we need an introduction of the community right to build, with a low-carbon obligation. We need, again, to promote demonstration of cost-effective projects. And I would like to remind you of John Prescott's project, probably about 15 years ago now maybe, when he issued a competition for developers to come up with cost-effective low- and zero-carbon homes. We need to reduce red tape and the costs of other requirements relating to the creation of new houses: for example, to petition Westminster to devolve, reduce, or eliminate the community infrastructure levy for affordable housing contribution requirements, especially for one-off houses and developments of several homes. And, for one-planet type developments, in the open countryside, I'd like to suggest that we exempt these low-risk homes from the requirements of installing sprinklers, in, say, one and two-storey houses. And we should reintroduce the zero-carbon standard for new homes that was scrapped by the Tory Government.

With regard to existing housing stock, I feel that there's a real need to look at the planning barriers that are preventing new housing being built at the moment in Wales. Obviously, this needs to be done in a very careful and managed way, but I believe that one of the blockages behind that is staffing and expertise in planning at the local authority level to enable sensible and applicable developments to take place that are suitable to their context. I think there's a real need to support the skills sector to enable the skills, because, in the past, historically, heating and hot water and delivery of technologies was all mainly reliant upon a very common system, the gas boiler, whereas this is really changing now and so there's a much wider range of skills that are required within the supply chain, particularly within the installer sector. And therefore the skills need to develop to accommodate, and the whole construction sector needs to develop to appreciate this.

With regard to retrofitting, I think it's probably a lot more important than the new build sector, because people are living in quite poor housing across the whole country just because of the quick development at the end of the late nineteenth century. And therefore there needs to be a real understanding of what building stock we have at the moment, and that understanding needs to be at quite a detailed level so that really appropriate and holistic retrofit programmes can happen that will then impact on the quality of life and well-being right across the board, which includes education, it includes well-being and health, and those retrofit programmes will really have an impact across the whole population of Wales.

On new build, I think we've suffered in recent years with ambitions being stated to raise standards faster than England and then being dropped again under threat from the housebuilders that, 'Oh, well, we won't build in Wales, we'll build in England.' But Wales has got control of planning as well as control of building regs. So, what I'd like to see is a trajectory for building regs out to 2050 to give industry some confidence that they know what's happening, and then that the planning is configured so that homes that meet or exceed the highest targets set are de-risked in the planning process. I think that would compensate for any additional costs in delivering the new technology or the new way of building that's designed to reduce the carbon. So, it's those two things—work the building regs and the planning system together, I think.

I agree with the previous speakers—

Could you explain what de-risking is?

Yes. At the moment, you put a scheme in for planning and you really don't know how long it's going to take to be approved and whether it's going to be approved. And that is a risk that carries a cost, which deters people from building as much as they possibly could. If they knew that if we met a certain standard—a certain high standard; it wouldn't just be nodded through, but it would be fast-tracked and have a greater chance of getting through—and also you'd have a decision in a short finite time, I think that would encourage house builders to build here. Whereas just raising the standards, I fear, will discourage them from doing so.

The big one for me is retrofit. We've got 1.3 million homes in Wales. Over a quarter of all Welsh energy consumption is in homes, so we need to do something substantial. If we're to hit our 2050 targets, Wales has got to retrofit 40,000 homes a year until 2050. So, we've really got to upscale what we do. I think it starts by tackling fuel poverty, which is a scourge in Wales. Last summer's official figures, which are probably an underestimate, say that 300,000 homes in Wales are in fuel poverty, and that's actually disgraceful. We shouldn't be doing that. Now, Arbed and Nest are trying to tackle that, and they're exemplary, but they're too small. The scale is insufficient. By my figures, and also by figures of two other organisations who've looked at it, if Wales were to eliminate fuel poverty in 12 years—and it's supposed to do it by this year, under statute, but, if it decided to do it in 12 years, that would cost £150 million a year. So, the level of investment needs to be ramped right up, and that's a big difficult political decision, because, if Wales is going to spend £150 million on that, it can't spend £150 million on something else. But it's very important (a) for reasons of social justice, (b) because it starts to create the demand at scale of the retrofit industry, which begins to encourage people to think it's serious and to invest in new developments.

There are several other things—I've got a bit of a list here, I'm afraid, but bear with me. Wales is rich in small and medium-sized enterprises and micro enterprises. They are often a householder's first port of call for energy efficiency. Research has shown that quite clearly. The repair, maintenance and improvement market in Wales is currently worth over £1 billion a year. So, if we were to work with the SMEs and micro enterprises to help them, guide them and inform them so that they provided all the energy efficiency advice that householders are willing to accept, you could perhaps divert half of that—£0.5 billion a year—into residential energy efficiency improvements, and that would be 75,000 homes a year, if it happened. That's not going to quite happen like that, but there's work to be done there.

I think we need high-level planning guidance on what measures are acceptable that change the appearance of homes so that schemes can be pre-approved—if you do this, this and this from the pattern book, if you like, you don't need planning permission, because it's already approved. That would accelerate things.

There's widespread experience at home and abroad from devolved administrations, local authorities, housing associations on what constitutes best practice in residential retrofit for energy efficiency. That's not just technical, but managerial, funding, procurement, project management, delivery. But nobody's ever brought it together. Wales could host such events, which actually say, 'Right, what is best practice in this, in this, in this and this?', because then best practice could be delivered in Wales, and I think that would be good.

There's a lot of work to be done on funding. There are very good examples from Germany, from the Netherlands and from the Picardy region of France, actually, on how you fund, and also from the Swedish city of Gothenburg. I think Wales can learn a lot of lessons by discussions with those groups on how you win money for public funding schemes, and also how you make it easier for private home owners to do the work that's necessary. Eighty-four per cent of all homes in Wales are privately owned, so it's important to tackle that group.

I think the very first thing, and this is the last on my list, that Welsh Government needs to do—it likes task and finish groups. I think it should get together a group modelled on the way the Dutch did it about five years ago, which brings together organisations and people from all over, not just the construction industry, because it's a much bigger problem than that, and give them six months to say, 'Right, how do we achieve a step change in what we're doing in Wales?'

Okay. Thank you. Dai Lloyd.

On the Passivhaus question?

And new builds. 

And new builds. I think we need to get there gradually, and I think it needs to be in a trajectory that's made public before the standard is enforced, and I think it needs to be matched by things in planning that will help de-risk it for the house builders we're asking to do that.

Good.

I'm not sure I agree that the Passivhaus standard is the right standard. I just think that there needs to be good quality housing that needs to be appropriate for its context, and Passivhaus isn't always the answer to that. I think that sometimes there does need to be a broader consideration and I think they could be dangers if there is a Passivhaus standard set. Sometimes that might not be the right option for where the housing is being constructed.

What would be the issue with a Passivhaus standard from your point of view then?

I think Passivhaus limits the addition of technologies in certain conditions because technologies aren't part of Passivhaus, and if a technology can bring your carbon emissions down significantly even more, but you're still achieving Passivhaus levels, then you're not achieving as much as you could.

Okay. That's fine.

I do agree that it's problematic, Passivhaus. There are people who love it and people who do think it's a bit too perfectionist. It's not a one-size-fits-all solution. I know of quite a lot of examples of new housing that is almost Passivhaus and therefore much cheaper to build, but performs just as well, because part of the problem with Passivhaus is that the occupants of the building don't actually necessarily know how to live in them, and post-occupancy studies show that they actually consume more energy than their not-so-Passivhaus neighbours, because they're opening windows and things like that. So, there needs to be more awareness of how people live in buildings and that needs to be built into the way that they're designed and constructed. My favourite example here is Western Solar, Pentre Solar and Tŷ Solar in north Pembrokeshire, where Glen Peters builds to a near-Passivhaus standard, but he adopts a kind of eco-minimalist approach so that, if it works, he uses it. He aims for Passivhaus, but he doesn't get very uptight about it and that means that there's flexibility for the occupants as well and it's a friendlier kind of environment in which to live.

Okay. Thanks.

That takes us on to Gareth Bennett.

Thanks. Could the panel actually just clear up exactly what a passive house is?

It's—

Sorry—do want me to give you the technical specification?

Well, possibly not that, but it's a new concept for me. I just want us to all be clear that we know what it is.

It's about the overall energy use per square metre, to bring it right down, and it's also about airtightness, which is measured by the number of air changes per hour. So, you need a blower door test to measure that. That means that, in practice, you have to do things like control thermal bridging very rigidly; there's no thermal bridging allowed where heat can travel from the inside to the outside or vice versa. It has to be very airtight and ventilation is, therefore, controlled. All aspects of energy use are also minimised as far as possible and the heat is captured from things that happen inside the house—the occupancy, the technology inside the house and any solar energy that's captured—but mainly it's about superinsulation.

Right. So, you seem to have differing views on whether or not we need to adopt Passivhaus standards. You were more enthusiastic—

Enthusiastic about what it achieves. I don't think it's the only way of achieving it. I'm sorry if I wasn't clear about that.

Right, okay. So, what does the panel think are the standards Wales should actually be aiming for, and why, from the variety of different options like near-zero carbon, Passivhaus, near Passivhaus, energy positive? What should we actually be aiming for as the standard in Wales?

I think zero carbon, in operation, is a reasonable and achievable goal. It may, in certain circumstances—depending on location, orientation and surrounding buildings and so on—be possible to be energy positive and that should be encouraged, but I don't think that should be required.

Okay, thanks. Would you like to give your view?

I would agree with that, yes. I think the context can certainly have an impact. If a house is in a close valley and the climate is not positive, then that can really impact, and make it virtually impossible to achieve Passivhaus. 

Okay. Thanks for that. And David, what do you think?

I think trying to get zero carbon over the entire life cycle of the building is the way to go. I mean, in one planet development, the planning guidance says that that's exactly what these buildings have to be. So, you look at the entire life cycle, from the materials, the construction process, the occupation process and taking it down at the end. So, there has to be a plan for the building in that context. That is a planning requirement for one planet developments.

Thanks.

I'm very interested in terms of new development, et cetera, but if you look at older houses—. I live in east Swansea. I don't know if you know Plasmarl, which is where I was born. If you go into Plasmarl, you will see a number of old houses, mainly privately rented, which have ill-fitted single glazing. Shouldn't we be looking to do some easy, quick hits?

No, I think we're wasting money on easy, quick hits. There's a Welsh housing quality standard that's in place, so really—

But not for privately rented—

No, but I think the private rented sector needs to come into the Welsh housing quality standard so that they're achieving that. I think that should happen in some shape or form. I think there's a problem with going in and retrofitting one problem and then going back and retrofitting another problem, because quite often there are conflicting architectural issues; once you've retrofitted the windows and then you go in and retrofit something else, you spend double the amount of money going in and doing the work. Whereas I think if you do a whole-house approach carefully—. And also, doing the whole-house approach allows for quality—the work to be done in a well-thought-out and careful manner. And it also allows for the work to be inspected, because it's all right putting something in, but has it been put in in a well-considered and well-applied approach? On a quick-hit basis, that sometimes doesn't happen.

Yes, I'd support that.

On this issue of retrofitting—because I know most of our questions are just going down, you know, building standards and focusing on new builds—in the 1970s and the 1980, when on all the slate roofs on these terraced houses the nails started to perish, there were enveloping schemes. Anyone who can remember those decades—you'd see whole streets with scaffolding from the start of the terrace right along, and it was all done like that. Nearly all those houses were in the private sector, but there was basically a grant system. Are there any retrofit schemes that would be done on a community basis like that? Because if you're going to hit something like 40,000 a year, that is the league you're in. So, can you illustrate some of the retrofitting at mass possibilities?

It almost certainly is best delivered on an area basis, so that the building team can move through and work at a whole terrace rather than pepper-pot it. It's quite hard to think of examples where that's been done at real scale. Scotland's starting to. 

I mean, the Arbed scheme, obviously, is probably one of the biggest— 

Well, tell us, first of all, what you'd be doing. Would it be mostly looking at the roofs and the exterior of the building? What would we be trying to do?

You'd be improving the whole envelope of the building, I think: definitely walls, windows, roof or attic, certainly. You'd be putting in controls that switch things off when they don't need to be on. As the cycles of replacement happen, you'd be replacing old, inefficient equipment with much, much better rated equipment that consumes and demands less energy. So, there's a whole raft of things. The big one is, I think, the heating of water and space. That starts with making the building a much better insulated box.

That's absolutely right. There are cases of councils in England—I think Nottingham City Council is one of them—that have done exactly this, with their own council-owned properties. So, you'd see entire streets with scaffolding all the way down.

So, this is fundamentally an insulation approach, rather than generation.

Yes, it's looking at the airtightness and superinsulation of the building envelope.

Okay.

I think if you're replacing the roofs, though, the cost of putting an integrated photovoltaic system into the roof, which would allow you to generate quite a significant proportion of the amount of energy being used by the householders, would help towards the decarbonisation targets. We're undertaking some retrofits at the moment and we're including batteries into that system as well. So, we're not only tightening the fabric of the building but also including the integrated PVs so that where you're replacing the roofs with PV panels you don't have to pay for the cost of the tiles. And then we're storing the energy as well, which will help to reduce fuel poverty by enabling householders to generate and store their own energy.  

And when you were talking about a £150 million per annum programme, this is what you had in mind, is it?

That's based on an estimate of what it would cost to tackle the 300,000 homes that are officially classified as in fuel poverty, and that would be for 12 years. Have you heard of the Dutch scheme called Energiesprong? It's being brought over here but it evolved in the last decade in the Netherlands. Essentially, what they do is put a tea cosy around the house—a high-tech tea cosy—but as part of that, the new roof that goes on top of the old roof has photovoltaic panels integrated into it from the start. So, it really doesn't matter which way the building is oriented; it will catch some sun. It's quite expensive at the moment, but what the householder buys is not a thing; it's an energy performance guarantee for 25 years from the people who supply it. So, they're motivated to come back and fix it when it's not performing. 

We expect they'll be coming in to see us in the next few weeks.

I think the warranty, or the guarantee, is one of the critical things, so that the householder feels they're not left with something that they're unfamiliar with. I think that guarantee is virtually essential.

Thank you. Simon. 

This is an incredibly complex field, it appears. We've got all these different standards led by—you know, different countries are experimenting with different ways. We have, in the past, spent a lot of money in Wales certainly on enveloping schemes, going way back, but also on home maintenance grants, which, back in the day, were not at all related to energy efficiency but we wasted a lot of money then. Just a general question—do you get a sense at all that Government sometimes is reluctant to invest because you're always chasing the next best thing?

Yes. It's also a huge and difficult target to shoot—just eliminating fuel poverty, which all the nations of the UK nations are bound to do, has proved impossible for them to do because they, so far, have not felt able to commit the funds necessary to do it. But it is a solvable problem. The benefits that flow from it—from stimulus to the economy, reduction in demand on the NHS and bringing people into employment—all of that, if you wrap in all the co-benefits, is tremendously good all round.

I would disagree with David on the VAT thing. I think we need to design the scheme that maximises tax revenues for Treasury because that's the one they will support. I think fighting Treasury over VAT is like tilting at windmills, unfortunately. I understand the logic behind it, but they'll never agree so you might as well not have that battle. 

Well, we'll also have control of our own stamp duty, or land transaction tax, in April, so some of us are interested in how we might use that in Wales to encourage some of these developments as well. 

That could be, with some other measures—

You can have a carrot-and-stick approach there, certainly, so that's something to bear in mind. The reason I asked that opening question was just to—. You know, over the years, I've seen several examples—. I've been taken to see, 'This is the latest', then it's the next latest. It was Pentre Solar last year. In each and every circumstance, they were quite local developments or developments led by a housing association in a particular area or whatever and, each and every time, one of the things that came up was, 'Well, how can we do it elsewhere?' Because we don't have the supply chains, we don't have the companies that are just doing this—whether it's a tea cosy or not—but we simply don't have that embedded. Within two or three years, a government priority will change, the investment will switch slightly—it will still be in the area but it'll switch slightly to something else—and then you've got to recreate or create a whole new set of supply chains to deal with that problem. There hasn't been that consistency. Where are we, in Wales, compared to the rest of the UK and then internationally—I suspect I know the answer to this but I'd like you to tell me—in terms of our supply chains and the robustness of that to deal with these challenges?

I think Wales is fine as far as supply chains are concerned. What Wales suffers from is being part of the UK and subject to UK national Government policy flip-flops—

There I would agree with you. 

—which have happened every three years since the year 2000. Nobody's going to invest against that background. So, with the powers that Wales has, I think it has the ability to create some certainty about the future in Wales, which people may be willing to invest against.

You said—sorry, David, but you said you were okay about supply chains on the whole.

No, I don't feel okay about supply chains. I think we need to create a better market for the kinds of supply chains that we want to see happening. There's firstly the issue of skills and training, which has been raised already, and the fact that anybody can set up to become a builder, unlike being a plumber or an electrician, without having a qualification. Something has to be done about that. Certainly, I'd like to draw your attention to a model that's started in Germany and Austria and is spreading throughout the world, which is a Baugruppen model. This is one attempt—[Interruption.] Sorry?

Could you say that again?

It's Baugruppen. It actually means—. It's a community housing movement. It means 'building group', literally, in German. They work in partnership with local authorities. In Berlin, for example, 5,000 houses, 25 per cent of the city's new housing provision, have been built this way. It works partly on the basis of setting a competition for builders and for architects and developers and so on, with certain standards. They know that the standards are not profit led, the developers are not allowed to make more than 15 per cent profit. Instead, there are other conditions, and a lot of these are social conditions. You could tie these to, for instance, the Well-being of Future Generations (Wales) Act 2015 in Wales. This allows the people who want to compete for this to bid, and then the chosen winner is allowed to then develop the project. There are many other useful aspects to it as well in terms of building communities. But, that's one way, having competitions that actually stimulate the market for that kind of build that you want. That's a good way forward, I think.

Is that replicable in the private housing market mix that we have in Wales, and the land tenure and all the rest of it that we have?

I think it would have to be done in partnership with the local authority. In Germany, they make the land available.

Okay. Just to finish off—. Sorry.

Do they charge a preferential rate for the land? Is that part of the deal?

Yes, that is part of the deal. I think this is an issue as well that we need to address in terms of affordability—the cost of land.

Because a lot of schemes are just not feasible because of the cost of land.

Exactly. It's the elephant in the room, in many ways.

Sorry.

No, no. Just before we may go off on that particular path, just to finish on the supply chains, clearly, swapping and flip-flopping on policy does not help supply chains. It doesn't help establish them, it doesn't give people confidence to invest in something they would be developing—

And, the cowboys come in.

Yes, we've seen that happening with cavity wall insulation. That's the obvious example of that. There was a great supply chain, but it was all rubbish. But, how do we get the supply chain for what we've been talking about this morning? Is it something that Welsh Government should actively invest in to establish them, or can it naturally flow as long as you've got a consistency of policy and investment? Which is the more important?

I think Arbed was a really great scheme. I think it was a real leader in retrofitting and a blanket-scale approach. I think there was consistency starting to build with that, but then it stopped. I think, if Arbed had continued to roll rather than having a stop-start situation, the people in the supply chain would have realised why they were doing what they were doing and then started to expand their knowledge to other areas within the technologies as well. Whereas, where they come in, when people have a small scheme and they need to work on external wall insulation, external wall insulation is all that they're focusing on. They don't see the bigger picture; all they're doing is fitting external wall insulation. Whereas, I think if people see the big retrofit programme, they'll always be looking then to see where things are moving to. So, schemes like Arbed would consistently help to encourage that thought process. 

Jayne Bryant.

Thank you, Chair. I just want to move now on to perception. Dr Patterson, you've suggested that there's a perception that householders don't want to change. Indeed, we've had some written responses suggesting that there's little appetite for low and zero carbon Passivhaus standard homes. The construction sector has said that nobody will buy them. How would you respond to that?

Well, I was project manager for the Solcer house development, but we're also doing a lot of other retrofit work, and working with householders, from a broad range of the public. From the Solcer house survey, we had surveyed 400 people, and, out of those, 90 per cent of them were extremely positive about the Solcer house, and just the layout and the aesthetics of the building as a whole. I've done some in-depth questionnaires and surveys with people, and everybody wants to change, they want things to change, but they're just not sure how to do it themselves, and if the market isn't providing this change—. But, from my personal experience, I think people are willing to have the change, but we can, yes—.

How do you think we can address the perception, then? What steps do you think we need to take?

I think it's through demonstration and showing people that these buildings don't need to be the same, but they will also perform, so that they can live in a way that they would hope and expect to, but also provide them with a better quality of life and well-being.

I think it's also about making it the socially normal thing to do. If you're a member of the middle classes, then having a new kitchen put in is a socially normal thing to do, and you know where to go, and you have an idea of what it will cost, and you come up with a scheme that's affordable. But when it's retrofit, it's very difficult; the outcome is very uncertain; it's likely to cost twice what you think; and it's, justifiably in many cases, got a bad reputation. So, there's an awful lot of things that need to be done to correct that, and to help embed it as a socially normal thing.

Mortgage companies are starting to look at what they can do to favour low-energy homes. For example, there's the stamp duty nudge. There's good evidence from, actually, a study in Wales, which was preceded by a study in England, which was preceded by a study in five western European countries, that said that, other things being equal, an energy-efficient home is more valuable per square metre, sells for more per square metre, than the same home, but less energy efficient. But, that's not widely understood or promulgated. But the evidence is clear, and the Welsh study, about two, three years ago now, absolutely confirmed that in Wales.

Isn't there also evidence that, in the rented sector, where homes have been renovated to a high standard like this, there are fewer rent arrears and there is less maintenance required, and fewer complaints as well?

Yes. RSLs confirm that, don't they?

It's about telling the story a bit better, perhaps, is it, and learning from other countries, maybe, about how they've tackled it?

Yes. I think maybe other countries are seeing things in their own backyard, really. If the streets are done in a small town in the Valleys, and other people can see that, then I think that's—people's worlds are quite small. So, yes.

Okay. Dawn Bowden.

Thank you, Chair. It was just to follow up on Chris's point about the value of homes, and whether the studies that you were referring to, or whether there's just general evidence out there at all, that, since estate agents have been required to, or when you're selling your home you're required to, have an energy-efficient plan, aren't you, with your selling pack, has that made a difference, do we know, in terms of people's choices of the houses that they buy?

I don't know. That's a good question.

I just wondered if that was part of that study, I don't know.

It's certainly raised awareness, I think. It's quite hard to buy a home now without an energy-performance certificate. I mean, there are still estate agents out there who poo-poo it. So, I think it's trickling in to the collective consciousness.

It would be interesting to see if we could get that sort of information—whether it actually does make a difference to what people choose. Thank you, Chair.

Okay. Anyone else? Joyce.

You mentioned, David, Glen Peters—I've been to see that; I went when it was being built. But you mentioned Berlin, and the housing association. So, I suppose we have to start at the top. Because I was involved in an inquiry last year, or the year before, and there are very clear messages in Germany that they will only use renewable energy, primarily. So, the driver comes from the top. The other thing, of course, is local control of the network that supplies energy to that local market. So, those are two major differences that then drive that energy efficiency within the production of homes, and how the surface energy that is often generated by the houses that we're discussing—because they ought to be able to produce some surplus energy—is then used and utilised by the community. So, have you done any work in that direction, because without the starting points, without a very clear commitment to energy reduction and use, it becomes increasingly more challenging to try and produce what it is we're all discussing? 

I think we need to tease out some different things from what you said. So, we need to tease out energy generation from energy saving, first of all. It's pretty much always cheaper to save energy, to prevent it having to be used, than it is to install a generation plant, because a generation plant also has its own carbon footprint, which needs to be brought into consideration as well.

So, yes, there's a different sensibility in Germany and in certain other countries than there is here. But that sensibility—the keenness for saving energy—is a political decision. It can be communicated by strong leadership. In every place, in every company I've ever looked at where energy efficiency programmes have worked, it's only worked when there's leadership from the top and there's a top level commitment to it. That's the first thing. 

And the second point is that you mentioned about local control, and I think in terms of Baugruppen and similar initiatives, particularly the initiative called 'So.vie.so' in Vienna, that is because, like in Wales, they can set their own housing laws and they can also target subsidies in areas where they want to encourage that market, and then encourage local groups on the ground to actually then develop the kind of communities that they want. And I do think we need to be thinking at a community level, not just at an individual housing level; we need to look at the footprint of an entire community, because if you build communities in a place that is a long way from facilities, from public transport, and so and so forth, that also affects the energy, time and productivity of the people who are living there. 

Thank you very much. David Melding. 

Thank you, Chair. I think in your opening remarks a couple of you talked about the skills gap that we currently have, and we've got some data comparing the number of people that are working in low-carbon renewable energy in the UK, and the Welsh figure is something like 11,000 full-time equivalents, which is not far off, actually, the UK figure reduced to our population proportion. But, I suspect that just reflects the general situation that we're in in the UK, which, obviously, we've discussed as being not on the scale that we require. So, to get to that scale, what are our main challenges in terms of making a skilled workforce available?

It seems to me that if we've not started, really, to prepare for a significant number of skilled people in addition to what we have at the moment, coming through the system in the next five years, say, and this obviously done through vocational programmes and collaboration with further education in particular, if we're not already planning for that increase, then it pretty much tells you where public policy is going in this area. Are there any constraints about getting that level of the workforce trained in this sort of area, and are they surmountable and not impractical? How would you go about that, given that there was a will in the various Governments to prepare a workforce that can do this work?  

I think the main thing to be done is to create the pull, the demand, for such people in a way that people feel confident enough to then invest their time, energy and money in getting the training that they need. I think without that confidence that there's going to be a job for them at the end of that, it's going to be hard to persuade large numbers of people to get the skills that are needed to do the work.  

Let me ask: are the FE colleges currently set up to train in this area? Presumably, there is a vocational training standard that can be met. Because this is a very different type of approach to traditional building; you're not training, broadly speaking, people to lay bricks, are you? It's new materials, often off-site, and then the dynamics of the building, and lots of new skills.

I don't think it should be limited just to FE. I think HE also would play a really important role in this, because like I said before, construction, particularly housing, was very consistent, whereas the range of technologies and techniques and all of those sorts of things are developing quite broadly now. So, FE and HE need to be given more respect to enable those skills more widely to be developed, to work together and to apply them in a better way. We need quality. We don't need things to be done in a quick and fast way. We need things to be done properly in a well-prepared and well-planned-out way, where the buildings are surveyed appropriately. So, the skills need to be across the board in planning to do the work properly, then surveying the buildings well, the electrical design, all of those. If you're bringing technologies together, they need to work together, so those skills need to be working together rather than thinking that they're coming only from the FE sector, in bricklaying or whatever.

And then there are the builders that are already out there. There's an analogy here with landlords, where landlords have all recently had to register in Wales and pass a certain test to enable them to continue to be landlords. I think one can take a similar approach with the building trades, and if they want to continue, they need to have some vocational training, in-service training, if you like, to bring them up to scratch with the new techniques. I think it's these techniques that we should be concentrating on in terms of building up the supply chain within Wales. Wales is full of timber. We've got lots of timber, and the best performing low-carbon, zero-carbon houses, like Western Solar's, are built with local timber. Timber, may I remind you, also sequesters carbon in the fabric of the building. So, there are certain kinds of materials that will cost carbon in their manufacture, like plastics, and other kinds made from plant-based products, and even wool—lots of wool carcasses are burnt in Wales every year—that can be used to sequester carbon. So, I think there's a whole area of raising skills in building houses using these techniques, which can be encouraged by local authorities and by Government itself, and you can do it through the procurement strategies that the Government itself has tied into the well-being of future generations Act. 

I'm still having no idea of where we are with capacity, to be frank. I just wonder: do you have anything to say? We've got 11,000 people in the carbon and renewable energy sector at the moment. Because a lot of them won't be house building or retrofitting, if we're to eliminate fuel poverty in the next 12 years, how many people do we need to train in the new retrofitting skills?

All of them.

I think it shouldn't be dealt with as low-carbon skills. It should be construction skills, and all construction people should be thinking low carbon and I think that then—

But this is a massive increase in construction work, right? And you need people to do it, more than are there at the minute. We're building at record low levels at the moment. There just isn't the workforce. How serious a constraint is that? How long would it take us to meet those capacity problems before we could really turn the tap on significantly to increase activity in this area? Do we have any—or can you point to any—studies that have been made, or indications from other countries where they've gone from where we are at the moment to a more vigorous approach? I still find it difficult to know how practical what we hope to be concluding—well, recommending, I guess—to the Government in this area is going to be.

Can I get back to you on that?

Please send us a note.

I can't put any numbers on it, but I think from what my colleagues have said, the existing sector needs to look at how they are working, and they need to be trained—

But that's not going to affect retrofitting, is it? I mean, the existing sector is, broadly speaking, building the 7,000 homes we've got—. I mean, we're doing some retrospective fitting, I realise that, but—

I think there's a lot of maintenance work happening in buildings, though, because people are still paying for their houses to be maintained. And if maintenance is thought of in a low-carbon way, rather than just fitting kitchens and fitting bathrooms, and if the construction sector dealing with retrofits or refurbishments think of low carbon in what they're trying to do, then that would broaden the existing—. Because that's the quick hit in changing the people who are working now—is to get short training schemes to bring those up to speed.

Okay. Well, I infer from that that there isn't a great problem in the supply—

I've got a number for you. Sorry—I've finally engaged brain. There have been studies done on how many new jobs are created by having large-scale retrofit, and the typical figure is 30 to 35 new jobs per £1 million per year spent. So, if we were spending, say, £200 million a year on retrofit in Wales—just as a guessed number associated with the 40,000 houses—that would create around about 7,500 permanent new jobs. So, that's the order of magnitude of the training need.

That's helpful, thank you.

But the question is also: do we have the capacity of the people to actually do the training?

That's the big question.

That's the question I thought you were asking.

Well, it's obviously part of the question; that's why I was talking about FE colleges. But, it does seem to me that we're going to increase the workforce in this area considerably, and doing that quickly is obviously a challenge.

Joyce Watson. 

I think you need to step back. Your question is right. There are schemes with local authorities where they are training in collaboration. There are five local authorities joined together in a scheme called Cyfle, where each local authority—Pembrokeshire, Neath and Swansea, I think, are in there, and Carmarthenshire—joined together to commit to produce apprenticeships within the construction industry. If you had a commitment for retrofitting all new builds that required this upskiling—a lot of them will already have skills; it'd be a level of upskilling—and joining together across Wales, I think you could answer the question that David is asking about how you produce, without the onus being too great on one or the other. This is the largest construction apprenticeship scheme in the UK, if not in Europe. I think it's something that maybe you have heard of or you haven't heard of, but my question is this: we don't need to reinvent all of the skills; a lot of them are there. What we need is the upskilling for those who've already got skills. So, I don't know what your thoughts are on that.

I'd agree, but I think it's harder, sometimes, to teach an old dog new tricks.

Well, I think you ought to try. I learn new tricks every day.

Absolutely. I'm reminded of projects that are run by the United Nations Environment Programme in some countries, where they do this kind of thing by bringing in experts that teach groups of people and then those people go and teach other groups of people and so on, and it spreads out in a kind of pyramid fashion. So, that's what you do if you've got a limited pool of people with the necessary skills to communicate. So, that's possibly one approach. But the approach I mentioned earlier of actually training people in work to allow them to continue that work as a condition, then, that's the thing to do.

Okay.

Simon Thomas. 

Still on skills, I'd like to come to this from a slightly different perspective, in a way. Just thinking of my own experience—my first car, bought many years ago—I could go to the FE college to a car maintenance course, I could change the oil, I could do the spark plugs and I could do general maintenance and all the rest of it. I don't think I've lifted the bonnet of my current car for at least seven years, except, perhaps, to change the screen wash. That change in technology and the ability of individuals to deal with it is now going to happen in housing. So, at the moment, I can do a lot of things around the house, day-to-day things—

The hoovering.

Certainly the hoovering. And the ironing. And the cooking. And put a new sink in, which I did fairly recently; it's just straightforward low tech. But if we're going to have houses that are zero carbon, or with no air going through them, or whatever it might be, just putting in a little DIY job can affect the ability of that house to then measure up to its passiveness or whatever it might be. So, we're going to come to an area in terms of skills where—. I struggle to get an electrician in Aberystwyth, and I'm going to really struggle to get somebody who understands how all my integrated switches go on and off and how it all works together. That might be fine in Cardiff, but I'm going to struggle in rural areas to get somebody who understands how a low-carbon, high-tech house works. Even assuming we've got the skills to build them, have we got the skills to maintain them and to maintain the consumer confidence to be either renting or investing in those houses, and how do we address that aspect of skills?

Just thinking of my own experience with electricians, we have a one-man band who's very good, and he does what he can to keep up with everything that's the latest. But it is hard for him as a one-man band because, basically, he has to work 12 hours a day to pay the alimony and pay the child support and all that kind of stuff. So, we do need, I think, to help—. I don't think people are essentially unskilled, but they have trouble keeping abreast with everything that's changing and happening. So, I do think we need to put in place measures that support particularly the smaller enterprises—

If I could just say on that, we have an awful lot, certainly in west Wales, of these people who service everything from farms down to individual houses. They do tend to be men—they are one-man bands who, if they are going to upskill, would have to take their own time, lose money in order to do that, and while they don't have to, will continue to just work along the way they've always worked.

Yes. So, I think that's the group that needs to be helped to stay abreast with the latest stuff.

Are there any examples of schemes that can do that, or things that we should be considering?

I think it would be good for those sorts of people, for a start, to be praised, because they're usually the people who take risk in trying something different. So, they should be praised for that and given support to help to do that. There are companies that—although they might not be in the same sector—have tried low-carbon technologies that can provide them with support. It may be more the business management side of things rather than the actual technicalities of things; how to deal with that change in practice in their working lives, rather than continuing to always fight: 'Oh, I don't want to let Mrs Jones down. I don't want to let whoever down, so I'll keep working and working and working and working' and actually making themselves sick or whatever. Those sorts of companies do need support and I think there are other companies that maybe they could mentor with that could help them to change the ways that they work whilst developing their skills as well.

I think there's partly an argument for keeping things simple. So, if the building isn't too overly complicated in the first place, then it's going to be relatively easier to maintain. With an eco-minimalist approach, where you look at the whole carbon life cycle and you build with timber, as long as you don't thrust something through the building envelope, you're going to be pretty much okay. If you know that you shouldn't actually do that as an occupant—that's a bit of occupancy education that can be done. What else is there? If you've got a passive house, your mechanical ventilation or heat recovery units could break down. Otherwise, if you've got generation, then there are the batteries and there's a control system. That is a specialist thing that you wouldn't expect to do yourself. You can have a maintenance service contract with the installer for that purpose.

Just finally on that, Pentre Solar, which we've talked about several times now—I noticed that that went for storage heaters, in effect, rather than batteries.

Absolutely. He experimented with batteries and he found that there was a potential fire hazard. It's a brilliant idea because it's a tried-and-tested technology, storage heaters. And what's more, it works better like that than it does on an Economy 7 system, which they were designed for, weren't they?

Yes, because you've got the sun in the day and then you've got storage heaters at night, which wasn't what Economy 7 was, obviously; completely the opposite.

Dawn Bowden.

Thank you, Chair. I just wanted to ask you about comparative costs. We've had conflicting evidence about the costs of building to meet the new zero standard. I think, David, you were saying that, depending on the design, there shouldn't necessarily be additional costs.

Well, that's it—it does depend. You've got to make sure that you're comparing like with like when you're comparing them.

Sure. Because the community housing council talked about an additional £15,000 to build a new property.

Yes, that might have come from a study done in 2012 in Gwent. But there's been a more recent study this year, which basically identifies the types of construction that actually kept the costs down, but still achieved the same levels, compared to others. So, for instance, timber stud walls, which we've mentioned already, are 45 to 51 per cent cheaper than other options; insulation in the ceiling, rather than the roof, is 25 per cent more efficient and cheaper to put in; and having a single concrete base rather than a plinth around the outside sort of thing, that's insulated all the way underneath, is also cheaper.

Does anybody else want to comment on that, just in terms of the comparative costs? I'll just come back to David otherwise.

Until the zero-carbon standard was abandoned by the national Government, we were on a trajectory where it was going to cost no more at all to build to the higher standards. But then, suddenly, that was abandoned. We were so nearly there. So, I think, with time and volume, costs can be brought down so that it's absolutely no more expensive to build well than badly.

So, would that account for the figure that Community Housing Cymru have come up with—the £15,000 difference in building a zero-carbon house? The fact that those standards have not been met—would that account for that?

It does depend on what kind of house they're talking about.

Well, yes, I don't know. So, you're saying that—

I'm not saying that it depends on—

—it would depend on the design, the materials, the technology.

The technology, the design and the materials—and the supply chain.

And the supply chain, yes.

And if they're factory-built nearby, and assembled on site, that can also help you to do things at scale.

All right. Okay, that's fine. Thank you, Chair.

Can I just—[Inaudible.] If we were having this conversation, say, five years ago, about electric cars, we'd have been having very similar concerns, problems and costs, but what we've had is—and can I pat politicians on the head—a general political view that we want to move towards electric cars. If the change of Government, which I obviously hope for at the next election, will still be moving towards electric cars, and if there's a change of Minister, which there probably will be in the next 18 months, there'll still be a movement towards electric cars. Car manufacturers are now starting moving towards electric cars. We've had that sort of—. It's not a political argument that we want electric cars. Everybody's now in agreement that we want electric cars. That's the direction we're going to, and all everybody's now talking about is how we'll achieve it. Are we lacking the same thing in housing at the moment? We really need everybody to want passive houses or low-energy housing. Everybody wants that. It doesn't matter if the Government changes, the Minister changes, or any change, the direction of travel is agreed by everyone.

Absolutely. Yes.

With the technologies for the car, I think everything's come into line with the car. So, the technologies are there now. The politicians are supporting it and the market is desiring, but that market is very high affluent, I guess, and it's that affluent market that's driving, because they now want to buy an electric car. There are probably very few people who are in the middle or lower classes that have electric cars because they're still beyond their affordability. I think maybe the low-carbon housing has been in the affluent sector for a while now, but it's sort of slowing down. I think maybe there needs to be a push to try and bring other sectors into that for the sort of less-affluent people to be able to buy a house now.

If I carry on with the electric car analogy, what we're seeing now is talking about, by 2030, 2040 or 2050, all cars being electric. You're seeing the number of electric points for charging increasing dramatically, and they'll probably double in the next 12 months. You're seeing all this change. There's a commitment. I don't think you'll find many elected politicians, or anybody likely to hold office, who is not in favour of electric cars. Isn't that what we need with this—low-carbon, Passivhaus, or however we want to describe it? Isn't that what we need—that it becomes the norm? And once it becomes the norm, the manufacturers start thinking it's a good idea and it then sort of becomes not just Tesla making electric cars and everybody saying, 'That's a good idea' and smiling and then getting back to making the diesel and ordinary petrol cars. Now we've got everybody looking to how we can make electric cars—'How we can make it work for our company.' Isn't that what we need here—to get everybody thinking, 'This is the direction we're going to go in. We're going to have to make it work'?

I think we need political leadership in that regard. We need politicians to create and set out a vision for the future of Wales and how it is low carbon and what that will be like, and we sincerely lack that at the moment at scale. I don't think there is a vision for what a low-carbon or zero-carbon, one-planet Wales could be like in 50 or 100 years' time. If we had that vision set out for us, then we could know what we were aiming for. And that's deeply what I feel is required.

Okay, thank you. Joyce Watson.

You alluded to it, Chris, early on—and I'm going to rehearse it—and that is the view on the building of properties being expressed by the big builders that 'We cannot build these houses because they are going to cost too much money and therefore'—and we understand it well—'there's not a profit element in it whatsoever.' So, what's your response to challenge against that, that that might no be the case and that we can actually afford to go in this direction and, more critically, how we take those who are currently opposed to building energy-efficient housing along with us, because we will be relying on them to do just that?

It's hard because what Wales does can be undermined by what central Government does. I think what Wales needs to do is to set out the clear trajectory for the acceptable standards of energy efficiency of new homes from now till 2050, and it needs to put in place the other measures that, in the short and medium term will help to compensate for any perceived additional cost in making those. Other measures that it can put in place as well around stamp duty, I think, on energy-efficient homes will encourage that. So, make it absolutely clear that we are heading this way and there's to be no wavering from that so that, by 2050, every new home is built as at least zero-carbon. Demonstrate that Wales understands that, in the short term, that may cost housebuilders more and it's doing this, this and this to help compensate for that, but make the destination and the journey as clear as possible.

On the other hand, David, you suggested that the way forward might be that charities, housing co-ops, community land trusts and other such social enterprises are the answer.

It's very much part of the picture, yes. I think this talk by the big-volume housebuilders is a bit scaremongering, quite frankly. It's been in the news recently what profits they've made, and we've seen the collapse of Carillion. I think we can try to move the market away from those kind of people to the kind of market that suits Wales, which might be smaller companies—more smaller companies. When I say 'companies', there's a lot of flexibility in the kind of structures, the legal structures that can take place.

With regard to trusts, the Baugruppen model that I mentioned is one of them. There's also quite a lot of good advice that's given by the Town and Country Planning Association in their recent publication on garden cities. So, those are predominantly done in partnerships between local authorities, housing associations and developers and trusts or housing co-ops and other similar kinds of bodies. And they use the uplift in the value of the land created by putting the housing on that land as a means of recycling it into building more housing and into the ongoing maintenance programme. 

You talked about land value. We talk about the price of doing all these things. The price of land massively outweighs it, doesn't it, in terms of development? If you get into some of the more affluent areas of Wales, such as the Vale of Glamorgan, the Gower peninsula, then land values are exceptionally high—and those are just two areas I know. I'm sure there are lots of other places in Wales—probably most of Monmouthshire—which would fall into exactly the same category. Would it be possible for Welsh Government or local authorities to give a reduction in the price of land—agreed with the district valuer in order for it to be legal—if people did produce low-carbon or Passivhaus housing?

I think it's more of the opposite way around in that the land value in areas—band D and E—in Ceredigion and those sorts of areas, the value of the buildings once they've been built, and the fact that the land is expensive and then you need to spend x amount of percentage more to build a low-carbon house, makes the production of those houses financially unviable because the cost of the build process is just too high. So, I think it's more if you challenge the more low-value housing areas, then that will enable development in the band D and E sort of areas to allow low-carbon housing to be constructed.

Okay. Anyone else? Any other questions? No. Well, can I thank you very much for—

I would like to say a couple of things if that's okay—

I was going to say that. I was going to thank you for coming along. Are there any closing remarks that anybody wants to make?

Yes, thank you. I would like to add—because we haven't really talked about the blockages in the planning system. I do think that there is a role for retraining planners. We find in the One Planet Council that we have to do this ourselves and hold training sessions for planners, and I think members of planning committees as well as planning officials, because they're basically not up to speed.

And the second thing is also to do with planning guidance. TAN 6 allows for One Planet developments anywhere in existing communities, in existing towns and on the edge of towns, and in the urban countryside, but there has only been planning guidance produced for One Planet development in the urban countryside. So, there is no model for reducing the environmental footprint of communities elsewhere. I think this is a lack. So, there needs to be a consultation on this, there needs to be some movement, because in the Calon Cymru Network we're trying to do this by using a community land trust to build such projects on the edge of towns like Llandeilo and Llandovery in order to try and test the planning system in this regard, to try to nudge the authorities to come up with guidance of this sort.

I think Wales—and I mentioned this vision that Wales needs to have—does have a kind of vision, but it's not specific. It says it wants to be One Planet within a generation, but it doesn't know how to get there. So, the idea of communities— towns, cities—setting targets to be One Planet within, say, 40 to 50 years, and then a road map to get there that brings people on board with that, would automatically have the effect of influencing the retrofitting of buildings through energy efficiency and also on standards for new builds as well.

Is there anything anybody else wants to make any final comments on?

Well, personally I think that fuel poverty should be the main driver for all of this because I think that's where the whole country can benefit, through health, well-being—. I think if fuel poverty is seen as the driver, then I think that would maybe enable some of the funding to materialise. And as a result of that, I think that operational costs will support that—rather than looking solely at capital costs—because if the operational costs are looked at, if people can live in their houses for virtually nothing but the capital costs are slightly more expensive, then that fuel poverty issue will be overcome.

And I also think there is a role, particularly with retrofits, for the EPC to provide an MOT-type system for houses. And that would, maybe, overcome some of the maintenance problems that we talked about earlier on, in that if there is a document that stays within the building so that people are aware of the technologies, aware of what the condition of the building is, then it would help the maintenance in the long term to be correct for that particular building.

I echo what you said on fuel poverty—absolutely. That, I think, is the starting place. I've brought a copy of my recommendations on retrofit for each Member, so that's there if you want it. I've talked about making retrofit socially normal in part of my remarks, and I think that's absolutely crucial. There are two people at Cardiff University that I would recommend the committee consults with if you haven't already done so. That's Chris Tweed, who's head of the Welsh School of Architecture, and Nick Pigeon. Both of those, I think, can provide remarkable insights into how one might go about making such a large-scale undertaking a socially normal, and therefore an easy, thing to do.

Okay, thank you. Can I just make a final comment? I think that fuel poverty is one of the real, serious problems, and is it any surprise that people who live in cold, damp houses end up in hospital a lot more than people who live in warm, dry ones?

And that's a £175 million a year cost to the Welsh NHS.

And it isn't only just physical health; it's also mental health. I think the impact on people's mental health is— 

And it's education.

Yes, and then it feeds on to the children as well. So, it's across the board. It's not just physical health.

Okay. Thank you all very much. Thank you. Shall we have a short break?

Can I welcome David Bolton from Melin Homes? We're expecting some other people but there's a serious accident on the A4232, which has created absolute chaos around the area. Can I thank you for coming in? Do you want to make an opening remark before we—? Sorry, can you introduce yourself and would you like to make any opening remarks? Then we'll start asking questions, if that's okay. 

I think it's probably easiest if I just respond to your questions, because I think the review covers quite a number of areas—I could talk for hours so I'll just let you ask the questions. [Laughter.] My name's David Weatherall. I'm the head of policy at the Energy Saving Trust. We are an organisation working across the UK promoting sustainable energy, particularly in homes. We provide several services for the Welsh Government in the area of sustainable energy, particularly in community energy and in contributing to the delivery of the Nest programme. 

Thank you very much. If I can start, at the recent launch of the UK Committee on Climate Change’s advice to the Welsh Government on setting carbon targets, Lord Deben suggested the Welsh Government should consider setting a standard that no new homes should be built in Wales unless they met Passivhaus standards. What are your thoughts on that?

I think, first of all, Passivhaus design is great and is a very effective way of building low-energy homes. I think our view is perhaps that it's a standard that should be voluntary rather than mandatory, noting that building regs are there to set a baseline not the actual standard that all homes may reach; we'd hope many homes will go beyond building standards. We would suggest that perhaps something better to aim towards would be something like the zero-carbon standard for a 2020 target.

Okay. Thank you. Dai Lloyd.

Not right at the moment, no. It's been a real issue for our organisation over the last 10 years or so that, while housing stock data for England and Scotland have been updated on a nearly yearly basis, that for Wales has not been significantly updated since 2008. So, we're very pleased that the Welsh Government is planning to update that and produce a new housing stock assessment for autumn 2018. One other thing I would note is that we have energy performance certificates now that have been issued on the majority of homes, and also they're issued on non-domestic buildings. That's a very rich data set for understanding the housing stock and understanding the energy efficiency of the housing stock. For comparison, some of the work we've done with the Scottish Government has been to map that energy performance certificate data, integrate it with other information and data about the housing stock, and then supply that, with the Scottish Government's help, to local authorities in Scotland that can then target the homes that most urgently need assistance in terms of energy efficiency.

Can you set out your views on which standards Wales should be aiming for and why, e.g. zero-carbon, Passivhaus, near-Passivhaus, energy positive, or any one of the long list that exists?

I think probably some of the specialists whom you spoke to in your first session are probably more on the technical side of the differences between those standards, but, from our point of view, we worked very hard in contributing towards the planning for a zero-carbon home standard, which was discussed and on the horizon in both England and Wales. We think that's the best framework for Wales to be planning for—we suggest from a timeline of about 2020. So, just to unpack the components for that, that would say that there is a robust minimum requirement for energy efficiency on each property, there is a robust requirement for low-carbon energy on the property—so, renewable energy—and also then, depending on the home and the community, there is perhaps some additional flexibility for them to source low-carbon energy to meet a zero-carbon standard.

Simon Thomas. 

I just wondered, from your perspective, how difficult it is that there are all these different standards. It's almost like you hear about a particular low-carbon or zero-carbon standard and then somebody will trump it with an even better standard, and then somebody comes along with the brightest idea, usually from Germany or Austria, or something like that. Just how confusing can this be sometimes for people who are already living in a home and just want to make improvements that bring the best benefit to the environment but the best benefit to themselves in terms of investment as well? Do you perceive that there's a lack of clarity around what is the most applicable approach, for the Welsh circumstances anyway?

Yes, I think so. One of the things I would emphasise is that I don't think it's right for me or anybody else to come in and say, 'This is the standard that Wales should be building to'. As I say, building regulations are about setting a baseline. We think that should be a baseline that achieves a broadly defined zero-carbon standard. But, clearly, it will need work that looks at the Welsh housing stock, that looks at the market in Wales, in terms of determining where those different parameters in terms of minimum energy efficiency standards, minimum renewable energy requirements are set. There are lots of standards out there. I think the thing to notice is that some people get very enthusiastic about these, and Passivhaus is a very good example of a standard that's gained a lot of traction, a lot of people are really keen on it—self-builders, people who really want to live in a super-low-energy home. And I think, in some ways, that plurality is good, but I think it's important not to confuse that plurality of voluntary standards with the baseline that Wales is going to set in its building regulations.

Following on from that, would it help if we only had one standard we were aiming for? It almost seems like the old VHS/Betamax argument—there are lots of these different standards. Everybody is a champion of their own standard, and we have really a concern that, as everybody's a champion of their own standard, we just have this conflict, almost, that, 'No, we want zero carbon, that's what we're aiming for', or, 'We need to aim for Passivhaus.' Wouldn't it be better if we just had one agreed standard or agreed area, so that you could say, 'Well, we want to do something in this area, these are the ones underneath it that meet that requirement'?

Well, I think first of all, obviously—I keep emphasising this word 'baseline' for building regulations, and I think one of the things that could be very powerful is that if you can set an initial zero-carbon baseline in building regulations for 2020, you can then set a trajectory of higher standards for where that could go between 2020 and 2030. So, for example, a zero-carbon standard at 2020 would probably only include what's called the regulated emissions—the heating and lighting in the home. You could look at a standard that also started to include the energy that people use in their appliances. Having said that, I think there is a challenge if you were to endorse—. As I said, I think there is a value in the plurality of these standards. So, for example, Passivhaus, super-insulated, requires mechanical ventilation—that's right for some people, but not for others. So, I think, yes, there is a value for Wales in setting a clear baseline in building regulations, in setting a trajectory for where that's going to go, but also, I think, in allowing and encouraging, perhaps through planning, people to build to a variety of different standards.

Can I ask one last question on this, which is something I asked earlier and which didn't reach much support? I have a number of houses in my constituency that have single-glazed, badly fitted windows. Now, that is the biggest local problem in terms of energy loss and energy cost. And I have some very poor people in my constituency who are paying more for energy than probably anybody else in this room because of that. Do you see—the previous panel didn't—but do you see any merit in actually dealing with some of these very serious problems as a priority?

Well, I think one of the strengths of Wales's Nest programme, for a start, is that, rather than focusing on replacing boilers or installing insulation, or whatever, it focuses on the homes of people on lower incomes that are energy inefficient in a broad sense. So, I think there is certainly a need to focus on holistic solutions for our existing buildings, and developing that. We need to be clear—we've been talking a lot about new build—but we need to be clear that the biggest challenge here is certainly upgrading existing buildings. And we need to target that activity first on the homes of people who are on low incomes, because the problem of fuel poverty is not just an environmental problem, it's not just a bills problem; it's a health problem and wider.

Thank you. It's something I've said quite regularly, and I will just end with the comment that it's very expensive to be poor.

But can I welcome David Bolton of Melin Homes, and Hugh Russell of Community Housing Cymru? I understand you had problems with the A4232. You're not the only people to have done so; some of our committee members had it earlier as well. So, can I welcome you?

If we can carry on from where we are at the moment, then we'll go back to the bits that you missed at the beginning. So, Gareth Bennett.

Thanks, Chair. How much public demand do you think there will be for near-zero-carbon and Passivhaus standard homes? There has been some evidence that maybe prospective house buyers might not be that keen to buy those kinds of houses. So, I don't know whether we can start off with David, and then each of you give your opinions on that.

I think some of Hugh's submissions showed that, from a housing association perspective, the more energy-efficient homes are the ones that are much more sought after. As a housing association, and with previous housing associations I've worked for, people have increasingly become aware of what those potential energy costs are for those homes, and it is very much a factor. I think, in the wider sense and in the house purchasing side of affairs, it's probably more about lack of awareness. Anecdotally, I would say that people say, 'I'm not that interested', because they're not aware of what is on offer or what differences can be made to people. So, I think that lack of appetite is fed from not really knowing much about energy-efficient homes, but also very much from what is on offer out there. The bulk of what is built, not just in Wales but in the UK, is essentially what was built 20 plus years ago with some tweaks on it, and, until that changes, I don't think people will be aware of exactly what their options are. It'll also become much more important to people as energy prices continue to rise.     

Just to add to that, when I saw this question in the stuff that was sent over in advance, I did query that perception of Government. I can't talk on behalf of the private sector; I can't talk on behalf of potential house buyers. I'm a young person; I don't know anything about buying a house. [Laughter.] From a social housing perspective, we aren't getting that message from our members. We're not hearing that their tenants and prospective tenants don't want to live in these houses and, in fact, research has showed that turnover has reduced in these better quality houses. So, from our members' tenants' perspective, I query where that perception had come from.  

And I think, from a private sector perspective, all our research shows that people do like individual measures on homes in terms of things like solar panels. People do actually value them when they're buying properties or renting them. We deal with 5 million people a year who are interested to improve energy efficiency. I think some of the challenges are that it's still a bit difficult to do energy efficiency often, particularly in terms of refurbishment. So, a lot of what we need to do is to help smooth the path through advice and information. And I think also, to some extent, we've got a bit caught up on some of the messages around the environment and money, which may be the policy drivers, but, actually, for a lot of people we need to be getting across more strongly the message that these are just comfortable, nicer homes. 

Okay, thank you. 

Sorry, if I could just add very briefly to that, as Melin Homes and the Being Greener team, we've worked through the Welsh Government's Warm Homes Arbed 2 programme, and delivered a lot of schemes for local authorities and housing associations. The majority of homes that we've improved have been—. Our ROC buyers have been the private sector, and what we find with that is that education is absolutely key. So, people have to understand what's being done and what the impact is on it, but it's fair to say that because we raise awareness on that side of it, the schemes that we deliver, we regularly get 70, 80, 90 per cent plus take-up within those schemes from the owner-occupiers. So, there's an appetite for it. 

Okay, thank you. David Melding. 

I'd like to look at the skills issue. We are currently building at record low levels of homes in the UK, and Wales is very much part of that picture. And we've got this huge challenge around retrofitting, as well as building new to higher standards. Do you have any indication of the capacity problems, and how many more people do we need to start to train? You may want to look at retraining as well, but just in terms of, in the next five years, the number of skilled young people who are likely to enter the construction sector.

I'm happy to take that.

Sorry. You take it. 

Go for it; you work in the sector.

Yes, since the global crash, there have been a lot of skills that have left the market, retired, gone to other places, so, undoubtedly, there is going to be a skills shortage moving forward. One of our concerns from the retrofitting, new-build side of life, is that a lot of the skills that are in place are the wrong skills. You go to most colleges and you see a bricklaying course building a wall out of brick or block that is 1.5m high and 2m long, and those are the skills that are being taught, and they are far less the skills that are going to be looked at.

I think the encouraging thing for some of the new-build technologies and for some of the retrofit technologies is that it's reskilling of that existing workforce. That existing workforce already has those skills, or there's some of it that doesn't require three, four, five years of apprenticeship on it, particularly when you look at some of the modular construction, some of the offsite construction parts of it. I think it's about focusing the training and the workforce to those areas. We, as a housing association, are very proud that, within our direct workforce, we've got eight or 10 apprentices across a range of skills in there. I know there is work that is going on on the apprenticeship side. There are those parts of it, but students in schools and colleges need to see construction as a career that they want to move into. Part of that argument may be that it's more pleasant to be in a factory environment doing that sort of modular, offsite construction than it is being up to your knees in mud with water trickling down the back of your neck trying to lay bricks.

Any other views?

I have a couple of points to add to that. Firstly, the Farmer review came out, covering UK construction, last year. That showed significantly higher numbers of people leaving the construction sector than coming back in, just to reinforce what David's saying.

We are seeing much more interest from our members in offsite construction, which will require a different set of skills. The innovative housing programme, which I'll return to a few times—I think it's very pertinent to this discussion—will see us take some steps forward towards offsite manufacture. There's a coalition of housing associations that have come together and put in a successful bid for some funding for research into offsite manufacturing; a potential for factories built in south Wales, what that might look like, and some skills will come into that discussion. So, there'll be an impact if offsite does become the future of construction. It's not going to be everything, but it will hopefully be a significant contributor to construction. You'll probably see a diminution in the number of wet skills needed, but you will see new jobs created in factories, new ways of working.

And just to add to some of what David was saying about apprenticeships, I was looking at good practice within our sector, with regard to apprenticeships within construction. Coastal, down in Swansea, became aware of an issue whereby apprenticeships were forming part of the procurement process. Contractors were taking on contracts, they were meeting their apprenticeship target, they were bringing people onto site with them, but then they were letting them go afterwards. So, Coastal have sought to address this by ensuring contractors have a post-project plan for apprentices, which strikes me as a very sensible solution to that. Perhaps there are little tweaks that could be made within the procurement processes across the country that could help with this.

Also, I would add that the Construction Industry Training Board are the people to really have a chat with about this. They've brought in the Construction Wales Innovation Centre recently—a couple of years ago—that will hopefully help to prepare the workforce in Wales for the future.

If I could just add a dimension to this, and I do think it's important. The great part of the challenge is refurbishment, and skills for refurbishment are absolutely vital. We know this is mainly delivered by the SME sector. Some of the problems in the past we've seen, with cavity wall fill in Wales, for example, point to skills problems in that area. So, I think targeted programmes at SME builders who do the vast majority of home refurbishment to improve the standards they're building to are absolutely vital.

In terms of public policy at the minute, there seems to be no indication that's going to the further education sector to—. Currently, they're doing what the market—in their view—wants, and that's to build these 7,000 homes by very traditional standards. What's the scale of the problem here? How quickly can we really—? If we want to recommend it to the Welsh Government, there needs to be quite a fundamental change in direction to driving up the energy efficiency standards in building regulations, and then a real push to some form of new scheme to start significant retrofitting. We've heard one suggestion: to eliminate fuel poverty in a specific programme aimed at 300,000-odd properties in Wales that are most vulnerable in that area. But I just want a sense of the scale because it seems, at the minute, it would take us years to get to the sort of workforce we would need. Or am I just being pessimistic? I mean, what?

I don't have the number for the scale that a training programme would require, but, clearly, this does need to be a significant area of focus. I think the successful programmes that we've been involved in in the past, with the existing refurbishment trade, have been those that have really focused on on-the-job training—sort of toolbox talks types of approaches that get to people when they're actually out there working, and sort of model best practices and learning techniques, rather than trying to bring them into FE colleges, for example. But I'm afraid I don't have an answer on the sorts of numbers of that programme that would be needed.

Yes, but even there, the current capacity of the SME sector in construction, compared to its historical strength—. We're at a fairly enfeebled level, aren't we, in terms of—? It's a reflection of the amount of construction that's going on. I sense that we don't quite grasp yet whether the skills issue is a major inhibiting factor or one that just requires very clear public policy pronouncements and plans, and then, within a reasonable period—say five years—we could be up to a sort of capacity that would allow a very significant amount of activity to take place in both retrofitting and then if we're driving up the number of homes we're building each year to meet those new targets.

I think, for me, as an organisation, we're currently more focused on the standards issue, which I think the skills issue then feeds into. Because, really, the challenge for retrofitting has been that there have clearly been some issues with installers and the SME sector not achieving the standards that we would hope with energy efficiency retrofits. We're very involved in an initiative with the Westminster Government, called Each Home Counts, which is about trying to work towards a new quality mark that will apply, for example, to insulation installations to get to a more guaranteed quality of work. I think, clearly, once you've got those standards in place, the idea is that those standards will apply within the eco programme, which is the main funding source for energy efficiency from the energy suppliers. Installers and others will have to get the skills to meet those standards. So, I think the standards issue is quite a key driver here, and almost something we need to get in place before we can focus on the skills.

The SME sector is very agile, and is much more agile than the sort of nationwide construction sector at being able to employ, to bring in, to change their direction, to a certain extent. Where the SME sector suffers much more—and why it's smaller now than it was 10 years ago—is that they haven't got the same levels of resilience that some of the nationals have got in terms of being able to—. Most of the nationals that we talk about, the vast majority of their workforce is the SME sector and the self-employed sector, and the minute that things take a downturn, those staff get sent home and stop getting paid. But that is then the SME sector, so their resilience is much less in terms of being able to pay the wages when the volumes of work aren't coming in.

But the other side of that then is that the SME sector are very, very agile and innovative at being able to pull those numbers back together. The Arbed scheme managers for Welsh Government in south Wales for Arbed 2, we created more than 400 new jobs on that. Some of the points on this are that the way that we've done it in Wales and the way that we've been led by Welsh Government to do it in Wales has led to far higher quality outcomes than has sometimes been the case, because Welsh Government has said, 'These are our projects, we're putting our names to them, they have to be done well, they have to be done correctly.' So, that means that some of the nationwide issues haven't been seen where there's been that control on it. It comes back to whether you're being pessimistic in terms of the numbers on it. It requires action, but it's not insurmountable.

Thank you.

Thank you. Joyce Watson.

Just again on the skills and about upskilling, reskilling or applying apprenticeships in the widest possible way that you can. I thought for Community Housing Cymru, as I understand it, unless I got it wrong, you're the umbrella body for housing associations in Wales.

That's right.

Is there any evidence that you are driving forward joint working in this field, and if you are, so that you've got skilled people who can work across an area rather than in a defined geographical area, because the border might be right next door? Have you worked towards that in any way at all? Or do you know that anybody has?

Our members will often work across geographical areas—

But specifically in this field: training people.

Yes, again, I would say our members are building across local authority areas, so there will be apprenticeships that go with that. So, you'll have the opportunity, as you build across Wales, to bring in apprentices from different areas, if that's the point of your question.

Okay. Sorry, perhaps I'm not making myself clear. Perhaps it's my fault. I'm talking about joint programmes between housing associations, because they're an entity in their own right, as I understand it. They have their own budgets, as I understand it. So, therefore, have they pooled any of those budgets into delivering a workforce for the future that would be cost-effective for them, but also produce some of the skills that might be in short supply at the moment?

So, working for a housing association, the answer is 'yes', and yes more could be done on it, but there are initiatives such as the apprentice initiative that works across housing associations, and you've got similar with Carmarthenshire Construction Training Association Limited in Carmarthenshire. So, they sort of provide that shared apprenticeship programme, and that is across housing associations and across contractors. I think, as Hugh talked about earlier on, the purpose of that is that, if somebody has a six-month contract that isn't six months' of work for that apprenticeship place, there are ongoing opportunities for those apprentices. It's also then the case that if you take the innovative housing programme, the sector has worked together on that, and that's been more organic than sort of planned through. They work together on that, but they've also worked then with external agencies, such as the further education colleges, but also the universities, like Cardiff University and Cardiff Metropolitan University. So, that happens. Quite often, that happens organically or it's driven by a number of directors or chief executives. But, it is pushing forward.

Community Housing Cymru and the housing associations can only do so much in an area like this. As we talked about the training and about the colleges' part of it, you need to sort of step back and look at what is in place to encourage the college departments to do this, because everything that they do, every lecturer that they bring on costs money, if you like, and there has to be that funding to be able to say, 'The skills that we are teaching these new entrants into the construction industry will then be used on an ongoing basis.' At the moment, the skills that they are training them to do are used on an ongoing basis, but it's very much for the traditional two skins, brick-and-block type construction. That construction will not deliver what is required for the future in terms of lower energy and affordable housing.

So, you're telling me that you're part of the Cyfle group.

Pardon?

Cyfle. CCTAL has morphed into Cyfle. Are you part of that?

We're not, as Melin Homes, but we're part of the apprentice scheme. So, as a housing association and us having CHC as our umbrella organisation, we host apprentices, and that works across housing associations.

Okay. If I could also, Chair, come back to the skills standards. We know, as things stand at the moment, there is no, except for electricians, determined certificate requirement. I'm not saying that people aren't skilled, but there's no compulsion. But, there is compulsion when it comes to electricians to meet a certain standard. Do you think that that might help? I think, David, you brought it to the table, really, about the consistency in the standard that people can expect, perhaps being driven by a consistency in the training and something that tells people at the end of the day that these are competent. I'm not saying the others aren't, but something that actually is predetermined in that training that will come out with a certificate. What are your thoughts on that?

The area that we are focusing on at the moment is the standard of the delivered installation, so it's really about, 'Does this insulation do its job? Does it perform as it would be reasonably expected to by the householder? Is it safe?' That's about testing that completed job rather than— 

That's the product.

Clearly, there's sort of a stage beyond that, which would be to look at what is the training to make sure that people are ready and able to achieve that standard. But, we're not actively looking at that at the moment, I'm afraid.

We are looking at that. As I say, one of the main concentrations of what we've looked at has been the retrofit market. You're quite right: it's electricians and heating engineers who have to be accredited to that organisation to be able to work. There are other standards, such as FENSA, but for somebody to go along to somebody's home—their biggest investment—and to put external wall insulation onto that property takes, at the moment, a four or five-day training course to be accredited by the system holder, such as Rockwool or SPS or Wetherby, and that really isn't enough. That really isn't enough. There are people who can do it, but not have the wider knowledge in terms of gas and electricity. So, we've worked with local colleges to say there are additional modules we can put in place, a five-day training course that does bring in the capacity, the awareness, the understanding on it. It's our proposal that, as that gets developed, that's part of a passport that allows people to work on our schemes. It's a quality mark passport. I think, absolutely, for your aspirations for Wales and the quality of what we do in Wales, I think there should be an appetite for a quality standard that applies to any Welsh Government-funded work.

Okay, thanks.

Simon Thomas.

I just wonder if I can look at this from the other perspective—and different questions for the different organisations, if you see what I mean. We know that governments have promoted particular standards for construction and have then withdrawn from those standards—unfortunately both Westminster and the Welsh Government have done that—and have said that on the basis that they didn't think the houses would get built because they didn't think the house builders would be interested in achieving those standards and selling them on. That was at a particular time, potentially, but that means we've certainly taken a back step in the standards that you've been talking about and, perhaps, taken a back step in spreading those skills as well, because house builders now can carry on just using the same skills they've always been using and not looking at these new approaches. Now, clearly, you're not involved, as CHC, in private housing, but is that something that you've perceived—that the builders themselves have been a brake on the development of these skills? And then, obviously, from the Energy Saving Trust's perspective, perhaps you can give a different perspective on whether the private market has been operating in that way, or have we had the wool pulled over our eyes? 

Firstly, I would say that some of our members are building private housing now. That's an increasing aspect of what they do. But, yes, that's really a minority of what's being produced overall. I'm not sure how to comment as to whether private builders need to pull their socks up with regard to the quality of construction work.

Within Wales, pre global crash, a really significant amount of the supply of new housing was built by the home-grown, if you like—by the SMEs, by the Welsh sector. That has now flipped around in terms of the nationals building those homes. I think it's fair to say if you go around your constituencies, apart from some design or aesthetic features, what is being built now is the same that has been built for the last 20 or 30 years, albeit it's probably being built smaller now, because of the costs on it. I think for Welsh Government to look at reversing that trend and to look at the SMEs taking up that house building mantle—. You might say I'm bound to say it, but the housing association sector are building homes for market sale as part of their activities. Quite often, that's the way that a site will work: that a certain amount of it is for sale, generates a profit, that then pays for the social housing to be built on it. So, it's a mix-and-match from that perspective and, yes, you're absolutely right, I think previously one of the threats, one of the things that was raised was, 'If you start doing this in Wales, we're packing up and we're heading over the border.' Knowing small house builders, knowing large house builders, and having dealt with many of them, that decision will be made by those builders on a purely financial basis. If the standards change, and they can still continue to make those healthy profits out of it, they will move to it. The fear, particularly for the large-scale national builders, is the unknown. For a large-scale national builder, a Malvern-type three-bedroomed semi-detached house will cost the same to build in Cwmbrân as it'll cost to build in Cowbridge.

The land price will be different, though. 

The land price will be different, and there might be abnormals on it, but when that site is set up, the national builders know exactly what those properties will cost them. So, the fear for the national house builders is if you say, 'You can't make these'—perhaps timber-framed, but, generally, brick and block skin, or whatever—'You can't do them that way, you've got to do it this way'. That is the national volume house builders' business model. And that will quite understandably terrify them. That will terrify them because that's taken 20, 30, 40, 50 years to build up. 

But that model is not meeting our climate change obligations, it's not meeting our fuel poverty obligations, it's not meeting the needs of future generations.

On a nationwide basis, innovation tends to be led by the social housing sector and by the self-build market and by the smaller more innovative SMEs. At some point in the future, when this model is fully set up and tested and working really well, the volume builders will look at it, will buy the staff resource, will buy the expertise, and they will deliver to that, but they're not going to do it by themselves, because it's not where their business model is and it puts their investment models at risk. That is why it needs to be a legislative approach to making that change on it. That decision will be made, and there's a risk on that.

I think part of the risk analysis is what can happen within Wales to build it up. When you look at the innovation, when you look at some of the modular construction, there is an awful lot of technology and ability and capability waiting in the wings within Wales on it. The reason it's waiting in the wings is that it takes investment, it takes looking to say, 'We know what will happen. We've now got the business model to approach that.'

One of the risks—and we discussed it on the way in this morning—from that aspect is that, if I work for a volume house builder and I looked at it and said, 'I don't want to do this yet, therefore I am going to look at opportunities over the bridge, so I will just mothball all of the building sites that I've got', you've got building sites that are then mothballed and nothing is happening. So, I think the breadth of the legislation that you look at on it has to consider perhaps some of the compulsory purchase order aspects of it to say, 'Well, if you're not going to build there, these will so we'll have that site.' That's probably the biggest single risk that you run—that all of those land banks just get fences put around them and left. My colleagues who are through and through development say that land—they're not really making any more of it.

Can I just say something quickly on that? I think the important thing to note is that, given that this is sort of effectively about comparative standards in England versus Wales, from 2008 to 2015 in England we were working towards a zero-carbon homes standard. The volume house builders did seven years of work gearing up for that and there were substantial independent analyses done of the comparative cost of building to that standard versus to the prevailing building regulations, and it was found that the additional costs were small and were shrinking very, very rapidly. And it's for that reason that I suggested when I first came in that you should be looking at a standard that is close to that because a lot of the work has been done around the costs and achievability of that by the large house builders.

More broadly, in terms of direction, clearly Wales will not be on its own in this. Lord Deben has already been referenced, chairman of the Committee on Climate Change, speaking out very strongly on this. He's a Conservative, obviously, and there's a driver at European level from the energy performance of buildings directive, which will see these sorts of standards introduced across Europe. So, I think the idea that house builders would be pulling away from Wales if it were to introduce the standard is probably not realistic on the grounds that these standards are going to become prevalent everywhere.

Dawn Bowden. 

Thank you, Chair. Following on from that, really, I think in the evidence that we've received, and certainly in the previous evidence session, we heard that, in terms of comparative costs for producing carbon-zero and near-carbon-zero properties, depending on design, construction, materials, there shouldn't be necessarily huge additional costs, and yet in some of the evidence that we had, I think from your organisation, Hugh, Community Housing Cymru, you were talking about the possibility of an additional £15,000 per unit, I'm assuming.

Yes, that was some anecdotal evidence provided to us in a consultation meeting we had to decide how we were going to respond. They didn't specify what kind of unit it was, so it's quite hard to use that figure, I suppose, but the point is that there may be some initial additional costs looking at the innovative housing programme pilots. Some of those inevitably have cost more. The innovative element has been dealt with by the cost of the programme, but one of the issues raised was that the Welsh Government's acceptable cost guidance will need to flex to deal with these additional elements of these innovative elements on these newer styles of home.

The other point to make is that we might anticipate an initial spike. If you put new standards in, you might anticipate an initial spike in costs, which would level out over time. The same goes for almost every aspect: as things become the norm they become cheaper to do, skills are there and people know how to use them. So, yes, there was some concern from our members that things are initially going to cost a little more, which is—

But you would accept the other piece of evidence that we've had, which is that, depending on design and materials and so on, the cost could be almost relatively neutral, potentially. Is it an overblown concern? That's really what I'm asking. Is it kind of an inflated concern? Because it's the thing that we always hear. Whenever there's change proposed, or innovation proposed, the first thing that you get is businesses saying, 'We can't afford it'—you know, 'We can't introduce the minimum wage because everybody's going to go out of business if we do that.' You know the sorts of things they say.

It's largely about risk. Even with the SME sector, an awful lot of the contractors who develop in Wales have been developing to those models if they're working on behalf of a national or if they're working on behalf of the housing associations. And some of that is risk and an unknown. The minute that you—. If you speak to somebody who is used to building in a traditional way, with traditional materials, and then you say, 'We want to do this differently', they don't know, or they haven't got those direct skill sets on it, so they will start introducing cost as a risk package on it—'We don't know how to do this. Let's put 15 per cent on it'. If you then go to the organisations who are innovating, what they will tend to say is, because they're working at those smaller scales at the moment, there is a premium on the cost of it, because it's cheaper per unit to produce a million widgets a week than it is to produce 100,000 widgets a week. So, I think you will find that some of the initial costs will be higher, and there's always a tendency, with innovation, to put bells and whistles onto what you're doing as well. But I think, as that market starts to grow, those costs are undoubtedly going to be normalised downwards.

Well, that's the economies of scale, isn't it?

Yes.

It's also overcoming that initial hurdle of getting to know something, getting to know a new technology. Somebody came back to me with some information on one of the IHP schemes and said that they're paying a lot more in consultants' fees than they would expect to in the future when they've got a better understanding of it, so they won't need to employ consultants. So, that's the sort of thing that will cause that initial spike. 

So, there are, maybe, some upfront costs but in the longer term that shouldn't necessarily be a barrier to achieving this.

Yes.

I think it's important that work is done in this area. At a political level, you would say this is where we're aiming to get to in terms of achieving a standard that's right for Wales in terms of carbon budgets, and that standard being a zero-carbon standard, but then the specifics of what that standard looks like in terms of exactly what level of energy efficiency you're going to require on different house types in different situations might be something that's then decided as the regulations are put together.

Okay. Thank you.

Joyce Watson.

I'm going to ask you about the planning process. Some suggest that it currently doesn't support building new types of housing—low energy, low carbon. Do you share that opinion? If you do, what do we need to do to change it?

Yes, I agree with you.

Not with me. It's not my opinion—

Oh, sorry. I agree with the sentiment. Both for retrofit and for new build, the planning process requires attention. From the retrofit perspective, the Welsh Government have put out a lot of planning advice to local authorities along the lines of, if you're putting in an external wall insulation, that doesn't require planning permission. But it's remarkable how often somebody decides that it does then require planning permission, and I think part of that is lack of cohesion amongst planning departments. I think some of that may be, if I were a cynical person, led by generating fees for cash-strapped planning departments. There are those parts of it.

But, yes, both from the new build and from the retrofit perspective, there needs to be more cohesion from planning departments, and I'd suggest that there are probably some relatively simple fixes that could be put in place. A smaller site or, quite often, a social housing site, requires much more—many more hoops to jump through than a larger site. I think part of that is fear factor; I think part of that is inward investment for that local authority. But, for a lot of local authorities, for a large housing site, their main considerations tend to be around highways and number of parking spaces.

I think there are an awful lot of homes being built at the moment that aren't fit for purpose. Again, we had a discussion of the two-bedroomed house being built with 50 sq m of floor space—for a two-bedroomed house. That tends to be more in the region of what you would expect for a one-bedroomed flat. They're being built—they are cheaper to build, they provide that access into the housing market, and for people to have homes. But you start to outgrow that property the minute you put the bed in.

Sorry, can we keep to the question? I agree with what you're saying on size of houses, but, anyway, can we keep to the question? The question is: in terms of building new energy-efficient homes, if the planning system isn't assisting, what do we need to do to make that happen?

So, there are some universal issues relating to the planning system at the moment, which we put a paper out on last summer, which will apply regardless of what type of house you're trying to build. There are also some specifics relating to low-carbon housing, which I suppose I should cover first. Another IHP project they found—

Do you want to tell the public what ISP is?

IHP. Sorry. The innovative housing programme. So, this is Welsh Government's scheme to essentially top up projects that have additional innovative features. So, you would—. The Welsh Government, they'd—

That's okay.

Is that enough?

Yes, so I heard from one organisation who've had some real problems with orientation of their site. They needed to orient it a certain way so that the solar panels would be effective. Planners didn't like the aesthetics of it, so they had some fairly big battles with them over that, and the site is up to 10 per cent less effective as a result. It's a fairly minor example, but it is indicative, I think, of perhaps a lack of desire to take on innovation, to accept innovation within the planning system.

To look at the more universal issues, you've got massive reduction in capacity within local planning authorities. The reforming local government White Paper the Welsh Government put out suggested that the planning function had declined by 53 per cent between 2009 and 2016, which is the largest reduction in any area of a local authority. That causes all sorts of problems in terms of delaying progress, as you would expect—there are fewer people to do the job.

Can I come in there? The danger is that it's the exact opposite, that, because you've got fewer planners, they can't fully examine the scheme and they just sign off big schemes because that's the easiest thing to do. So, it can actually speed them up, but it doesn't give the degree of scrutiny that planning schemes ought to have. 

Yes, I appreciate the logical step you've taken there, but our experience, or our members' experience, is quite the opposite. They've seen a lot slower processes and perhaps larger developments getting priority. We made some suggestions in our paper around what you could do about that, for example, letting local planning authorities retain fees so they can build themselves back up rather than have the planning fees—. We're open as a sector to discussing raising planning fees if that were—.

Would you agree with me, because I've been trying to make a fuss about this for some time without anything resembling success, to let local authorities set the planning fees rather than have the planning fees set centrally?

If there were an argument that that would speed things up then I would absolutely agree.

David, have you got anything?

I don't think we have any specific views on this other than that obviously we'd like the planning system to encourage and support the building of homes that are highly energy efficient and low carbon. I think one of the ways the planning system can support that is, if you've got a building regulation system that sets out a baseline for a zero-carbon standard, planning should be encouraging homes that can go beyond that, using this multiplicity of standards.

Thank you. 

I don't think it's much of a consideration for planning departments. As Hugh touched on, what is more of a consideration is streetscape, is aesthetics, is parking spaces, so I don't think there's any push from most planning departments to say, 'Let's really encourage the energy efficiency aspects'—

So, would you say then—because there is TAN 6—that what needs to happen is for more direction that would help enable—?

Yes.

And, if you've got any further thoughts on it, you can always send us—. Yes. Thank you. 

Okay. Can I thank David Weatherall, who took part in the first part of the meeting? Please stay, but can we go back to the bit that we did with David Weatherall here while you were stuck on the A4232? The first one is: should Passivhaus standards be imposed for all new homes?

Passivhaus is one of several standards and I wouldn't get overly hung up on what name you apply to a standard. I think it's a more sensible approach to look and to say, 'These are the standards that we will adopt'—you know, you've got Passivhaus, you've got EnerPHit, you've got where building regulations are. I think, if you adopt Passivhaus as a standard, you start to move in a certain direction of what you build and you start to move into perhaps a technological direction that doesn't suit everybody. I live and die by the statement that, whatever you do with a home, you start from the fabric-first approach on it. So, you make the fabric and the windows and doors and the openings, the ventilation, do as much of the work in terms of energy efficiency as you then can. So, I would look at—. It may be an opportunity for Wales to say, 'This is the standard that we will adopt', rather than something that's out there and may suit a different sort of geography, lifestyle and climate to ours.

Just to add a couple of points to that—. I don't mean to keep returning to it but I think it's really important. The learning we're going to get from the innovative housing programme, which is seeing a range of pilots developed, including a number of Passivhaus developments—there's an Active Homes development; there are a variety of these pilot projects coming through—and I think it would be hasty to be saying we should be looking specifically at this type until we've learned what works from that programme, really.

The other thing is that CHC has called for a review of housing across Wales, a broad review, which would include—. This would be a follow-up from the Essex review, which came out in 2008. So, we feel it's timely that there's another broad-ranging review. As part of that, we'd like to consider the standards that we'll need for the future. So, yes, I think both my points come back to the fact that I can't give you an answer right now.

Okay. Fine. Dai Lloyd.

Forgive me. I think that came in late, but a question as to whether we have a clear picture of the current housing stock to enable retrofit, to give us an idea of what retrofit is going to look like in the future: yes, we're getting there. So, there's a cross-tenure housing conditions evidence survey under way—the first one for a number of years; 10 years, in fact—which will include consideration of energy efficiency, which the Building Research Establishment are undertaking. Nest are also collecting data as part of that as to household income, household costs, where energy is paid for. So, those two datasets, when combined, should give us a pretty good overview.

I would also note that there's a budget I only came across last week—and I had a chat with One Wales about it yesterday. It's a One Wales project called FRESH, Foundation Data for Robust Energy Strategies for Housing, which is another mapping project. It maps information from energy performance certificates over information collected from the census so that you can see areas of relative poverty, for example. You can look at the quality of the housing stock in terms of its energy performance. What they've done is, they've received some funding from Wales & West Utilities, and it's a very small-scale project, but they've worked with local authorities to go into areas that show both poor energy performance and low financial attainment or areas of deprivation, and they've sent round energy experts, effectively, who have been able to give some advice, been able to give access to grants, been able to provide a bit of on-the-ground support. Like I say, it's a small-scale project, but I thought it was worth mentioning. I think they're doing a great thing there.

Fine.

Housing associations will have a pretty good picture of the energy efficiency of their stock so that the sector there, in terms of housing associations, stock transfers, et cetera—stockholding local authorities will have a good picture. So, from the social housing perspective, there will be a good picture of how energy-efficient they are, how well they're performing. That will start to reduce when you look at the owner-occupier sector, and we welcome the work that's been done in terms of the private rented sector because I think people in private rented are amongst those who face absolutely the most challenges. So, I think, as a sector, we really welcome the work there.

I think the biggest danger then, as I say, is in the owner-occupier sector, because you've got energy performance certificate data that depends very much on how good that individual assessor was. I think one of the biggest risks and biggest tasks and biggest things to challenge that we have is in rural housing. I think rural housing is where the map starts to go dark in terms of how well or otherwise people's homes are operating.

Okay. Following on from the answer you gave to me on Passivhaus, what are your views on which standards, where it should be aiming for and why? We've talked about Passivhaus, we've talked about near-zero carbon and near-Passivhaus, there's energy-positive—there's a whole range of these. Should we actually not get too tied up with which one and just say we want to generate something that is energy-efficient and then let people pick and mix from that list?

Certainly I think, based on my previous answer, until we've developed more learning in Wales, I think certainly, yes, keep an open mind—the sector is.

Yes. I think it's about what works best and what works best for different groups of people. I think perhaps near-zero isn't robust enough because you get people far cleverer than I am arguing about how far away you can be from near-zero and still call it 'near-zero', so I think it's going to go that way. I think as well that one of the dangers we identified was that, if you say, 'From 2020 on, this is what you have to have', there's a risk there that, as you near that point, things will fall over because it's nowhere near to it. I think you're better looking at a phased approach to it, not a 20-year phased approach to it, because then it'll take 20 years to reach that target, but I think if you look and say, 'This is when the legislation happens and within five years of that legislation there are annual reduction targets in terms of what happens', the sector needs to be—our sector needs to be pushed on it, really, and the volume housebuilders even more so.

I always like a direction of travel, and you can see the movement in that direction of travel because they know you're going to get to where you're aiming to eventually. Setting targets and then missing them doesn't necessarily—. People get disheartened.

Can I thank you very much? Are there any final comments you'd like to make or anything that you would like to have said and haven't?

I think the only thing that we haven't really explicitly discussed here is fuel poverty and the real need to be focusing on efforts, as I said, on energy efficiency in the coldest homes of people on low incomes.

I believe you had Chris Jofeh in before, and I always think of one of his quotes, which is that if you just concentrate on new builds you don't make the problem better; you make the problem worse more slowly, and I absolutely agree with that sentiment on it. I think Welsh Government's direction of travel in terms of the retrofit is to be applauded. We and Scotland are significantly ahead of some of the ways that it's being addressed in England, but we are passionate about it and it's about people's lives—fuel poverty, the effect that it has on health, communities, social welfare.

I'll leave you with one of my favourite quotes:

'It's very expensive to be poor.'

Thank you very much. You'll get a transcript of it, and if anything's been missed, if you could let us know. Thank you very much.

We've had the Welsh Government's response to the committee's report on the draft budget, which we dealt with last week. So, can I ask Members to note the response, and the clerking team will follow up the actions required and the Cabinet Secretary will report on progress within six months. Are we happy with that?

Well, I'm not terribly happy with the response, but—. Yes.

Well, it's unfortunate the way the budget went this year with that unfortunate incident, and that sort of pushed everything out of sync.

We do need to follow up—. In June or July, we need to follow up on it, I think, to make sure that it's been done.

Note our unhappiness.

Can I move the motion under Standing Order 17.42 to resolve to exclude the public from item 7 of this meeting?