Thank you for that introduction, Stewart [Basely, Executive Chairman The Home Builders Federation]. I am delighted to have been invited back to speak at this year's Home Builders Federation AGM and lunch.
You have asked me to speak about ways in which the industry can work with its partners to deliver our zero carbon homes agenda. This is an important and timely subject in view of the considerable opportunities and challenges facing us over the next 10 years to build more and better homes for future generations. Especially as I am sure that many of us in this room share the same vision of the future. A future:
Not only where we protect and enhance the environment not only for our generation, but also for those still to come. But also:
where families have access to homes they can afford;
where we create and sustain safe and successful communities.
We share this vision with many families across the country. It simply isn't sustainable for us not to build for the future. So this Government is committed to encouraging housing growth, raising the quality of design and improving the environmental performance of our homes.
Case for Change
Our first challenge is to increase the number of houses we build to meet our growing and changing population. Some said it couldn't be done. That the planning system was creaky and outdated. That we weren't putting enough money into new social housing. That we lacked skills in construction and in local authorities planning departments. That the housebuilders wouldn't play ball.
The Government's response has been clear. We have undertaken major reforms to the planning system. We reduced the number of tiers in the development plans system from three to two and at the end of last year we updated our policy on housing in Planning Policy Statement 3 (PPS3).
PPS3 gives local authorities the tools to deliver high quality housing by providing more flexibility in how they plan for housing. PPS3 places greater emphasis on how important good design is to achieving high quality housing, providing homes where families with children, young people and the elderly want to live. Design that, for example, makes space for children to play - design that helps create a community.
We also provided more resources to local authorities planning departments specifically £600m in the form of planning delivery grant over the last 5 years. They responded by speeding up decisions and three quarters of all councils are now meeting all the targets for deciding planning applications on time. Five years ago that was true of less than one in ten of councils.
The housebuilding and construction industries have responded. The level of housing supply has increased - from around 130,000 a year in 2001/02 to over 180,000 in 2005/06. We are also on course to deliver the target of 30,000 social rented homes a year by 2008. There is an explicit commitment to increase expenditure on social housing as part of the current spending review. But building more social housing in isolation will not solve the problem. As we know, many of the young families joining social waiting lists right now would have preferred to buy a home of their own. But they have seen house prices rise in recent years to beyond their means. You need to build more affordable housing - it is as simple as that.
We have 1.8 million more home owners compared to 1997. But long term house prices have continued to rise faster than earnings. In every region of the country, we have seen house prices rise significantly faster than earnings - putting particular pressure on first-time buyers. Every region of the country now faces affordability pressures. In every region in the country, demand is now increasing faster than supply. So what we have done so far isn't enough. We need to keep up the momentum. The most recent household projections indicate even greater rates of household formation - to around 220,000 new households per year.
If we do not address this rising the demand there will be serious implications both for economic stability that business relies on and social justice that people expect.
We know there are many challenges so we asked John Calcutt [nice to see him in the audience] to undertake a "Review of Housebuilding Delivery". He has been asked to examine how the delivery of new homes is influenced by such factors as the nature and structure of the housebuilding industry along with its supply chain of land, materials and skills. But the review looks beyond capacity to address household growth. We look forward to receiving John's recommendations this autumn. It will look at how homebuyers' needs and aspirations can be met. People don't just want more affordable homes. People want to find a well-designed environment when they walk out their front door. People want energy efficiency - to save fuel and help tackle climate change.
The Role of Design
We need to create sustainable well planned communities - with well-designed homes. But design is not just about individual homes, its not just about the green spaces - it also covers the infrastructure - the streets and schools, it means giving the access to jobs. It means designing a place that helps make communities great places to live and where families can prosper.
There are excellent examples up and down the country of refurbished and new developments that have created successful mixed tenure communities, with comfortable homes that are light and airy with good quality private outdoor areas as well as surrounding public space. The Coalfield Communities programme has transformed places - they have refurbished homes and provided new jobs. There are now more jobs on the site of the colliery in Castleford then there were below ground. The Housing Market Renewal Pathfinders have also succeeded in turning around some of our most deprived communities - by renovating housing and improving the design of the local environment. Or look at the Millennium Communities - the striking design of Greenwich even features on the new BBC 1 programme links. You only have to look at the increasingly high standards of the projects coming through our Housing Design Awards each year to see how standards are improving.
But progress is still too patchy. CABE's recently completed Audit of new housing built between 2003 and 2006 shows all too often we are accepting poor quality schemes. Fewer than one in five schemes were classed as good. Nearly a third were considered to be poor - so poor that CABE felt that they shouldn't have received planning consent. CABE concluded that much more needs to be done by all those involved in development to deliver high quality design. We need to improve the design of both individual homes and the places that surround them. Design needs to be higher up the agenda of all involved in housing. This is my second challenge to the sector.
Climate Change
The third challenge, and considering the theme you have asked me to cover today, the one I will spend most time on is - to design homes and places that help us tackle climate change. Amongst the scientific community and in Governments there is no longer any real doubt that the climate is changing because of our actions. Already our planet is 0.7 degrees warmer than it was a century ago. Already the carbon dioxide in the atmosphere is 40 per cent higher than a century ago - and at its highest level for over 700,000 years. Ten of the hottest years since 1850 were recorded since 1990. We cannot be certain what the catastrophic consequences will be if we don't act. But the risks are high. The recent Stern report made clear, if we carry on like this, there is at least a fifty fifty risk of the planet's temperature rising by 5 degrees by the end of this century.
This could mean hundreds of millions of people could see their lives and livelihoods at risk from the rising sea or heat and drought. Hundreds of millions of refugees seeking help and homes. A million species - such as polar bears - could be extinct within fifty years. And the economic impacts could be greater than the two world wars and the Great Depression put together. And what does this mean for the built environment, for our cities and towns, for our homes? Nearly half of our carbon emissions come from buildings. A quarter from our homes. To deliver the changes we need means substantial changes to the way we heat and power our buildings. We need a new approach to designing places and buildings that are environmentally sustainable. Whether using lighter coloured finishes to help combat the urban heat island effect, or careful use of materials that have lower embodied energy.
Last year I went to Scandinavia. I saw inspiring examples of low carbon homes and community infrastructure - proof that high quality of life and sustainable living can be achieved together. I learnt a great deal. So did the people who came with me - your executive chairman, Stewart Baseley, Paul King of the WWF, and John Calcutt. What we saw convinced us that we needed a step change in the way new homes were built. The UK was clearly lagging behind. So in December the Government said we want to ensure that all new homes are built to a zero carbon standard by 2016 at the latest. This will cut our carbon emissions by around 7 million tonnes a year by 2050. That's equivalent to more than the annual total emissions from the 8 largest English cities outside London. This shift towards zero carbon homes will be supported by a long term strategy which combines changes to the regulations with fiscal incentives, and by demonstrating how it can be done.
The Chancellor's announcement that he will exempt zero carbon homes from stamp duty will give a significant boost to take up. We have seen before how incentives like this can create and reinforce new markets. Six years ago, low sulphur petrol went from being almost unknown to dominating the market in a matter of months. All because the Chancellor cut the duty by 2 pence. I believe we will see something similar with zero carbon homes over the next decade. To see this effect we will need to show how we can move from where we are now to lower and the zero carbon development. Zero carbon homes is not a Government whim, Stewart Baseley and I have established a taskforce to make sure we work towards tackling the barriers to achieving the zero carbon homes target. The adoption of the Code for Sustainable Homes will help.
All new Housing Corporation funded homes and those supported by English Partnerships will achieve Code level 3 standards as minimum - that's a 25 per cent improvement on the current building regulation standard. Indeed in many places it is the social sector that is already showing the way to provide the most energy efficient homes - thanks to the investment you and we have put in through the Decent Homes programme. The designs of new social housing will need to be high quality yet affordable so that people on low incomes do not lose out. Already some places are already able to go further - the Millennium Communities that we initiated in 1997 are already delivering Code Level 4. I've personally seen some other innovative and exciting projects - such as Hockerton - that show how to produce low carbon, high quality homes. But we need to make sure that examples of best practice become standard practice. So we launched the Carbon Challenge with English Partnerships to fast track the creation of zero and near zero carbon communities. These new homes will demonstrate high standards of design while achieving Code levels 5 and 6. Building on the lessons learned from our Design for Manufacture competition, the creation of these exemplar communities will help the industry to develop the skills and technology needed. The detailed designs of the Challenge communities will respect the local needs of individual sites and will ensure that the use of energy and water and the creation of waste are reduced.
I also announced in March funding to develop standards for 'eco-towns' in our Growth Areas. These will demonstrate how to reach the highest standards of sustainability including low and zero carbon technologies and quality public transport systems. I am certain that these eco-towns will also make use of brownfield land and surplus public sector land and lead the way in design, facilities and services, and community involvement. Many of you will know of the new brownfield settlement planned at Northstowe near Cambridge. It will provide 10,000 homes with schools and facilities, but with a 50 per cent reduction in energy emisssions and a strong public transport link. We want to extend this kind of exemplar work even further .
Already we have said that we will examine the costs of achieving a low carbon Thames Gateway. I can promise you that I want the Thames Gateway to showcase the best, most innovative approaches to low carbon in both the new homes that will be built and the existing stock.
Improving the quality of information available to consumers will also make an important contribution to improving the environmental performance of the nation's building stock. The roll out of the Energy Performance Certificate will start with the introduction of Home Information Packs on 1 June. Every home sold with a HIP will have an energy efficiency rating just like a fridge. As you know we will be requiring new homes to have an EPC from 1st October this year. The Energy Perormance Certificates will ensure that consumers are given key information about the environmental performance of the homes that they are thinking of buying so that they can make informed choices. The 'recommended measures' that go with the certificate will let consumers know about the things they can do, often as simple as installing loft insulation, to reduce their fuel bills. This will be a great step forward in helping the environment through improvements to the the existing building stock
And the Future?
Finally, of course, we will have a new agency to help. The creation of Communities England is a significant new step. It will be a new national housing and regeneration agency, combining the investment activities of English Partnerships, the Housing Corporation, and some delivery functions from the Department for Communities and Local Government.
Communities England will work with local partners to provide the right mix of housing, infrastructure, economic development and community facilities - including meeting the needs of vulnerable groups. And it will focus on delivering quality, sustainability and good design.
I am grateful for the contributions of the Home Builders Federation and others in the industry to the initiatives I have outlined today and I am heartened by the commitment of many in the industry to respond to the challenge. The Government wants to continue to work in partnership with those in the industry who build the places where we, and future generations, will live and work. Together I am sure that we can deliver zero carbon homes by 2016.
Thank you for listening so patiently at the end of your lunch - I hope next year when you gather again that you will be able to tell each other about the affordable housing you have built on some fantastic new mixed developments that are well-designed and sustainable.
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