Item 5 on our agenda this afternoon is a debate on the Climate Change, Environment and Rural Affairs Committee report on its inquiry into 'Low Carbon Housing: the Challenge'. I call on the Chair of the committee to move the motion—Mike Hedges.

Motion NDM6832 Mike Hedges

To propose that the National Assembly for Wales:

Notes the report of the Climate Change, Environment and Rural Affairs Committee, 'Low Carbon Housing: the Challenge', which was laid in Table Office on 2 August 2018.

Motion moved.

Thank you, Deputy Presiding Officer. I'm delighted to open today's debate on the Climate Change, Environment and Rural Affairs Committee's report on the challenges of meeting our need for low-carbon housing. I would like to thank all the current and previous members of the committee who contributed to our inquiry, the clerking team, the Research Service and those who gave evidence to us.

Our report addresses the reasons why we need energy-efficient homes, the costs of having inefficient housing and the steps needed to get us to where we need to be to meet our commitment on reducing emissions. Why do we need change? There are many reasons why we should improve the energy efficiency of our housing stock. The most pressing is the need to deliver on our legal obligations to eliminate fuel poverty and reduce the emission of greenhouse gases. The Welsh Government is required to reduce emissions by 80 per cent by 2050. Challenging targets need challenging solutions. Reducing the amount of energy we use in our homes will substantially accelerate progress towards these goals. Achieving these targets will require a considerable ramping up of ambition and must span the whole of Wales’s policy levers.

Our primary recommendation is that the Welsh Government should bring forward a 10-year low-carbon strategy, including milestones and targets in six key areas, including retrofit, new build and planning. I will focus on three of those key areas today.

First, retrofit. The houses built in the twentieth century will, by 2050, probably massively outnumber those built in the twenty-first century, and those built in the nineteenth century, in many parts of Wales, will outnumber those built in the twenty-first century. So, obviously, we need to retrofit. Inefficient homes result in higher fuel bills and the poorest in our society bear the brunt of this. Too many vulnerable people are paying too much for their heating through no fault of their own.

The Welsh Government has spent many millions on alleviating fuel poverty through retrofitting heating efficiency measures for the most at risk. Our report commends the efforts to deal with this problem and the announcement of a further £72 million pounds in the Arbed programme to continue the programme. Despite the Government’s efforts, the fuel poverty target has been missed. We heard that retrofitting needs to be done at scale to have any impact on fuel poverty, for instance retrofitting 40,000 houses a year to have a chance of meeting the target by 2050. We have recommended the Welsh Government should aim to deliver, within 10 years, the retrofitting of all houses in fuel poverty in Wales to zero carbon in operation standards.

The second area that I'd like to focus on is new build. Although new build accounts for only 6 per cent of housing, this is something that we have to get right. Today's new builds will still be in use in the twenty-second century. We recommended that the Welsh Government, within the lifetime of our proposed 10-year strategy, should ensure that all new-build houses should be built to zero carbon in operation standards.

There are few large-scale house builders, and there is little incentive to offer more than the minimum standard required by building regulations, but some large-scale builders aren't very keen on putting in roads to adoptable standards, never mind making sure that houses are built to be warm. We were told that changes to building regulations would lead to fewer houses being built in Wales. We’ve all heard that before, haven't we, Deputy Presiding Officer? We were told that about sprinklers. But we were also told, given notice and time, even major house builders will be able to adapt to higher building standards. We believe the Welsh Government should set out a clear timetable to move to zero carbon in operation, so that house builders, the supply chain and the skills providers can prepare. I am pleased that the Cabinet Secretary has accepted our recommendation on this.

We were also concerned to hear stakeholders telling us that existing building standards are not being enforced. Clearly, the system is not functioning. The inspection system needs to be far more rigorous and independent. We have called on the Government to introduce a quality mark for energy saving measures in new builds and retrofit technology to increase consumer confidence in low-carbon homes. The inspection and enforcement of this quality mark must be independent and rigorously enforced. It should also place an obligation on the installer to ensure the required performance is delivered or repair or replace the technology. Not, 'This is what you could achieve if everything else worked perfectly.'

Of course, these ambitious retrofit and new-build measures cannot be delivered unless we have access to the right skills at the right time. We found that there's a shortage of appropriately skilled professionals working in the industry. The need to pay for additional labour increases the cost of the necessary technology, which puts off builders from installing it. The industry representatives told us that the biggest barrier to investing in training is the lack of certainty in the market. To invest in training, they need to know that those skills will be used. This is why a clear commitment to a 10-year timetable towards zero carbon in operation standards is so important. It will give the industry the confidence to train the workforce we need to bring our homes into the twenty-first century.

Finally, I would like to turn to the Welsh Government’s response. I haven’t spent much time talking about it so far. It will be very familiar to Members—recommendations are accepted in principle, but we have no idea how they will be delivered in practice. We are told that subjects are being reviewed by groups of advisers or civil servants. Members may be forgiven for feeling a sense of déjà vu. I think of 'agreed in principle' as meaning, 'We're not going to do it, but we don't want to have an argument about not doing it, so we'll accept it in principle so that we've got a positive in there.' I think that, really, and I look at you, Deputy Presiding Officer, we need a system by which things are either accepted, partially accepted, and the parts that are accepted are named, or rejected. I'd much prefer to put recommendations forward that are rejected and I can then argue the case why they shouldn't be. How do you argue against 'agreed in principle'? You've got the 'agreed' in there—I mean, you agree with it in principle as well, so how do you argue that case? It makes life very difficult, and this is not unique to this report and it's not unique to this Cabinet Secretary. So, it's not a personal attack there, it's a fairly common Government response that I think is unacceptable.

Take our key recommendation for a 10-year comprehensive strategy for low-carbon housing. The response says that these matters are already being looked at by an advisory group that will report back in summer 2019.'Factor in the time it'll take the Government to respond, then add the time it'll take to develop an actual deliverable policy and the time needed to consult on it—we are making very little progress on our 10-year programme. I think we're down to five now after that list, if nothing goes wrong. I think it really is important that we do take creating low-carbon housing seriously.

Cabinet Secretary, I speak on behalf of the whole committee—we are frustrated by delays and a lack of progress. Our report contains challenging and ambitious proposals for Wales. We hope that in your response you will show the same ambition as we've shown in actually trying to get low-carbon housing for Wales.

It's a pleasure to follow our excellent Chairman. I say 'our' excellent Chairman—I've now left the Climate Change, Environment and Rural Affairs Committee, but I did enjoy my time on it, and I thought this was a particularly important report, and a fitting one with which to end my time on the committee.

Housing is a key area for carbon reduction, and if we're to meet our ambitious targets to reduce emissions by 80 per cent by 2050, they're going to be at the heart of any strategy. But ambitious as those targets—well, they certainly were when they were made—the latest scientific evidence suggests we may have to go further and more quickly. The speed with which global warming is now happening is profoundly disconcerting.

I share Mike's annoyance, really, with this system of responding to reports and saying 'accept in principle'. Now, I thought that the Permanent Secretary had already made a commitment that the Welsh Government would not be making this sort of response; it would be doing just what Mike Hedges said: accept, reject, or accept partially. I do wonder, Deputy Presiding Officer, if the Welsh Government were asked, 'What's your view about the 10 commandments?', they'd say, 'Accept in principle'. [Laughter.] Well, you know, this doesn't really get us very far. These are imperatives, that's why we have reports, and we do need clear policy responses. I very much agree with what the Chair of the committee said, that when we report after exhaustive evidence, very carefully considered, supported by an outstanding secretariat, and the attention, obviously, of the Members under the leadership of the Chair, I really do think that that constitutes the firmest evidence you're going to get on these matters. So, I think we do need more punch in terms of the response.

I was particularly disappointed by the Welsh Government's qualified acceptance of recommendation 1. We do urgently need a 10-year strategy, and you're saying you're going to await the report of the decarbonisation of homes advisory group and their report, but are you going to have a strategy then? At least tell us that, if you are waiting for that group to report. What we said is that you needed a strategy, and I think that that is a fairly direct recommendation to which we could have a 'yes' or 'no'.

If I move to recommendation 3—again accepted in principle—and that is really about quality assurance, I accept the Government realised that that is really important. But let's remember that the best systems won't deliver if they are installed badly, and we did find evidence that this has been happening. And also, if we're trying to get people particularly paying from their own means for retrofitting—and it can cost, I think, on average £15,000 a property—we've got to be able to reassure people that they're going to get a quality product. So, I note that it's the UK Government that has responsibility for the new quality mark for retrofitting products, but I do want to know what the Welsh Government is going to do to ensure the effective use of that charter mark in its own programmes. I think that is something you can answer now.

Recommendation 6 has been rejected and this emphasises the need, in the focus on retrofitting, on those who are in the able-to-pay and low-income home owners category. This is really such an important part of the market, because these are the people we really need to attract if we can get that bulk to move over and install retrofitting. They're going to be outside public programmes, usually, they're not in social housing, and they're going to have to bear the cost of the retrofitting. We may be able to aid them in certain ways with attractive mortgage products or loans or whatever, but it is really a very important area and I think the Welsh Government has to give a lead.

On recommendation 7, I think, again, a point made by our Chair: we need to ensure there's a talented, skilled workforce there. But I found that response to our report particularly complacent, because unless we know we're going to have a strategy and the scale at which we will be retrofitting, we can't possibly hope to train the number of people we will want to be qualified for this important construction work.

Finally, on recommendation 13, which is rejected, I think it's lucid to say that you don't think direct tax incentives are appropriate for the able-to-pay and low-income house owner sector, but then I think we need to have a better indicator of what alternatives you're going to use. You can't just say, 'There's international evidence that grant mechanisms and communications strategies are better.' What are you going to do? That's what we want to know. Thank you very much, Deputy Presiding Officer.

As a brand-new member of this committee who wasn't fortunate enough to be party to a lot of the evidence received, I did thoroughly enjoy reading the report, and I did read, as well, the Government's responses to the recommendations. It's clear we are still facing significant challenges in meeting our climate change commitments here in Wales, and a reduction in emissions of 80 per cent by 2050 will require bold and decisive long-term action by the Welsh Government, and making housing a central plank of achieving that in terms of making our houses more energy efficient is going to be one of the key elements in achieving that, albeit a very difficult one, clearly, because of the age of our housing stock—it's one of the oldest in Europe, and the report rightly demands an ambitious vision from the Welsh Government. The scale and pace of delivering highly energy-efficient homes needs to be urgently increased, or, of course, we'll fail to meet the challenges that we face. And some of these messages I'll be expanding upon in our later debate on climate change.

I would like to align myself to the comments made by the Chair and David Melding about this tendency to accept in principle. It was clearly a feature in the Children, Young People and Education Committee's report, 'Mind over matter'. In that instance, of course, the Ministers and Cabinet Secretaries were sent back to look at some of that again. And you're right to refer to a letter from the Permanent Secretary, David Melding, but the letter was explicitly in relation to the Public Accounts Committee, and I'm just wondering—I think it's got to a point now where we really need to consider whether this is actually extended to all committees, or at least that there's a process in place to sit down and look at all of this.

Anyway, the Welsh Government really needs to drastically upscale its home energy efficiency programmes in order to tackle not only climate change issues but, of course, as we know, fuel poverty, and to take advantage of those jobs that will be created as well. I'd like to see us put in place a target around reducing energy demand, and even aggregating that down to a localised level so that we can actually encourage more local ownership of what needs to be done, and making global ambition something that people in individual communities can relate to and can feel that they actually can contribute positively towards achieving.

Around 23 per cent of households in Wales live in fuel poverty, and we estimate around 1,800 excess winter deaths every year, of which, in 2016-17, around 540 could be attributed to cold homes. Now, that tells its own story as well. The Institute of Welsh Affairs has used Swansea bay city region as a case study of how that region could meet its projected energy demands entirely from renewable resources by 2035. It found significant scope for opportunities in meeting that challenge. For example, 200,000 homes—that's 60 per cent of domestic properties in that region—would need to adopt energy efficiency measures to meet the 2035 goal. Now, that as well, of course, would ensure that each home would save between £350 and £420 a year on their annual energy bill. Now, we as a party have said that we'd launch a national energy efficiency programme to help keep homes warmer, bring down energy bills, create jobs and help the environment in a multibillion-pound investment programme over two decades.

Before I run out of time, I don't want to let the second recommendation go, which refers to Part L of the building regulations. In the last Assembly, when I was the party spokesperson on this issue at that time, the Welsh Government went out to consultation on improving energy efficiency, and they had two options in the consultation. One was for a 40 per cent improvement; the other was for a 25 per cent improvement. They held the consultation, and they plumped for an 8 per cent level. Now, that was a hugely missed opportunity, in my view, for Wales to be ahead of the game, to gain first-mover advantage in a journey, of course, where we all have to achieve a certain level by a certain point in time, so there was never an issue as to whether we wanted to move in that direction, and it's good to see people who voted against that at the time now being much more enthused about this, and I'm glad that the Government is moving in that direction. Although, more generally, given that the clock is beating me, I have to say I am rather disappointed by the modesty of the Welsh Government's response. It doesn't really represent the urgency that we need, or indeed the ambition that we have a right to expect.

Thanks to the committee Chairman for bringing today's debate. Mike Hedges raised the issue of how much regulation we need in this part of the housing market, and of course we have to be careful not to overregulate, but I think he made a good case that we need a certain level of regulation to deal with the issue of old houses and their lack of energy efficiency. So, low-carbon housing is one way in which we can do that. Retrofitting is going to be a necessary part of the programme, as Mike Hedges pointed out, and we do need quality assurance, if we're going to bring in a retrofitting programme, to avoid problems that we've had in the past with cowboy contractors entering the market, as we saw with cavity wall insulation. So, we do have to be careful that we don't repeat mistakes that have been made in the past. 

Training is an issue. As Mike pointed out, we did have people that were involved in the inquiry raising issues about training. Now, new skills will be needed in the production of low-carbon homes in the future, because the sorts of skills that you need to build these are not traditional construction skills. Further education colleges could offer these kinds of courses. We heard evidence from witnesses stating this. But, of course, we need to know that there will be a market for these skills going forward, and we need to have some assurances that there will be, therefore, some kind of Government aid for the low-carbon housing schemes. Planning issues also arose in the inquiry. There was an issue raised about retrofitted walls in particular, because we were told that retrofitted walls, under a strict interpretation of planning rules—. They're not supposed to require planning permission, but we were told it's amazing how often planning inspectors decide that retrofitted walls do need planning consent, and it was suggested that this may be part of a system of local councils, who are allowed to charge their own planning fees, deciding to charge people for different things that, strictly speaking, they didn't need to be charged for, in order to raise extra revenue for their own cash-strapped local authority. I don't know how real an issue that is, but it was raised by a couple of people, so it's probably worthy of investigation, that.

The issue of accepting recommendations in principle: yes, not a very good practice, which seems to be becoming more and more widespread with the Welsh Government. But other Members have— they've made their feelings known on that, and I'm very glad that Mike Hedges did as well, and that he continues to show strong independence of mind as the Chairman of the committee. Diolch yn fawr iawn.

Can I call the Cabinet Secretary for Energy, Planning and Rural Affairs, Lesley Griffiths?

Thank you, Deputy Presiding Officer. I welcome the committee's report, which recognises that the delivery of low-carbon housing in Wales offers significant challenges and opportunities. Domestic buildings are responsible for an important proportion of Wales's carbon emissions. However, it is important to understand that reducing emissions can be achieved in many different ways, and a range of solutions will be required, based on house type, tenure, energy performance, demographics, building usage and a range of other factors. The Minister for Housing and Regeneration and I, alongside our ministerial colleagues, are committed to transforming Wales into a thriving country in a low-carbon world.

In July, Cabinet agreed to make decarbonisation a priority area in 'Prosperity for All'. In December, we will ask Members to agree emissions targets for 2020, 2030 and 2040, and our first two carbon budgets. This will provide a clear decarbonisation pathway for Wales. Over the summer, we launched a consultation, seeking stakeholders' views on our approach to decarbonising Wales, and I was very pleased with the response. These responses are currently being analysed and will inform the development of our low-carbon delivery plan, which will be published in March 2019.

Our emissions from the residential sector accounted for 8 per cent of total Welsh emissions in 2016, and emissions from the sector have decreased 25 per cent since the 1990 baseline. We've already committed to the development of a new programme of action that will decarbonise homes in Wales by 80 per cent by 2050. This will have clear milestones and targets. We are currently developing this programme using specifically commissioned independent research to provide a strong evidence base. The decarbonisation of homes advisory group, which is made up of a wide range of external stakeholders, is helping us to develop and then deliver the programme.

At the moment, it is not possible to support the committee's recommendation for a low-carbon housing strategy in full, as it is still unclear what the research and the decarbonisation advisory group will recommend to Ministers. The report is due in the summer of 2019. But, just recently, I spoke at an event organised by Mark Isherwood, and I did commit to certainly being very happy to work at getting that strategy brought forward, and I think the advice that stakeholders gave me at that meeting was that a 10-year strategy would be required.

In the meantime, our innovative housing programme is being used to test low-carbon solutions. In 2018-19, it is open to both social landlords and the private sector. This is important as it encourages the SME sector in housing in Wales to start building again, but in a way that changes their existing practices. Through regional skills partnerships and various programmes of support, the Welsh Government is providing investment in training provision to ensure that the construction sector has the appropriately skilled workforce to deliver its targets for energy-efficient homes. Regional skills partnerships collate and analyse labour market information to provide the Welsh Government with information on existing provision levels against current trends, but they also work with employers and significant development projects to project future skills needs.  

Part L of building regulations is currently being reviewed to increase the energy efficiency of new homes and deliver, as a minimum, nearly zero energy. David Melding referred to a so-called performance gap, but I do believe this review will certainly address that, going forward. I will consider imposing more stringent standards if NZE does not meet our current energy ambitions. As part of the work to deliver the next changes to Part L, we will identify opportunities for future improvements beyond the current review and the timetable for achieving them.

Through our own programmes, we are driving high standards of energy efficiency measures and installation. With the closure of the feed-in tariff expected in March 2019, we will also need to look at how we drive forward reductions in emissions through renewable energy measures in homes. This year, we have awarded and mobilised contracts for the next phase of the Warm Homes programme. Nest and Arbed 3 contracts both stipulate whole-house assessments are undertaken to ensure the right solution is offered. This means we improve home energy efficiency and give people the help they need not to live in fuel poverty. We are making significant investment in this programme, investing £104 million between now and 2021. Our investment will also lever in up to £24 million of EU funding in addition to funding from the UK energy company obligation, and this will enable us to improve up to 25,000 homes.

We already have plans to commission a cost and benefit analysis of retrofitting homes, and that will include households that are in fuel poverty. This will better inform how best we help people out of fuel poverty in the future, whilst supporting our housing decarbonisation objectives. We are also leading the way by demonstrating to mortgage providers ways to incentivise preferential lending rates for low-carbon homes. The industry-led lenders project has provided a formula for affordability assessments that takes into account the energy efficiency of the property and can provide additional borrowing for more efficient homes. We introduced this formula into the Help to Buy—Wales affordability calculator in June this year.

Whilst we recognise the importance of moving towards zero- or low-carbon homes, we do not wish to introduce this into all schemes at present, but rather introduce this type of requirement over a period of time. The Wales stalled sites fund, for example, is designed to bring together a cohort of developing SMEs before we introduce such a requirement. We remain committed to consider all relevant evidence, and should further evidence come forward that supports the case for changes to taxation or policy, the Welsh Government will be happy to re-examine the case. Diolch.

Thank you. Can I now call on the Chair of the committee, Mike Hedges, to reply to the debate?

Diolch. Can I thank David Melding for his comments this afternoon, for his contribution to the debate, and for his contribution during the committee? I can say that you will be missed in the committee when we discuss housing.

He raises that quality assurance is important. People need to be assured that, if they are buying something, the quality that they've got is such that they are not paying money out like people have done for other things that they've had that were meant to help their homes and didn't.

Older properties are lived in by people who are on low incomes and are low-income house owners. That's by definition. Your five-bedroomed detached houses tend not to be lived in by low-income householders; it’s the two/three-bedroomed terraced houses that are lived in by low-income owner-occupiers, and it’s important that these properties are retrofitted. This is probably the biggest group of people who could benefit in terms of not just fuel poverty, but actually benefit from retrofitting.

Llyr Gruffydd—again, the importance of having a method of reducing carbon, and housing has to be part of it. Scale and pace need increasing—I think that’s something we’ve said about an awful lot of things from our reports from time to time, but it's, I think, if you can sum up an awful lot of things here, moving in the right direction but not quickly enough. I think that's probably—. I don’t think anybody criticised the direction in which the Welsh Government is going. Nobody criticised the fact that the Welsh Government is moving to reduce fuel poverty. They are moving to reduce carbon. I think the concern is, from the committee—and any of the members of the committee can tell me if I’m wrong—it’s not happening fast enough.

New jobs—we’ve talked a lot about the fact, and we’ve had Lee Waters, who is not in here, tell us regularly about the effects of automation, but other jobs will be created. This retrofitting is unlikely to be automated, certainly in the short term. So, it’s really important that we skill people up to do this.

Gareth Bennett came on and talked about that we need skills. We need the colleges to train people, but people will not undertake training, colleges will not undertake courses, unless they know there’s a market and there is an assurance of continuity, that they know—the people going on a training course—that there's going to be 10, 15 years' worth of work to retrofit, rather than in three years’ time there will be a change of policy, a change in direction and their skill will be outdated.

I thank the Cabinet Secretary for her response. I very much welcome many of the comments she said. And there are many different ways of reducing emissions. I do not see—and perhaps the Cabinet Secretary can explain to me—why tenure affects the method of retrofitting. I can understand how the type of property affects it, but I can't understand how a house being privately rented, owner occupied, or owned by a housing association would actually affect the type of retrofitting you needed. Perhaps the Cabinet—I'm quite happy to receive an intervention for that to be explained to me.

Decarbonisation is a priority—and the Cabinet Secretary highlighted reductions. We're going to have milestones and targets to be set; I think that most Members in here would like to know when. Consider more stringent standards—yes, that's the direction we want to move in. Review of Part L—I think that's something that needs to be changed. We all welcome Nest and Arbed 3, and I'm sure that whoever stands here in about five or six years' time will welcome Nest and Arbed 4. But, at some stage, we need to be making progress to such an extent that we don't need Nest and Arbed 5, 6, 7, 8, 9 and 10.

Fuel poverty is a huge problem. I'll finish on this—a story of one of my constituents. She goes to bed at 7 o'clock at night with her daughter. Why? That's the only way they can keep warm. They live in a house that is privately rented, probably because they spend more on keeping cold than most people in here spend on their houses keeping them warm. And I think that that is the problem. We have this level of fuel poverty, and it's the poorest people who are suffering, not just because of the cost of fuel, but because of the type of property they live in—the single glaze with gaps that means that they're doing very well at heating the world, but not such a good job of heating their own houses. Really, fuel poverty has got to be a top priority. I know the Welsh Government wants to reduce it, but we need to be really committed to eliminating it.

Joyce Watson took the Chair.

The proposal is to note the committee's report. Does any Member object? The motion is therefore agreed, in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.