Aaron Elliott considers the strategic issues involved in combining development of new zero carbon homes with decarbonization of existing ones.
The Welsh Government (WG) Draft Budget published in December was a timely reminder for housing associations and local authorities of the sustainability challenges related to the development of new homes. The draft budget includes a package of £1.6 billion for housing priorities of which £1 billlion will go towards social housing. There is significant emphasis throughout the budget, a golden thread, around climate change, sustainability and zero carbon across the various proposed funding settlements. The housing settlement was no different.
It’s a big ask
The zero-carbon agenda is at the forefront of WG ministers’ minds. Social landlords are carefully considering how they will respond to the challenge set to them, with scarce internal funding available, despite the substantial funding settlement from WG. Altair’s June 2020 report commissioned by Community Housing Cymru (CHC) calculated a cost of £4.3 billion for housing associations to meet the target decarbonisation target and the finer detail of WHQS 2.0 is looming. This is set against a backdrop of other competing priorities such as building safety and increased town planning requirements such as in TAN15 that could further constrain land supply. All of this is a heady concoction of requirements, and some would say ‘red tape’, for the development of new homes of all tenures.
An Altair report looking at ways of implementing off site manufactured (OSM) homes, cited supply chain concerns and also materials as key challenges to pressing ahead with factory-based construction. These supply chain difficulties will also be present for new technologies and approaches to achieving zero carbon developments. So a thorough risk assessment and supply chain analysis will be critical to anything innovative and shiny used to achieve zero carbon in new homes.
The seminal Rethinking Construction report by Sir John Egan, is now nearly 25 years old, and has been followed up by The Farmer Review of the UK Construction Labour Model: Modernise or Die by Mark Farmer in 2016. Both reports highlight the challenges of efficiency in the construction sector, and they are still relevant today. Some associations have made a head start on this such as Cartrefi Conwy and United Welsh progressing with their own factories and subsequent developments that will no doubt answer a lot of the criticisms levelled at the construction industry in these reports. Could it be through this political priority around climate change and zero carbon that the sector is forced to become more efficient to deliver the challenges set by Egan and Farmer? A potential win-win all round but not without big challenges to head off before it becomes a reality.
Strategic direction and directive
There is a waterfall of papers and reports on the zero-carbon agenda and unpicking it all can be quite a task. Altair’s report Housing the Green Revolution Pioneering the way forward (available at: https://thinkhouse.org.uk/site/assets/files/2305/altair0121.pdf) from last year untangled some of the key strategic issues for those delivering new homes to marry zero carbon new homes with decarbonisation of existing stock, alongside the various activities in day to day business to reduce organisations’ carbon output.
The initial impetus will need to be taken from the very top of organisations when looking at strategic priorities, risk appetite and internal capabilities. This approach goes right to the heart of the business (incorporating budgeting and accounting) to incorporate zero-carbon reporting. By establishing a clear framework to navigate the journey to net-zero across the business, development teams will understand their targets, enabling them to calculate what can be delivered within the budget envelope. It’s likely that reduced new-build targets will compensate for the increased capital cost as zero-carbon construction techniques and technologies take time to produce cost efficiencies. OSM may help realise those efficiencies quickly, if carried out at scale.
We envisage a mixed market of supply with traditional and modern methods of construction being the norm. Wales could increase its off-site manufactured homes, aligned with the WG’s five-year settlement, and realise all the benefits that that can bring to communities. If done properly it can play a key part in fulfilling the objectives of both the foundational economy and the Well-being of Future Generations (Wales) Act 2015 and turn the zero-carbon ambitions into reality on the ground through new developments.
Thank you to Gareth Davies from Cardiff Community Housing Association for sharing his thoughts and contribution to this article.
Aaron Elliott MRICS is business development director at Altair Consultancy
If you’d like to discuss your organisation’s approach to developing new homes in the conversation about net zero contact aaron.elliott@altairltd.co.uk or annabel.gray@altairltd.co.uk or 07774 527054