Monday 17 March 2014

Merton Rule Lives on

Housing Standards Review Steps Back from Brink

Image: Viridian Solar

The Department for Communities and Local Government (DCLG) has concluded its Housing Standards Review and contrary to expectations the so-called Merton Rule, whereby Local Authorities can specify that new homes generate a certain portion of their energy use from renewable sources is retained.

 Part of the government's 'Red Tape Challenge', the Housing Standards Review (HSR) was wide-ranging and covered issues from wheelchair access in new homes, their consumption of water and use of energy.  The starting point of the review was that there has been a proliferation of different standards and that this is costly for both housing developers comply with and for Local Authorities to police.  DCLG proposed a number of ways in which it might simplify matters.

The consultation published in the autumn contained a serious threat to the deployment of renewable energy in new homes.   (See my earlier blog and infographic). 

After a series of changes in which the energy efficiency of new homes improved rapidly, progress has completely stalled since the coalition government came into power.  As a result, current building regulations can easily be met without renewables.  The only driver to encourage developers to use renewables in new homes is that many Local Authorities require it as a planning condition (often called the ‘Merton Rule’ after the first Authority to pilot the idea).  They can do this because they were granted the power in the Planning and Energy Act 2008.

Many Local Authorities have adopted planning policies like this as part of their Local Plans with the goal of creating local skills and supply chains, mainstreaming renewables and encouraging their wider adoption.

The HSR consultation document proposed to remove this power, potentially leaving renewable energy in new homes out in the cold until the building regulations reach 'Zero Carbon' and this feeds through into actual projects – potentially as late as 2022.

The Impact Assessment that accompanied the HSR consultation gave a clear indication of what was influencing DCLG’s thinking.  The anticipated ‘savings to industry’ only counted the reduction in the costs of housing developers.  The business lost by the renewable energy industry was not considered, and nor were the savings on energy bills for the householders. 

 Housing developers were offering a narrative that was both simple and attractive to the politicians:

 "Free us from these unnecessary costs and we'll build a way out of this recession."

It was very clear who was in the driving seat.

As the civil servants at DCLG worked their way through the responses to the consultation and pondered their conclusions the country was gripped first by a debate on the affordability of energy bills and then by endless rain, flooding in Somerset and politicians in wellington boots trying to outdo one other on how serious they consider the threat of climate change.

Was it these events that influenced the outcome – the idea that DCLG could find itself ordering underwater Local Authorities in Somerset to tear up their climate change policies? 

Or perhaps the rash of record profit growth announcements by house-building companies undermined the argument that costs had to be cut to get Britain building again?

Or maybe it was the work done by the Solar Trade Association and Renewable Energy Association to present the arguments for including renewable energy as houses are built?  (Step forward Mike Landy and Leonie Greene).

 Who knows what the decisive factors were, but on Thursday 13th March, the decision was announced and the Merton Rule lives to fight another day.

Untangling the Announcement

The way the decision was announced has caused some confusion, especially because the Written Ministerial Statement said that there would be no optional additional local standards:

This caused a number of sources to wrongly report that the Merton Rule had gone.  A bit of digging shows that the opposite is true.  The new rules are to be enacted through the Deregulation Bill.  Here's the relevant section:

To understand the impact of the changes, you need to read it with the Planning and Energy Act 2008, shown below:

So it can be seen that the change only affects Section 1(1)(c), and prevents Local Authorities in England (only) from requiring energy efficiency standards higher than building regulations for houses (only).  Crucially for renewable energy sections (a) and (b) are left intact and Local Authorities can continue with planning conditions that require a proportion of energy from renewables providing a critical bridge to Zero Carbon Homes.

Attention now turns to the definition of Zero Carbon Homes, encouraging DCLG to deliver it on time and how much of the standard can be 'bought-in' rather than 'built in' through a process called 'Allowable Solutions'.