Thursday 9 March 2017

The Merton Rule is Not Dead, Long Live the Merton Rule!

Can Local Authorities Still Require Energy Efficiency Higher Than Building Regulations?

The largest housing developers would very much prefer it if they were able to build the same house in Aberdeen that they build in Abingdon. If they can do this, then the cost of the architect and engineers to design their standard properties can be spread across more units, and their buying power can be increased by using the same component parts in every house they build. This is one of the ways they out-compete smaller, more local building companies.

For this reason they dislike local rules and regulations that affect the houses they build.

In 2008 UK government enacted the Planning and Energy Act, which among other things clarified that local planning authorities had the legal right to require energy efficiency standards in new homes that exceeded the national building regulations. This approach to pushing developers to build housing with an energy performance beyond the national minimum had become known as the 'Merton Rule' after the local authority in London that had pioneered the approach.

Here's what the Act says:

1  Energy policies
(1)A local planning authority in England may in their development plan documents, and a local planning authority in Wales may in their local development plan, include policies imposing reasonable requirements for—
(a) a proportion of energy used in development in their area to be energy from renewable sources in the locality of the development;
(b) a proportion of energy used in development in their area to be low carbon energy from sources in the locality of the development;
(c) development in their area to comply with energy efficiency standards that exceed the energy requirements of building regulations.

It has been estimated that around 50% of local authorities took advantage of the new clarity to build such requirements into their local plans.

National builders didn't like it. They didn't like it at all. Different local authorities chose to ask for 10% renewable energy on site, 20% renewable energy on site, Code for Sustainable homes level 4.

The national developers were faced with different requirements up and down the country, a situation further complicated for them by the fact that different local authorities enforced their planning requirements with different levels of enthusiasm and competence. In some areas, particularly those areas that combine both high housing need and low house prices, developers might find a planning requirement for renewable energy on new developments to be highly negotiable. Other local authorities, notably in the south, with high house prices that means developers are queuing up to build new homes there, have been far more successful at holding the line on the aspirations of their development plans.

It could be argued that this is exactly as it should be. The UK has very high geographical differences in house prices. Local authorities could set their local planning regulations to achieve the highest energy performance that was consistent with the economics of housing development in their area, specifically whether the value of development land is sufficient to cover the additional costs of more efficient homes.

However, in 2015 things swung back towards the large developers. The government of Cameron and Osborne announced a 'bonfire of regulations' to free business from costly red tape. The Housing Standards Review was formed to look at red tape afflicting the house builders. Developers successfully argued that this patchwork of local planning requirements was 'red tape' and the review concluded that it should be swept away.

The government chose to add the changes to the Deregulation Act 2015. Section 43 of this Act amends the Planning and Energy Act as shown below.

43 Amendment of Planning and Energy Act 2008
In the Planning and Energy Act 2008, in section 1 (energy policies), after subsection (1) insert—
“(1A)Subsection (1)(c) does not apply to development in England that consists of the construction or adaptation of buildings to provide dwellings or the carrying out of any work on dwellings.”

This amendment would remove the ability of local authorities (in England only) to require developers to exceed the building regulations for energy efficiency. Note that sections 1(a) and 1(b) remain, allowing local authorities to continue to require that a percentage of the energy consumption of a new development to be met with renewable or low carbon energy.

The passing of the Deregulation Act is, however, not the last word in this story. If you work in a local authority in England and a housing developer is telling you that you can't impose higher standards than building regulations on a development, they're wrong. The fact is that section 43 has not yet been brought into force, so the original Planning and Energy Act text still applies.

If you look at the Commencement Section of the Deregulation Act, you'll see how the various elements of the Act are to be brought into force.

Some sections come into force on the day the Act is passed in parliament, others some set number of months later. No special mention is made of section 43, so it falls under this provision:

(7)Except as provided by subsections (1) to (6), the provisions of this Act come into force on such day as the Secretary of State may by order made by statutory instrument appoint.

A check of statutory instruments shows that this has not yet happened for Section 43, fully two years after the Act itself was passed by Parliament.

In fact, during a Lords debate on the Neighbourhood Planning Bill, in response to a question by Baroness Parminter, Lord Bourn confirmed that it was the case that local authorities still have powers to require higher building standards:

"The noble Baroness asked specifically whether local authorities are able to set higher standards than the national ones, and I can confirm that they are able to do just that."

So there you have it, the Merton Rule lives on!

 Local authorities still have powers to drive low carbon development in England, and it's just as well because our central government seems to have lost the will to do so. It's down to the sustainability officers and planning officers to enforce their local plans and they have the power to do so.