Sustainable Standstill: Why major housebuilders aren’t going green

Hi, and welcome to Sustainability Solved, the sustainable business podcast. I'm Will Richardson, the founder and CEO of the Green Element Group, incorporating Green Element, Compaia Footprint, and of course, Sustainability Solved. We've been empowering organizations to manage their environmental impact for a just and sustainable world since 2004.

And I'm Charlie Luxton, an architectural designer who focuses on sustainable buildings and housing. Today we're talking about a subject that is close to my heart. Ian Pritchard is the co-founder of Greencore Homes in Oxfordshire, who build airtight, energy-efficient timber frame houses, and they construct them in their factory in Bicester. So welcome, Ian.

Morning, Charlie. Morning, Will.

So I want to— what we're trying to get right into the meat of this morning, Ian, is the planning system and its response to the climate challenge and the pressures that we are feeling in this country around development. And I think there's an assumption that a lot of people think that after all of the talk from various governments over the last decade or two, that getting planning, if you're building sustainably, is easier. Is that true from your experience?

I really wish it was. No. I mean, first of all, I should say I'm not an expert on planning. I'm just a frustrated user of the planning system. So my experience is that the planning system is really set up to deliver business as usual, and if you want to try and do something better or different, that can create some challenges. You often have, you know, the personal support of the planning officer, but you're trying to do things that are unusual, that therefore get closer scrutiny, take longer to get consent, and there can be a lot more bureaucracy involved in the process.

So what would you— how would you sort of class business as usual, and how would you class what you're trying to do differently?

Well, business as usual really is the model of planning for the volume housebuilders, really. That's where the vast majority of new houses in this country are delivered via the volume housebuilders. And that's really what the planning system is set up for. It's aligned to the way they do things.

If you had a, I don't know, a carte blanche to build a utopian world within planning, from your experience, what would that be or look like?

Yes, I mean, it's a really challenging question. So first of all, I think it's important to understand that the planning system is really set by national government. And although local authorities try to impose their own standards, they're often challenged at a national level. So it means that the planning officers are really delivering a policy that's created nationally and was created many years ago. So it focuses on some things that we probably now think are less important. The things that we probably should be focusing on that are more important are things like energy, carbon, wildlife, biodiversity, and those sorts of things, rather than car parking spaces and bedroom sizes and so on. So I think ultimately we need a new planning policy that is a national policy that is fit for the future rather than comes from the past.

So how would you, how would you summarize the issues with the way the product that is being produced by the mass house builders? Because I know that something like 65% of all new housing is built by about 8 companies, I believe. And what's wrong with what they're doing now, in your eyes?

So there's, there's a few things. I mean, you've got the aesthetics. It is a cookie-cutter approach where Certainly, some of the volume house builders build the same product, the same house, whether it's in the north of England or the south of England, and whether it's in an urban or a rural context. So, you've got a certain problem with the aesthetics and whether those houses appear to belong in the community that they're built in. But the thing that I'm really passionate about is the performance of houses. You know, we are in a climate crisis. Every time we build a new house, it's responsible for over 100 tonnes of CO2 emissions. And then in use, it will emit carbon at the rate of, say, 3 to 5 tonnes a year. So if we're building a new house this year, by 2050, it's probably going to be responsible for 200 tonnes of CO2 emissions. And we're in an environment where we've got a climate emergency. We're moving towards zero carbon as quickly as possible. We can't really afford to be building houses that are still contributing to the problem and will need to be upgraded in the near future. So the main frustration I have is around building performance. We've got to be setting our targets much higher, much sooner, and enforcing them and delivering on them. And unfortunately, we're not doing that.

So I'm just going to put my cards on the table. Ian and I know each other, we're doing some project together, and we've known each other over a few years. You gave me a statistic the other day which made me drop my pen, I believe, which was around the targets for new housing in Oxfordshire and how much of the Oxfordshire total carbon budget would be used by 2050 when you actually carry on with a business as usual case of existing housing. Can you just run me back through that? Because it was jaw-dropping.

Yeah. So COP16 Sorry, COP15 that was in Paris in 2016 set these global targets for CO2 emissions, and those are now broken down across countries, and in this country they're broken down across local authorities. So in Oxfordshire we've got 4 district councils and a city council, and the total carbon budget for those 5 local authorities is 26.3 million tonnes of emissions. And that's all the carbon that those— everything that happens in that area should emit for the rest of this century. And that's got to cover all of our running our existing buildings, building new buildings, running those new buildings, transport, agriculture, industry. But the reality is that we're planning to build 100,000 new homes in Oxfordshire over the next 10 years. And that will use somewhere between 80 and 100% of that carbon budget in that timescale just on those new houses. So it's not a fair apportionment of the carbon budget if we're going to squander all of it just on new housing in 10 years.

And do you think that anybody other than you has done that maths? And if so, why aren't they running around waving their arms in the air? I mean, what are local government and central government doing if clearly I assume that issue runs out across the entire country? Oxfordshire is not going to be unique in that position.

No, it's probably not unique, although it's probably fair to say we're building more houses pro rata in Oxfordshire than some other parts of the country. I think, to be frank, not many people have made the connection. The Climate Change Committee are very strong on this and are advising government. But government's in that awkward situation where we don't have enough housing, we've got a housing crisis, and if we don't keep building houses, we don't get votes for politicians. So unfortunately, government are looking to dumb down regulations to keep the volume up. And I think that's really driven by the volume housebuilders who, who tell government that you can either have the numbers or you can have the quality, but you can't have both. It's very frustrating because I think we've got to have both.

So there's 2 things I'd like to just discuss on that. One is, I assume from the tone of your voice, you think we can have both quality and volume.

Yes.

Which is the first thing. And the second thing I want to come back to after that is Is do we really think we can build our way out of a housing crisis? And I think there's two slightly separate things. We start with the second one, actually, because it's fun. It's sort of like the base thing, isn't it? That that there's this idea that we need more housing. We need to build more housing. We're not. We haven't got a massive population explosion, do we? We've got a significant fracturing of household scale sizes, right? So we need yes many more houses to accommodate fewer people in those houses, and those houses aren't getting radically smaller. So we're taking up more and more space per person. Yet somehow the only way that we feel that we can get out of this problem is to build. Now we know building is inherently an environmentally destructive process, even if you do it very, very sustainably, there's still impact. I mean, are there other ways that we can solve this problem? I'm asking a housebuilder here to say don't build new housing. But I mean, is anyone looking at that problem alternatively? And why does it win votes?

Yes. So I think it's, it's very true. The whole sector is very, very complicated. You know, we're living longer, our demographics are changing, there are smaller households. And where we have got spare housing, it's not necessarily in the part of the country that has employment. And therefore, we're becoming very much more concentrated in the southeast of the country. And there's vacant housing in other parts of the country. So you're absolutely right. There is a much wider issue of how we solve that housing crisis. And the main tool at the moment seems to be just build more houses in the southeast of the country and try and hope we can get ahead of the curve. So I think we have got to look at other things in the shorter term, medium term, and long term as well. In terms of volume, as you say, I now build houses, and our mission really is to move the housebuilding industry from an unsustainable model to a sustainable model. And you're right, every time we build a house, it has a negative impact. Our approach is to say, well, how can we create a positive impact every time we build a house? lock up more carbon than you emit? Can you generate more energy than you use? Can you improve wildlife and biodiversity and so on? And as we start to work through, we can— there are a number of those areas where we can create a positive impact. And we refer to what we do as building climate-positive homes. But what we do is a drop in the ocean compared to the number of houses that are being built.

People always assume that if you're building a more environmentally friendly house, it's going to be more expensive. But I remember it was for a budget. It was with George Osborne. So that would have put it back in 2018, '19, potentially.

Hmm.

And Cardiff University came out on budget day and said, we've just built a house that It's cheaper to build than a normal house. And as you say, it's climate positive, i.e., it was pretty much fully off-grid. And so what they were trying to say was, saying it's more expensive is not a good excuse. We've just done it as a university. So therefore, that you can take that off the table. Surely we're, what, 4 years on and we still aren't doing it and no one's picked up that. So we know it's not cost.

I agree with you, although there are some higher costs to building more sustainably, but in my view they are justifiable costs and they will come down if we start to do it at volume. It's great that Cardiff University showed they could do it on a one-off basis. The volume house builders will want to know that they can do it at volume without significant cost overrun, and the only way they're going to find that out is if they try it and they try building a fair number of these. I remember a friend of mine doing a project with a volume housebuilder where they did a small group of houses, and I think it was 15% more expensive the first time they did it. And he thought, well, great, 15%, that's not much. We can close that gap. Next time we do it, we'll probably be only 5% more expensive, and the time after that, we'll be at parity. But 15% in volume housebuilder terms is scary territory. And they decided not to do a second batch or a third batch, which, if you look at most other industries, it takes a while to get to scale and get to parity of cost. But that doesn't seem to be on the agenda in the housebuilding industry.

And it also strikes me that it's a deeply unfair playing field. So for example, The project that we're working on in, you know, we're doing an affordable community-led affordable housing scheme in Hook Norton where I live. There's 8 units for rent and there's 4 units for sale. And the challenge that you've got is that when you get set affordable housing rent, they're not interested in the running costs. There is no way that you can factor in the lower running costs into the way you set your rent. So the system not only it sort of actively disincentivizes you to think about affordable living. It just talks about the house as a thing in isolation, which we know it is not. It is something that must be powered and serviced. So, you know, it seems that, that on every level, there is a sort of a lack of understanding of the actual economics behind this. So for example, if, if a mortgage company lent you money based on your outgoings, which they do, but they actually brought together your running costs with your mortgage costs, then your running costs were lower. You could hire— you could have— this is what I've never understood. You could have a bigger mortgage, you could buy a more expensive builder. A large volume housebuilder could build a more expensive house with more technology, even if it cost 5% more, and everyone would win apart from the energy companies. And therefore, ideally, we'd produce less carbon. I mean, I'm an— I'm a simpleton, but it does seem like there is a relatively straightforward solution out there if we get our ducks in a row and start talking outside of the housebuilding industry. Do you think that's a reasonable assessment? Or am I that foolish?

No, I think it's absolutely right. And there are some enlightened local authorities and enlightened mortgage companies that see it exactly that way, that affordable living is not just about the rent you pay, it's about the energy bills you pay, it's about your cost of food and transport and all the other things that go into the mix. Energy efficiency in houses is actually quite complicated because it isn't just related to the house itself. It's related to the number of people that live there, their lifestyle, the way they behave. The bits that you can control, which are the regulated energy, heating, hot water, lighting, ventilation, are part of the story, but they're not the full story. So an energy-efficient house doesn't guarantee low energy bills if people don't live in it in the right way. You know, we've been looking at the idea of could you build houses that have zero energy bills? And it's technically possible to do that. But if people are not paying for energy, does that mean that they don't value energy and they therefore use more of it? You know, a recent example I came across was somebody who had zero energy bills, so they went and invested in a hot tub. So they could run a hot tub in the garden.

Back to the drawing board.

So it is, you know, it's a fine balance, isn't it? We want to build houses that are as economic as possible to run, but psychologically, I think if they're zero, they don't get valued.

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And what's your thought around involving people more in the provision of new housing where they live? Because I get quite animated about this because I have a sense that currently, the housing system is fundamentally unfair in that a few landowners get incredibly wealthy, and obviously developers make a lot of money in this country. My understanding is they make about 3, 4 times the level of profit as they would do in Europe, although you might have a different figure. That's certainly the one I've heard. So actually, there's a lot of people getting very rich, and the people that live near those houses have more traffic, a longer waiting list at the doctors, and you know, all the issues associated with new housing, which, you know, let's not beat around the bush, there are some downsides, but traditionally there would be upsides in that their community would grow, their cousin might get a house, or their niece or nephew. I mean, do you see that we need, in order to reset the housing system, we need to engage local people in a meaningful way, not just in a tick box way? Do you think that's part of the kind of process that we need to think about?

I absolutely agree. Yes. If people are going to have new houses built close to them, everybody needs to benefit from the process. You need to see that quality of life for everybody improves through access to amenities, shops, and the best developments now are really delivering on that. Certainly, we're involved in quite a few projects where You wouldn't have seen that happen years ago. There's acres, even hundreds of acres of public open space and country parks and access to good local shops and restaurants and things and transport networks that are being created as a result of the development. But there's still relatively few of them. There's still too many that are just building dormitories.

How would you sort of characterize the difference between what you build, both in terms of houses and placemaking, compared to the, to the standard product that we see, um, from the main house builders?

So, um, what we try to do is, is create positive benefits at all levels. So whether that's carbon, energy, biodiversity, wildlife, but also community. We work within a framework called One Planet Living, which is a very simple premise that we've only got one planet. And at the moment, we're consuming the resources of that planet about 3 times faster than we should do as a country. So we've actually got to live within the confines of the planet. But that One Planet Living extends to everything from health and happiness and food and water and waste and so on. And so we are very conscious that it isn't just about building houses, it's building communities, it's building places where people want to live and can live sustainably, can live happily and healthily.

I think what's interesting, you were talking about the One Planet Living principles, which are, which are a very holistic form of looking at a new development? And I think transport's one of the really big challenges, isn't it? That traditionally a lot of housing developments have been completely dominated by the car, both in terms of the layout, in terms of garaging, roads, and actually the carbon intensity of that form of transport. I mean, how are you viewing sustainable transport going forward? Things like parking garages and the land that they use up, how Where do you see that element of this puzzle going, developing?

I suppose the first thing is very few people actually park cars in garages. Where houses are built with garages, they are often sort of storage space more than car parking. So certainly most planning authorities don't consider garages to be part of the parking allocation. You've got to have that that parking space as well as the garages. But you're right, that leads to very often an average of 1.5 to 2 car parking spaces for every house that gets built. Schemes become dominated by parking and cars. And yet most of those cars are not used particularly regularly. So we think that the future is to reduce the number of car parking spaces, reduce the individual ownership of cars, but make sure everybody has got access to sustainable transport, whether that's hiring an EV, using public transport, access to a bike or an e-bike or a scooter. We're in a period of transition at the moment, and it's going to take quite a while. But when it's all up and running, And you can have access to whatever type of vehicle you need whenever you need it, but you haven't got to own it, it's going to be a much better world for everybody. But we're not wired that way, are we? We like to own everything ourselves. But that sharing economy is moving forward quite nicely at the moment.

And how do you see the planning system driving that change, or are they following that change, or are they in fact impeding that change? You can tell I might have my own opinion about that, but I'd like to hear yours first before I wade in.

Yes, so I think this is different in different areas. So we've got some projects outside Oxfordshire at the moment, and one in particular in Cambridgeshire, where the approach to this is very advanced, and the number of car parking spaces and the strategy is much more advanced towards less car parking, more car sharing, and public transport. In the districts of Oxfordshire, it's more biased towards large numbers of car parking spaces and private ownership. In the city, it's again very much like Cambridge, it's more advanced. So it is very variable. The big problem, of course, is if you build something that doesn't have car parking spaces, in the hope that people are going to reduce private ownership and it doesn't happen, you've got a bit of a disaster. So everybody's very wary about rolling it out too fast, but it's got to happen, hasn't it?

Yeah, because it's quite interesting in this affordable housing scheme, we proposed a 5-car electric car club to reduce the number of cars that people were owning, and we were going to park them on that site, and we were told We can't do that, that we need to provide everyone with a car park and then another overflow set of car parking, and that that actually that that that's have to be shelved. Which, given the ambitions of the scheme and the stated ambitions ambitions of of climate emergency, it's it's a frustrating time, isn't it? Really, and and you know I've sat in I've sat in meetings with high-level planners. in areas all over the country and said, so this is a deeply sustainable building, surely that matters. And ultimately they've sort of stared at their shoes and gone, well, personally, I think it's amazing, but actually in terms of legislation and planning policy, doesn't matter at all. Literally, they've sat there and said it doesn't matter.

Yep. You've hit the nail on the head.

Going back to your, your 5 car charging, because I think this is really, really, really important. How did the finances stack up with it? So was that included in the cost of building the property and the ongoing cost for that car club?

So the car club exists in the location where this was going to go, and a number of the houses with an extended car pool was going to be put onto that site to allow the people who live there to use them and own less cars. Considering we're talking about affordable housing and houses for people right-siding, so older people, The idea that they could get rid of car ownership with the huge drag on personal economy finances that comes with car ownership seemed to be absolutely obvious. I think the issue that quite rightly Ian says is if it doesn't work, there's a local disaster and where do people park? But equally, one would imagine it's not beyond the wit of man or woman to say, let's allow a car club to start and we will review in 1, 2, 3, 5 years and change the strategy if it's not working.

I think it's exactly what we need. I have this conversation all the time in my local area. So we live just outside Edinburgh in suburbia. Pretty much everyone I know has 2 cars. We've only got 1 car, but a number of us do only have 1 car families, and it's actually quite hard. 3 times a week, I'm having to cycle 4 or 5 miles with my son on his trailer across to Fife, and it is a bit of a nightmare when it's raining and it's cold and sleety. And if we had a car club in South Queensferry, it'd be perfect, absolutely perfect, because it would cover those instances. So I think what you proposed was absolutely spot on. And I think this is what I was excited about this podcast was, why are we not thinking like that? What is going on? I mean, you've just said that the people you were talking to were like, well, personally, I think it's a really good idea, but actually— Planning doesn't allow— look, it's all very well, we've had this conversation now for what, 10, 15 years? What are we going to do about it? How are we going to change it? Like, you, you two are in the industry, you do have a voice. Like, what can we actually do to change the rhetoric and to change that planning?

So I think one of the things that we're doing at the moment is designing schemes that have compliant numbers of car parking spaces But also have either a car club or some sort of access to, to the right type of vehicles, with the intention that some of those car parking spaces will be— will revert back to green public space as we can demonstrate that they're not required. And that seems to be a sort of compromise that the planners are comfortable with because you're actually hitting the policy at the moment. If it all goes horribly wrong, there is enough car parking space. But over time, if we can demonstrate that it works, we'll reduce the number of car parking spaces and you'll get more green space as a result of it. And then I think if you can demonstrate that those work, next time or the next cycle of projects after that won't have to take the 2-step approach. They can jump straight into the end result.

But we're talking about 5, 10 years here.

I think we are, yes.

Which, given the fact 2050 is coming at a seemingly accelerating pace, or that just might be my age, but it does seem to be getting quicker.

Yeah, well, I'm older than you, Charlie.

And do we have 5 or 10 years? And I suppose this is the challenge, is like, so actually the issue, probably if we strip it away, is innovation. We are not innovating quick enough, whether it's around that, you know, we've talked about a specific issue of transport, but actually it's within all areas, isn't it? We are not innovating quick enough. How on earth— let's say you're the new government, whichever that might be. I think we probably know which one it's likely to be. And the one that it's likely to be have already said they want to build. And they've said that explicitly. They want to build and they want to change legislation, rightly or wrongly. And I don't want to get into that, to build more. Okay, fine. But how do we accelerate innovation in this sector? Does planning have a role? Does the industry have a role? Does government have a role? Where does that come from, that drive?

Yes. So all of those stakeholders do have a role. But the problem is that it moves quickly. So what are the things that we— sorry, it moves slowly. So what are the things that we could do that could make it happen more quickly? And I think those are actually economic drivers. So if we take an example of energy efficiency in houses, If we started to play around with stamp duty on houses, at the moment stamp duty is linked entirely to the cost of a house, but it could be linked to the energy performance of a house. And if you had lower stamp duty or no stamp duty on zero carbon houses, people would start building them because they'd be more attractive to sell, more attractive to buy for the buyers, and the economics would start to drive it faster than the legislation. And I suspect there are some things that we can do in car and transport terms as well, that you've just got to find what are the levers that make that possible.

Interestingly, feeding into that, we work within the banking industry and we're helping banks produce green loans. And I know that there's talk within the mortgage world of producing mortgages for houses that— so say a house that you've built in, someone will get a much better mortgage for your house that they've built rather than an older house because they know that A, it's probably been built better, B, it's going to be less to run. There are lots of reasons why a mortgage company would prefer to have someone move into a house that's got lower running costs. And that's when probably the big house builders will start going, well, that's been—

that's been— I built— I did a conversion of a barn in 2012, and that was EPCA, and the client got a discount on his mortgage from the Ethical Ecological Building Society. And that's 12 years ago, and it hasn't really had an impact for whatever reason.

But I don't think it's Bit mainstream enough though, is it? When it becomes mainstream—

It's moving towards being mainstream now. So as Charlie said, the principle of lower interest rates on green mortgages has been around for a while. It hasn't tended to be with the mainstream players who had the most competitive rates in the first place. So quite often it was possible to get a more competitive rate on a mainstream product than it was on a on an environmental product. But that is now changing. The finance industry has an awful lot of power. You know, at COP26 in Edinburgh, the Governor of the Bank of England stood up and said that there was, I think it was $130 trillion of institutional money now committed to net zero. Those are big, powerful numbers that they do create change. And that change does move much faster than legislation and And governments who, let's face it, all governments go through a cycle, don't they? They get elected, they've got a couple of years of being able to do something, and then they go into the midterm blues, and then they're starting to think about how they get reelected. So there's a relatively short period in a 5-year cycle when they can actually do innovative things and drive legislation through, whereas I think industry is now beginning to take more ownership than it has in the past and drive more change than government has been able to. So I'm an optimist, but I'm really excited about the way we're going in the future, frustrated about the laggards who try and pull us back, but we'll just have to drive through that.

So I think, are you suggesting then that realistically, And I think I agree with you, if you are, is that the market will solve this, that the planning system will try and keep up and possibly, you know, hold it back in places. But ultimately, the market and economics and the moving sort of public consciousness will actually be the thing that drives this change.

I think we, we need both. But given the fact that the planning system moves so slowly, I think the market will will drive it faster than the planning system does.

Thank you very much. That was fascinating. I think what you're doing is extraordinary. I think the fact that you've built market-competitive, very low or zero-carbon housing is quite an extraordinary achievement. And keep leading the way. That's, that's, that's my thought.

Thanks, Charlie. And thanks, Will. Great, great to talk to you both.

And that's it for this episode of Sustainability Solved. Next month, we're going to be talking to Stuart Goldsmith, a comedian who has been performing award-winning comedy all about the climate crisis. Make sure you hit follow in your app so you get notified as soon as the next episode drops.

And if you've enjoyed what you've heard today, please do leave us a review in your podcast app. We'd really appreciate it. Thanks for listening. Thanks, Ian. I'm Charlie Luxton.