On Wednesday 21 June, the Assembly will debate the Equality, Local Government and Communities Committee’s report into refugees and asylum seekers in Wales, and the Welsh Government’s response to its recommendations.
08 June 2016
Article by Jonathan Baxter, National Assembly for Wales Research Service
Article taken from Key Issues 2016 document
Whether a first time buy, a short term let or simply somewhere to call home, we all have different housing needs and aspirations. But is the Welsh Government doing enough to meet the nation’s housing requirements?
Wales is not building enough homes. An inadequate supply of housing has a negative impact not just on an individual’s welfare, but on a nation’s economic wellbeing. That is why increasing housing supply should be a high priority for the new Welsh Government.
Recent research has found that there needs to be a return to rates of house building not seen for several decades to keep up with need and demand. Despite some evidence of increasing supply recently, there is an annual shortfall of up to 5,000 homes.
Those extra homes cannot be delivered by the private, public or third sectors acting in isolation, but rather by the combined efforts of the whole sector under the Welsh Government’s strategic leadership.
How many homes do we need?
Recent research by the late Dr Alan Holmans – acknowledged as the UK’s preeminent expert in projecting future housing need and demand – suggests that Wales could need as many as 12,000 new homes each year. This is largely due to an expected increase in the number of single person households. In 2014-15, just over 6,000 new homes were built in Wales. Fifty years ago, we were building around 20,000 homes a year.
Who will build the new homes?
In 1955, over 70% of all new homes were built by the public sector. Sixty years later, that situation has reversed, with over 80% of new homes built by the private sector.
In 2015, the Welsh Government signed a housing supply pact with the Home Builders Federation to emphasise the importance of that partnership, including the role the private sector plays in delivering affordable housing. That followed a similar pact signed with Community Housing Cymru, which represents housing associations. Housing associations provided 89% of all new affordable housing in 2014-15, the majority of which was supported by a Welsh Government grant. In 2016-17 it is estimated that 2,700 new affordable homes will be delivered by housing associations, local authorities and the private sector. That is about half the number required according to the Holmans research, although the ‘social sector’ definition he uses also includes privately rented properties where housing benefit is claimed to help pay the rent.
There is also a role for the private rented sector in generating investment in new-build properties. At 14% of the entire housing stock and growing, twice as many people rent from private landlords as from local authorities. This increase in the size of the sector has been described as the largest structural change in the housing market for two generations.
This includes social rented housing provided by both local authorities and housing associations, as well as intermediate housing. Intermediate housing means properties where prices or rents are above those of social rented housing but below market housing prices or rents.
What are the barriers to homebuilding?
With median house prices in Wales in 2015 standing at over six times the median income (compared to around three times the median income in 1999), one of the main obstacles to home ownership and the supply of new homes has been the availability of mortgage finance. To address this, the last Welsh Government introduced the Help to Buy Wales scheme. It assists home ownership by allowing those with a smaller deposit to purchase a home while it also supports the construction industry. The scheme has helped around 3,000 households buy a home. It was recently extended to 2021 with potential to help up to a further 6,000 households.
Developers cite unnecessary bureaucracy in the planning system, additional costs imposed through building regulations, inadequate land supply and the method of providing affordable housing as part of new developments as development barriers. They also claim it makes Wales a less attractive place to invest development money. These factors can all affect viability and stop a development before it begins.
The way forward?
Historically, a relatively small amount of public funding has been allocated to housing in Wales. With capital grants in particular unlikely to increase substantially during the Fifth Assembly, there will need to be close co-operation with the housing association sector in particular as it looks for more innovative and sustainable ways to fund affordable housing.
Even with additional direct funding, no Welsh Government can meet the need for housing on its own. Through partnership working with stakeholders across the public, private and third sectors, the Welsh Government can provide a strategic lead and regulatory environment that encourages and facilitates development.
During the Fourth Assembly, the Welsh Government looks to have met its own target of delivering 10,000 additional affordable homes. Will the Fifth Assembly see a more ambitious affordable housing target in line with the Holmans research and, for the first time, an overall target for homebuilding? Is it also time to develop a new national housing strategy?
To some extent, the Welsh Government’s success will be assessed using crude statistics: homelessness, house building and home ownership. But we know housing impacts more widely, on health, educational attainment and poverty, while also bringing wider economic and regeneration benefits.
In reality, housing’s sphere of influence goes far beyond bricks and mortar. The success of the next Welsh Government’s housing policy should be judged in that context.
- NLP, The Economic Footprint of House Building in Wales (2015)
- PPIW, Future Need and Demand for Housing in Wales (2015)
- Stats Wales, New House Building (2016)
- Stats Wales, Dwelling Stock Estimates (2016)
- PPIW, The Potential Role of the Private Rented Sector in Wales (2015)
- Welsh Government, Affordable Housing Provision 2014-15 (2015)
- Welsh Office, Welsh Housing Statistics No. 2 1982 (Hard copy) (1983)
15 March 2016
Article by Chloe Corbyn, National Assembly for Wales Research Service
On 16th March, the National Assembly for Wales will debate the recent Environment and Sustainability Committee report on a Smarter Energy Future for Wales. The report is the culmination of over 12 months work by the Committee, which started with a fact finding trip to Germany to see how the German Energiwende has transformed the energy landscape there. (For more information on the Energiewende see the previous research service blog). It builds on previous work on Energy Policy and Planning undertaken by the Committee during the 4th Assembly, offering a vision for a sustainable energy future for Wales.
The key messages from the Committee are:
If Wales is to meet its climate change obligation of at least an 80% reduction by 2050 we need to change the way we think about energy; its generation, distribution, storage and conservation. The landmark deal on climate change in Paris last December sets a framework for Wales to accelerate its action in this area, making real strides towards reducing its greenhouse gas emissions and setting the bar high for a new energy model.
Leadership is key to achieving an energy transformation, with a clear and stable policy direction paving the way. This policy must lead Wales to a decarbonised energy system, with the aim of Wales meeting all of its energy needs from renewable sources. Local energy supply to local markets is a cornerstone of this new policy, and, whilst larger-scale inward investment projects will continue to play a part in providing energy security, diffused local solutions must also feature highly in a future renewable, sustainable energy jigsaw.
Energy conservation and demand reduction must be addressed, and are areas where Wales holds the necessary levers and powers to take action now. Both new buildings and existing housing stock present opportunities to improve energy efficiency.
The Committee makes 19 recommendations about what Wales must do to make the smarter energy vision a reality. A number of these are summarised below:
- Establish a clear vision for future energy policy, including a central role for local energy;
- Set annual targets to reduce demand for energy and help people use it more efficiently;
- Aim to meet all of its energy needs from renewable sources;
- Urgently revise Building Regulations to ensure that all new houses are built to ‘near zero’ energy standards;
- Explore linking the cost of stamp duty land tax to the energy performance of a house to start to increase the value of energy efficient homes;
- Urge the UK Government to enable Ofgem to allow prioritisation of local supply to local users in Wales;
- Amend planning policy so that it prioritises local and community renewable energy projects; and
- Provide ‘hand holding’ support and advice for local and community projects.
The Committee sums up by stating:
“The responsibility to ensure a smarter energy future is shared by every one of us in Wales. We must each play our part if we are to meet the challenges we face and take the opportunities presented to us. For everyone to have the opportunity to play their part, the next Welsh Government must provide the necessary leadership to set the vision and framework for this change. Wales must seize opportunities to transform its approach to energy now”.
Sustainable Wales, working with Community Energy Wales, has recently launched a video as part of its Shine a Light? Campaign, advocating local and community owned energy.
29 July 2015
Article by Graham Winter, National Assembly for Wales Research Service
Zero-Carbon Homes are dwellings that have very high energy efficiency performance and have no net carbon emissions from energy use. This can be achieved either through reducing energy use, using renewable energy, or a combination of the two. The move towards building homes that are zero or near‑zero carbon will help to meet emissions reduction targets that are necessary to reduce the risks of climate change. The Committee on Climate Change’s 2015 annual carbon progress report to Parliament, published on 30 June 2015 called on the UK Government to implement the zero-carbon homes standard without further weakening it.
The EU Energy Performance in Buildings Directive 2010 requires all new buildings to be built to a ‘nearly zero energy’ standard by 2021. Member States are also required “draw up national plans for increasing the number of nearly zero‑energy buildings”. A nearly zero-energy building is defined in the Directive as “a building that has a very high energy performance. The nearly zero or very low amount of energy required should be covered to a very significant extent by energy from renewable sources, including energy from renewable sources produced on-site or nearby”.
UK Government’s Productivity Plan
Two announcements by the new UK Government in the Productivity Plan published on 10 July 2015 were described as “the death knell for zero‑carbon homes.” Julie Hirigoyen, chief executive of the UK Green Building Council (UK-GBC), acknowledged the need for more homes to be built but stated this did not justify building them with a legacy of high energy bills. She said “It is short-sighted, unnecessary, retrograde and damaging to the house building industry which has invested heavily in delivering energy efficient homes.”
However both the Home Builders Federation (HBF) and the Federation of Master Builders (FMB) welcomed the announcements. The HBF was quoted in the media as saying “the allowable solutions approach that had been previously favoured would have imposed significant additional costs with no obvious enhancement in the energy efficiency of our housing stock.” The FMB said the UK Government was “right to remove the unnecessary zero carbon standards which threatened to perpetuate the housing crisis” and called on a greater push on retrofitting existing housing.”
The two announcements in the Productivity Plan were that the ‘allowable solutions’ concept, which enabled developers to offset greenhouse gas savings off-site, where it was not cost effective to do so on-site, has now been dropped. Also the proposed move to a further improvement on the Building Regulation standards in 2016 (that would be half-way to achieving Zero Carbon Homes) is also not going ahead at the moment. The UK Government has however said it will keep energy efficiency standards under review.
Because responsibility for making the Building Regulations for Wales is devolved to the Welsh Ministers, these two UK Government announcements only apply in England.
Previous UK Government policy
In England and Wales the main means of achieving the move towards nearly zero‑energy new housing is through Part L of the Building Regulations which covers the conservation of fuel and power. The Welsh Ministers have had devolved responsibility for making the Building Regulations for Wales since the beginning of 2012.
Building Regulations – England
In England a 6% improvement on the energy efficiency of new dwellings compared to the 2010 Building Regulations standards (25% on 2006 standards) was introduced in 2013. In 2014 the UK Coalition Government proposed a 26% improvement on the 2010 Building Regulations standards in England from 2016 – although this would still only represent the half‑way point to Zero Carbon Homes. It also announced at that time that small sites (10 or less dwellings) would be exempt from this requirement. Also from 2016 Zero Carbon Homes could be achieved by making up the remainder through ‘allowable solutions’ such as offsite renewable schemes, where it was not cost effective to do so on-site.
The recent Productivity Plan announced that both the ‘allowable solutions’ idea and the proposed move in 2016 to Building Regulations changes that would be half-way to Zero Carbon Homes is also not going ahead in England at the moment.
Building Regulations – Wales
In Wales changes to Part L of the Building Regulations came into force on 31 July 2014. These changes mean that new dwellings will be 8% more energy efficient when compared to the Building Regulations 2010 standards. The Welsh Government had previously consulted in 2012 on a 40% or 25% reduction on 2010 levels, stating that 40% was its preferred option.
The power to make Building Regulations to cover off-site carbon abatement measures (allowable solutions) was given to the Welsh Ministers by the Infrastructure Act 2015. The Minister issued a statement at the time saying that the Welsh Government would consult on such measures in Wales before exercising the new powers. It is not yet known whether the Welsh Government will decide to use these powers given the decision to abandon off-site abatement measures in England.
The Welsh Government has also said it will review Part L again in 2016. The review is intended to be the next step in a progression towards the EU target of nearly zero energy buildings.
Article by Hannah Johnson, National Assembly for Wales Research Service
On 8 July, the Chancellor announced a raft of new reforms to the welfare system, as part of the UK Government’s efforts to reduce the welfare bill by a further £12 billion by 2020.
Alongside the introduction of a National Living Wage, there will be cuts to housing benefit for young people, a lowering of the benefit cap, and cuts to Employment and Support Allowance and tax credits.
As Wales is more dependent on welfare, and has a higher rate of poverty compared to other UK nations, the impact of these changes will be high up the political agenda in the Assembly.
However, the biggest single cut to welfare spending is set to come from extending the freeze in working age benefits, tax credits and local housing allowance out to 2020. The Institute for Fiscal Studies estimates that it will affect 13 million families in the UK, who will lose an average of £260 a year as a result of this one measure.
A summary of the major changes and an analysis of their impact on Wales is below. It is worth noting that most of these measures will only affect new claimants:
- Automatic entitlement to housing benefit for 18 to 21 year olds will be cut from April 2017. The Welsh Government claims that 1,200 claimants in Wales could be affected by this change (without exemptions), with an average loss per claimant of around £90 a week, saving around £6 million a year. Around 55% of affected claimants are in the social rented sector in Wales.
- The benefit cap will be reduced to from £26,000 to £20,000 in Wales, which the Welsh Government estimate will affect 5,000 households in Wales. However, the BBC quoted Community Housing Cymru as estimating it to affect 7,000 households;
- The rates for the Work Related Activity Group (WRAG) within Employment Support Allowance (ESA) will be brought in line with Jobseekers Allowance (JSA), which will mean a cut of £29.05 per week.
According to DWP statistics, in November 2014 there were 36,530 people in the WRAG of ESA in Wales, which represents around a quarter of all claimants.
- Child tax credits will be limited to two children from April 2017 for any new claimants and existing claimants who have more children after 2017. Community Housing Cymru estimate that 51,000 working families in Wales already have two children so will be hit by the change if they have any more children [source].
Other changes include:
- A reduction in how much families can earn before tax credits/universal credit (UC) start to be withdrawn:
- Tax credits start to be withdrawn once family earnings are above £3,850 rather than £6,420;
- Universal Credit also withdrawn much earlier (straight away for non-disabled households without children);
- Backdating for Housing Benefit will be limited to a maximum of 4 weeks;
- Family premium entitlement to housing benefit will be removed for claims made after April 2016;
- Changing support for mortgage interest from benefit to loan.
The Bevan Foundation has also published a blog post on the new National Living Wage.