Homes that don't cost the earth: a consultation on Scotland's Sustainable Housing Strategy

Chapter 4 : New Build Market Transformation

The outcome we want to see:

Scottish companies maximise the potential of innovative design and construction techniques to deliver more, greener homes as part of sustainable neighbourhoods creating export and other economic opportunities.

Why is this important?

4.1 Scotland's house-building industry already makes a significant contribution to Scotland's economic prosperity, creating and supporting jobs and enabling labour market mobility. And, as a consequence of our increasingly ambitious building standards, the energy efficiency of the new homes built today has increased significantly in recent years. However, the Scottish Government believes that more can be done, both to improve yet further the sustainability of new build housing and to forge new economic opportunities from the sector and its supply chain, including the potential for a "first mover" advantage in the export market in Europe and beyond and its supply chain.

4.2 According to National Records of Scotland projections, we will need around 450,000 extra homes in Scotland to meet expected demand by 2033. The Scottish Government's ambition for new homes that meet the highest sustainability standards represents a huge opportunity for innovation and investment in the housing sector building on the industry's existing track record. Improvements to energy efficiency standards through the building regulations will play a vital part in transforming the new build market.

4.3 The Scottish Government has a key role to play through the way we incentivise energy efficiency in the new homes that we subsidise. We estimate that the £710 million housing investment budget for the three-year period 2012-15 could generate around £3 billion of economic activity and support up to 8,000 jobs each year, directly and indirectly, across the Scottish economy. Through the Affordable Housing Supply Programme ( AHSP), we are committed to subsidising 30,000 new affordable homes over the 5 years of this Parliament, mainly through councils and housing associations. The programme includes homes for social rent, intermediate rent and shared equity ^[43] . While some of these homes will be delivered though rehabilitation or off-the-shelf purchase, at least 80 percent will be new build, and a coordinated approach to driving energy efficiency through this Programme can spearhead wider reforms in the industry.

This chapter highlights opportunities to modernise the industry, including through procurement and the Government's affordable housing programme.

Progress so Far

4.4 Scotland's building standards have driven significant improvements in the quality and energy efficiency of new homes in Scotland. Homes built to 2010 building standards deliver a 70% reduction in carbon dioxide emissions compared to those built in 1990. (Further information on this, and the complementary sustainability labelling system in contained in chapter 2).

4.5 Timber frame construction is a good example of modern approaches to construction, accounting for around 75% of all new housing in Scotland ^[44] . It is well suited to delivering homes that meet increasingly high building standards. Timber is also a low carbon construction material, storing significant volumes of carbon in buildings and substituting for more energy-intensive materials. Some Scottish companies have already invested in creating factory production bases where houses can be largely constructed in a controlled environment, providing a higher quality, more energy efficient end product. The focus on low carbon construction and energy efficiency also provides opportunities for greater use of timber in construction, building on the rising Scottish timber harvest, the considerable investment in new processing facilities and ongoing research into new timber products and construction systems. There are also economic opportunities in the English market where penetration of timber frame is currently much lower.

4.6 The Building Performance Assessment Centre ( BPAC), based in Glenrothes, provides a unique testing facility for new and innovative construction materials and building systems, giving firms an opportunity to test their products and solutions in Scotland. The centre, supported by Edinburgh Napier University, provides facilities to test products for full scale assessment in blockwork, precast concrete and timber frame houses and apartments. In addition BPAC provides UKAS accredited testing for all forms of structural timber, as used in new buildings. In addition, there are large prototype test bays which can be leased to allow house builders, designers and product system manufacturers to construct and test new innovative housing build systems. Information is available at www.bpac.co.uk

Box 11: Case study - Housing Innovation Showcase: Stewart Milne Group Ltd - Sigma II building system

The Housing Innovation Showcase is a £3.3m project which will test different new construction technologies with a view to using the best methods and systems in mainstream affordable housing programmes. Twenty-seven new homes are under construction on the Housing Innovation Showcase site in Dunfermline, Fife. The showcase is a joint venture between Kingdom Housing Association and Fife Council and enjoys the support of Fife Construction Forum and Green Business Fife. A key element of the development will be a comprehensive monitoring programme of the performance of the different systems, and a comparative analysis of the benefits of different renewable energy options and other enhanced specifications on some of the properties. A link to the Showcase is here: housing innovation showcase 2012

The Sigma II Building System has been used at the Housing Innovation Showcase development. Stewart Milne Timber Systems is part of the Stewart Milne Group, one of Scotland and the United Kingdom's leading house builders. They have developed their Sigma II Build System to achieve superior levels of fabric performance. The system uses conventional materials and skills with an easy to understand approach. It is a fabric first solution that delivers an affordable, reliable and simple to install Build System, promoting a "Fit and Forget" approach. Their focus is on higher levels of prefabrication, to reduce build process and material waste, and a fabric first approach to carbon compliance.

Links to wider strategy on sustainability

4.7 New greener homes need to be part of sustainable neighbourhoods. For example, we can influence the design of new homes in sustainable places and neighbourhoods by ensuring that individual buildings make best use of the positive attributes of the site (such as orientation towards the sun). Equally important however is that the place within which individual buildings are found is well connected and well designed ^[45] . Where possible, new housing should be located in such a way to reduce the dependence of future occupants on fossil fuelled forms of transport. It should also be designed to accord with the six qualities of successful places that are described in Designing Places ^[46] the Scottish Government's policy on place-making. New housing should be developed in the context of the neighbourhood with mixed use developments becoming the norm. Consideration also needs to be given to the development of new housing typologies that meet the demographic challenges we are facing (such as the need to care for an elderly relative at home) and the potential for information and communication technology ( ICT) to shape the way we live and work. Opening up opportunities for self build and adaption will make our housing stock better able to cope with these challenges.

4.8 Our policy on street design seeks to prioritise place before movement in residential neighbourhoods. "Designing Streets" ^[47] discourages the adoption of site layouts that incorporate distributor roads and cul-de-sac layouts that depend on cars to connect householders to jobs and services. The Scottish Sustainable Communities Initiative is a Scottish Government programme that aims to create sustainable, ambitious and inspiring places. The public and private sector can learn from the experience of the Initiative to inform their own processes and developments. The quality of the place and the environment around new housing could also be assessed be made by reference to the criteria within 'Building for Life' ( www.buildingforlife.org).

Q38. What steps can we take to ensure that we design and develop sustainable neighbourhoods?

Our specific objectives for new build transformation

4.9 We want to see a transformed new-build market characterised by:

• The development of building standards that mean all newly built homes are warm and comfortable with the aspiration of net zero carbon new homes, if practical from 2016/17, as recommended by the Sullivan Report. ^[48]
• Homes constructed using techniques that minimise energy use and waste.
• The public sector leading by example, including through a Scottish Government subsidised house-building programme with a strong focus on energy efficiency.
• A flourishing export market in leading edge energy efficient products developed and manufactured in Scotland.
• New homes are in mixed-use developments that support the long term well-being of communities because they are designed in context of better place-making.

Main challenges to address

4.10 There are a number of barriers to change that need to be addressed which are set out below.

• Current construction methods and technologies are capable of delivering homes to the 2010 building standards or the proposed greener AHSP standard (discussed later in this chapter) in an efficient and effective manner. However, achieving the higher level of emissions reduction being investigated for the future may require significant changes in practice.
• There is a need for appropriate capacity within Scotland for innovative new components and housing systems to be tested, in isolation and in combination.
• The depressed housing market and constrained availability of finance, limits demand for innovative products and inhibits the capacity of companies to invest in research and new facilities.
• Some consumers may be unwilling to be "early adopters" in respect of new designs and technologies which affects demand for such technologies and innovative housing types.
• The need to develop a multi skilled workforce rather than specialists to avoid the risk that site employment could become short term. This is discussed further in chapter 5 and requires careful consideration.

Q39: Section 4.10 sets out the main challenges to address in taking forward our aim of new build transformation. What further challenges, if any, need to be addressed?

Q40: What action is needed to increase the capacity for developing and bringing to market innovative methods of construction?

Actions to address these challenges

4.11 We are working to influence the private sector to further extend the use of modern methods of construction and high quality materials building on last year's Greener Homes Summit. Our "Greener Homes Prospectus" published alongside this consultation paper highlights examples and case studies to illustrate how this can be done in a cost-effective way.

4.12 The Scottish Government has announced its intention to commission a review of construction procurement arrangements in 2012 to support greater consistency of procedures and improve delivery of construction procurement projects across the Scottish Public Sector

4.13 The review will include procurement arrangements for affordable housing and will make recommendations to support improvements in efficiency, delivery and sustainability of construction procurement projects across the Scottish public sector to ensure that Scotland's public sector and affordable housing sectors make best use of both their and the industry's resources.

4.14 The review is expected to identify opportunities and make recommendations to ensure that the construction sector:

• achieves efficiency improvements through opportunities for collaboration where appropriate;
• raises its performance through improvements to capability, procurement practice and project assurance;
• is able to identify and quickly adopt emerging best practice and that practices are standardised wherever possible;
• adopts good practice in relation to sustainability, including life cycle costing and reduced carbon and energy consumption;
• manages common/major contractors and projects effectively;
• makes best use of available construction procurement/project skills; and
• makes best use of new and emerging innovations in techniques, technology and materials.

4.15 The Scottish Government is taking a lead in promoting high energy efficiency standards, through its subsidy of the Affordable Housing Supply Programme ( AHSP). In May 2012 we issued guidance on the AHSP including incentives for councils and housing associations to achieve higher standards. All new build housing supported through the AHSP must meet the current building standards, and an additional £4000 subsidy per unit is available for council and RSL homes which achieve the 'silver' standard in respect of both energy use for space heating and overall carbon emissions (further information on the sustainability labelling system is given in chapter 2). In partnership with housing associations, councils are currently preparing their Strategic Local Programmes within the AHSP. These will set out how many homes they intend to build to the higher standard.

4.16 A further element of the AHSP is the Government's Innovation programme, which was supported though a £10 million fund in 2011. The Government has announced its intention to repeat this initiative, but with a stronger focus on higher building standards and greener technologies. The scheme will be launched later in 2012 after discussion with stakeholders, but it will provide grant and/or loan funding to affordable housing developments which are innovative in terms of construction method and sustainability, as well as meeting local housing needs and demonstrating value for money. Priority will be given to applications which demonstrate methods of construction that could be widely applied, so that the Innovation Fund can lead to positive change across a wide canvas.

4.17 In the future AHSP, the Government may continue to use variations in subsidy rates to incentivise greener homes. However, once the 2013 standards have become the norm for all new homes, it may no longer be necessary to vary subsidy levels according to the building standards achieved.

4.18 In the longer term, the Government will consider with local authorities and housing associations whether a reorganisation of the AHSP would enable the programme to become even more influential in driving change in the industry. This will be considered within the review of construction procurement outlined above. For example, would large scale and forward looking contracts be the key to enabling construction firms to invest in greener technologies with positive results for the Scottish house building industry and for exports? And if so, could a more joined up approach to the AHSP, with opportunities for councils and housing associations to collaborate with each other and across geographical boundaries, achieve a coordinated scale sufficient to unlock transformational change in building methods?

Q41. What further changes to the operation of the Government's Affordable Housing Supply Programme would help to enable it to champion greener construction methods and technologies in the medium term?

Q42. What further action is needed to influence the construction industry to make greater use of innovative methods to deliver more greener new homes?