Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith

Climate Change, Environment, and Infrastructure Committee

28/04/2022

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Delyth Jewell AS
Huw Irranca-Davies AS
Janet Finch-Saunders AS
Jenny Rathbone AS
Joyce Watson AS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Cat Griffith-Williams Adeiladu Arbenigrwydd yng Nghymru
Constructing Excellence in Wales
Clarissa Corbisiero Cartrefi Cymunedol Cymru
Community Housing Cymru
Christopher Jofeh Grŵp Gweithredu Annibynnol Llywodraeth Cymru ar Ddatgarboneiddio Preswyl
Welsh Government Independent Implementation Group on Residential Decarbonisation
David Lewis ClwydAlyn
ClwydAlyn
Dr Ed Green Ysgol Pensaernïaeth Cymru
Welsh School of Architecture
Dr Jo Patterson Ysgol Pensaernïaeth Cymru
Welsh School of Architecture
Gavin Dick Y Gymdeithas Genedlaethol Landlordiaid Preswyl
National Residential Landlords Association
Louise Attwood Linc Cymru
Linc Cymru
Mark Bodger Bwrdd Hyfforddi'r Diwydiant Adeiladu
Construction Industry Training Board
Martin Turner Bwrdd Hyfforddi'r Diwydiant Adeiladu
Construction Industry Training Board
Matt Dicks Sefydliad Tai Siartredig Cymru
Chartered Institute of Housing Cymru
Neil Barber Grŵp Pobl
Pobl Group
Scott Sanders Linc Cymru
Linc Cymru
Tom Boome ClwydAlyn
ClwydAlyn
Wayne Harris Grŵp Pobl
Pobl Group

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Andrea Storer Dirprwy Glerc
Deputy Clerk
Elizabeth Wilkinson Ail Glerc
Second Clerk
Marc Wyn Jones Clerc
Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu’r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:31.

The committee met by video-conference.

The meeting began at 09:31. 

Penodi Cadeirydd dros dro
Appointment of temporary Chair

Bore da. Yn absenoldeb y Cadeirydd, hoffwn wahodd enwebiadau ar gyfer Cadeirydd dros dro, yn unol â Rheol Sefydlog 17.22. A oes unrhyw enwebiadau, os gwelwch yn dda? Huw.

Good morning. In the absence of the Chair, I would like to invite nominations for a temporary Chair, to be elected under Standing Order 17.22. Are there any nominations, please? Huw.

Diolch yn fawr. A oes unrhyw enwebiadau eraill? Gan nad oes, rwyf yn datgan bod Delyth Jewell wedi ei phenodi yn Gadeirydd dros dro am y cyfarfod hwn. Diolch.

Thank you very much. Are there any other nominations? As there are none, I declare that Delyth Jewell is elected as temporary Chair of today's meeting. Thank you very much.

Penodwyd Delyth Jewell yn Gadeirydd dros dro.

Delyth Jewell was appointed temporary Chair.

Diolch, Marc, a diolch i’r Aelodau.

Thank you, Marc, and I thank the Members.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions, and declarations of interest

Croeso i'r sesiwn hwn o'r Pwyllgor Newid Hinsawdd, Amgylchedd a Seilwaith. Dŷn ni wedi cael ymddiheuriadau gan Llyr Gruffydd, ein Cadeirydd, sydd yn sâl, a dŷn ni i gyd yn danfon ein dymuniadau gorau iawn ato fe i wella yn fuan. Bydd y cyfarfod hwn yn ddwyieithog; bydd cyfieithu ar y pryd yn cael ei ddefnyddio. Ac, wrth gwrs, hefyd bydd ein meicroffonau ni yn cael eu rheoli'n ganolog, felly does dim angen i unrhyw wneud unrhyw beth gyda'u meicroffonau. A gaf i ofyn a oes gan unrhyw Aelod fuddiannau i'w datgan, plis?

Welcome to this meeting of the Climate Change, Environment and Infrastructure Committee. We've received apologies from Llyr Gruffydd, our Chair, who's ill, and we all send our best wishes to him and wish him a speedy recovery. This meeting is bilingual, and the simultaneous translation is used. And could I also remind participants that their microphones will be centrally controlled, so no-one needs to touch their mics. Could I ask whether any Members have any declarations of interest, please?

Yes. For any items regarding property ownership, I would like to refer Members to my own declaration of interest form that is published and available for all to see.

Thank you, Janet. Thank you very much.

Diolch yn fawr iawn am hynna. Oes gan unrhyw Aelod arall fuddiannau i'w datgan, plis? Dwi ddim yn gweld bod unrhyw un yn dweud, felly mi wnawn ni symud ymlaen. Gyda llaw, er fy mod i'n Gadeirydd dros dro heddiw, os bydd technoleg yn mynd yn broblem, mae Huw Irranca-Davies wedi bod yn garedig iawn a phenderfynu ei fod e'n hapus i fod yn Gadeirydd dros dro dros dro, tra fy mod i'n ceisio ailymuno. 

Thank you very much for that. Do any other Members have any declarations of interest? I don't see that they do, so we'll move on. By the way, even though I'm the temporary Chair today, if my technology fails, Huw Irranca-Davies has kindly agreed that he is content to be the temporary temporary Chair while I try to rejoin.

2. Datgarboneiddio tai - sesiwn dystiolaeth 1
2. Decarbonisation of Housing - evidence session 1

Fe wnawn ni symud ymlaen, felly. Mae ein sesiwn ni heddiw ar ddatgarboneiddio tai. Mae'n bleser gen i gyflwyno a chroesawu ein tystion y bore yma. A gaf i ofyn i chi plis i gyflwyno eich hunain ar gyfer y record? Awn ni at Chris yn gyntaf. Christopher.

We'll move on, therefore. Our session today is on decarbonisation of housing, and it's my pleasure to welcome our witnesses this morning. Could I ask you all, therefore, to introduce yourselves for the record? We'll go to Chris first. Christopher.

Good morning. I'm Chris Jofeh. I chair the independent group that advises Welsh Government on residential decarbonisation. As a declaration of interest, I'm a board member of Tai Calon Community Housing.

Thank you very much, Chris. Because Jo is next on my screen, can I go to Jo, please?

Hi, I'm Jo Patterson. I'm a senior research fellow at the Welsh School of Architecture. For the last 12 years, I've been leading low carbon built environment projects, installing technologies into buildings and monitoring them to investigate performance in practice.

That's fantastic. Thank you very much, Jo. And finally, can we go to Ed, please?

Thanks, Delyth. Hi, everyone. I'm Ed Green. I'm also based at the Welsh School of Architecture, and for the last five years, I've been working particularly with a colleague, Simon Lannon, on a series of pieces of work on behalf of Welsh Government looking at decarbonisation of the Welsh housing stock.

That's fantastic. Thank you, all, so much. We have a lot of different questions in different areas that we'll want to be covering today. I am almost certain that there will be areas that we'll want to follow up with you in writing after the session, because we're probably not going to get through everything. So, we'll go straight into questions, if that's all right with everyone.

I'll just start by asking Chris specifically: could you talk us through, please, how the Welsh Government's approach to decarbonisation—how has it been shaped by the 'Better Homes, Better Wales, Better World' report? Has the Government been aligning or adhering to the recommendations that you've made, do you think?

Broadly, it has aligned, and it's done very well. It's been hit hard by COVID, and that's limited its ability to help. Two of our recommendations were that decarbonisation should start in the social housing sector, and Welsh Government's efforts have started there. Another one was that it should spend a lot of money on field trials, and the optimised retrofit programme is its really good response to that. In other areas, it's fallen behind. I wish it hadn't, but I do accept that COVID has hit it very hard in the last two years.

09:35

Okay, thank you, Chris. If there's anything specific you'd like to either highlight with us during this session on that, we'd be really pleased to hear it. Or, again, if there's anything that isn't captured today and you'd like to share it with us in writing, we'd be very grateful for that.

Okay. I'll do that.

Thank you. Thank you very much indeed. I'm very aware of time, so I'm going to move straight on, if that's all right. Janet, we'll go straight to you.

Thank you. Do you believe that the Welsh Government is clear about, understands the scale of the housing decarbonisation challenge and actually has a plan or strategy in place to deliver it?

Is that one aimed at me?

Yes. And if I can say, if anyone wants to come in first—I should have said at the start, forgive me—if you want to indicate by putting your hand up, then that would be great. But, Chris, as you're speaking already, yes.

Okay. Yes, I think it does understand. I think it takes it very seriously and I think it wants to do the right thing. I think in the social sector it's doing pretty well. I don't think it yet understands or knows what to do about the private rented or the owner-occupied sector. I don't think it has a clue about how you organise or make available the funding necessary. I'm not saying it has to provide all the funding, but I think an understanding of and supporting efforts to find funding is an area where it's been a bit weak.

Okay. And just coming back on that one, of course a large proportion of property ownership in Wales is owned by the private rented sector. So, technically, then, there could be quite a lot of homes that fall outside the umbrella. How do you think that needs to be dealt with?

Oh, gosh, there are a number of things. I think future phases of the optimised retrofit programme could include the private rented sector, with social landlords being asked or told to engage with private landlords. The second phase was going to do that, but then for some reason that I don't understand that was actually dropped, but I'm hoping that can come back in phase 3. I think Welsh Government could make the case to Treasury for what's called enhanced capital allowances for private landlords, in the way that businesses can offset investment in energy efficiency against the next year's tax. So, I think private landlords might be allowed to do that. I think Welsh Government can do more to support the trialling and rolling out of property assessed clean energy loans for private landlords—that's very successful in the States. It's an idea that's supported strongly by the Green Finance Institute. I think the Welsh Government can do a lot about capturing data about private rented homes and the construction or the assembly of their building renovation passports, so that landlords actually know what they need to do. I think there's a big gap there. So, there's quite a lot.

There's also what's called demand aggregation financing, which is where you add up all the need for different products or services in a given, for example, local authority area, and then you go about purchasing that at scale. I think that needs to be investigated as a mechanism for supporting people who wouldn't otherwise be able to afford stuff at normal costs.

Thanks, Delyth, yes. Janet, just to pick up on your question also, one of the things we need to look at very carefully is having consistent standards across different sectors of the stock, because if we don't have consistent standards, what we're likely to see is the harder-to-treat parts of the stock migrating from one sector to another, so moving from social housing to PRS or into the owner-occupied sector. And so, for that reason, but also under the banner of the future generations equality goal, we should really be looking at being as consistent as possible across all different parts of the stock.

Thank you. And then, of course, one of the Welsh Government's key mechanisms for delivering home energy efficiency improvements is the Warmer Homes programme. Now, the Welsh Government recently consulted on how to strengthen the Warmer Homes programme with a new scheme expected from 2023. What do you feel is required, as part of the new scheme, to help address the scale of housing decarbonisation and fuel poverty?

09:40

Whoever would like to go first. Jo—forgive me, Chris. Can we go to Jo quickly first? Well, I say 'quickly', you can take however long you like, Jo, and then we'll go to Chris if that's all right, because you'd started speaking.

I think there's a real lack of supply chain in Wales. We're really struggling with people to deliver these projects at all.  We've recently gone to tender on some of the projects that we've been leading at the school, and we've had very few companies, particularly from in Wales, to deliver the projects. If we try and target the easy-to-treat homes first, the large, vast estates that were built in the 1950s and 1960s that are easier to retrofit to the levels that we need to get to, then that will help to develop a supply chain that can then work on the more hard-to-treat properties that are more difficult to technically deal with. So, I would suggest maybe working on large, similar types of buildings to start with to develop the supply chains. 

Forgive me, Chris, you wanted to come in, and then I'll bring in Joyce after that, but, Chris.

Thank you. It's not a very well-thought-through answer, this, but I'll have a go anyway. I think, historically, Welsh Government has treated fuel poverty and decarbonisation as separate and siloed activities. I'm encouraged that I understand now that it's recently brought them together into a single team, so that I think should help quite a lot. But in the end, it's money. It's money and it's giving confidence to the supply chains that Jo talked about that there is a steady pipeline of work that it's worth their while spending money training and getting involved in.

Thank you. Ed, before I bring you in, Joyce, was it something that was leading on from something that Jo had said that—? Ed, we'll go to Joyce first and then we'll come back to you, if that's all right. Joyce.

It could be that Ed might have answered it. The supply chain you talk about, I wanted to understand a little bit more—are you talking about a skills supply chain, a goods supply chain, just for clarity? That's what I wanted to know.

It's everything, really, but I was specifically, in that point, talking about the materials and installation, so things like solar panels, batteries, external wall insulation, insulation products generally. There just seems to be a lack of that market, but, obviously, the skills to deliver are also lacking as well.

Thanks, Delyth. I just wanted to expand on something that Chris had touched on, actually, at the end of his last point, which was that, very early on in the, I think, second stage of the work that we did, we identified a really clear tension between decarbonisation pulling in one direction, and affordable warmth and affordable fuel bills for residents pulling in a different direction. I think, in the more recent stages of the work, what we've identified is that there are actually four things that are very much in tension with one another, which is one of the things that really makes decarb of the Welsh housing stock a very tricky thing to have a clear path on. If you imagine a bed sheet and if you imagine each of the four corners pulling in different directions, you've got decarb tugging in one direction, you've got fuel bills pulling in a different direction, but then you've got housing quality, which we're looking at at the moment, pulling in a different direction again. Actually, one of the really big triggers for making improvements, particularly perhaps the owner-occupied sector is about how you make decarb align with improving housing quality and housing value. Then the other thing you've got pulling, the fourth corner of the bed sheet, if you like, is capital costs. Each of those corners has a different agenda and a different set of variables, so it does make it a very difficult thing to find the point where the bed sheet is as flat and unwrinkled as possible.

I liked how that metaphor really developed and you stuck with it, that was a—[Laughter.] No, sincerely now, that's a really important point. Thank you. I think Jo wanted to come in on this.

Yes, I just wanted to add to that that the impact of poor-quality housing on health and the co-benefits of health are probably the biggest thing of all that can support investment, and I think that, linked to the condition of housing quality and living conditions, both mental and physical health—we've seen, in very small samples from the work we've done, if we can provide evidence to support how health can be improved as a result of investment there are chances of getting more finance from different sectors. 

In terms of the evidence that you have on that in terms of physical and mental health and how those are affected, would Members be content if we asked Jo to write to us with that information, because I think that would be really fascinating to see? 

Because of our sample size being so small—we've only done 30 plus deep retrofits—it would never stand up at all with regard to any real evidence. But, yes, we've done monitoring before and after all of the retrofits that we've done, and we've worked very closely with all of the residents. So, we've asked them about their health and health conditions before and after, but it can be a very perceived thing, so it can't be taken as any sort of scientific evidence.

09:45

Thank you so much. I think Ed wanted to come in, and then I'll come back to Chris. Ed.

Yes, just on that point, Delyth, the BRE did a report, I think two years ago, called 'the cost of poor quality housing', and it's interesting because, recently, we've been looking at housing quality and decarb, and we've been trying to understand how you push housing in a direction where it starts to meet all of the different future gen goals. And, actually, some of the things that you really want to do to improve quality are very difficult to put a price tag against or to cost. But, actually, the report that the BRE did on the cost of poor housing puts very clear, very big figures against health costs and against some of the poorer housing that we've got. So, that would be a worthwhile reference to go to. And it's just interesting that health does seem to be one of the things that talks about there being a clear financial incentive to actually make homes better.

Thank you, that's really useful. Thank you very much for that. Chris, you wanted to come in as well.

Yes, thanks, Delyth. Just that there are two big studies—one came out of Cardiff University a couple of years ago, and one out of Swansea University, which looked at not the cost of living in poor homes, but the benefits that flow from improving those homes to health. So, I'd happily share those with the committee.

That would be fantastic, please, because, so often, we look at it from the negative, but, actually, it can be so much more empowering. Well, is it? I'm saying this in terms of not just persuading policy makers, but also persuading owner-occupiers as well—anyone who needs to be engaged in this—that, actually, if it's a positive, then, psychologically, it can be more of a pull. Huw, you wanted to come in.

Yes, simply to ask Ed or anybody else, how do you reconcile, then—? Sorry, what would your advice be for policy makers on reconciling those sometimes conflicting tensions between different policy objectives? Because the danger is here that that becomes an excuse for not taking decisive action. You can never quite hit the sweet spot or you bounce between one objective and another. So, is there a current consensus on what policy makers should be focusing on, and not just for one electoral cycle, but for the medium and long term?

I think it's a really good question, Huw, and we had the same sort of conversations, actually, in the Stage 3 work we did. We talked a lot with social housing landlords, and there was a huge energy and appetite within the landlords to make these kinds of changes, to get stuck into decarbonisation, to make improvements to their stock. But there were an awful lot of questions, particularly around that hard-to-treat chunk of the stock, around what they should actually be doing, and it's precisely because of these tensions that are in play that it's very, very difficult to find the right answer.

So, one thing is about exactly as you said—finding the sweet spot, identifying standards to deliver what needs to be delivered, but allows sufficient flex that you can do the right thing in any given situation. And then the other thing that we found, in our most recent work we've switched to using primarily case studies as the vehicle for understanding or testing what to do in a particular situation. And I think, from a lot of points of view, one of the best things we could do going forward is to develop a dossier of really well-worked-through, really robust case studies that talk about that, when you've got housing that's something like this, or a scenario or a context that is kind of like this, this is an approach that actually delivers a really good result, not just from the point of view of hitting the 95 per cent decarbonisation or coming in under a particular benchmark for being financial good value, but actually all round, doing everything that it possible could to make that particular situation as good and as high quality as possible.

Following up on Huw's question, I think for social landlords, there is not much of a conflict between decarbonisation and tackling fuel poverty because social landlords get both of the issues, and if you decarbonise a property well, you make big strides towards taking its occupants out of fuel poverty. I think the real challenge for Welsh Government is in privately owned homes, whether they're privately rented or owner-occupied, where the people cannot afford to do the work themselves. There, it seems to me, public money has to be spent and Welsh Government's efforts have to be devoted to increasing the flow of public money. I think Welsh Government can do something towards maximising ECO4 spending in Wales, which is the spending by the energy companies. I think it can attract and direct that better. Also, and this is a tough one, probably, it does have some tax-raising powers. I'm not sure that it would be unacceptable to say, 'We're going to up the tax on the richest 5 per cent of the population in order to take the bottom 20 per cent out of fuel poverty.' That may be a socially acceptable line to take. But it's got to find some more money from somewhere, and it won't get it from Westminster.

09:50

Thank you very much for that, Chris. Unless anyone else wanted to come in on this point—. Jo, you do, okay. Jo, and then we'll move on to Joyce's next question. 

Just briefly, I think there have been issues in the past with the conflict between reducing carbon emissions, fuel poverty, health and improving buildings' fabric. One of the biggest examples of that is air source heat pumps, and the fact that air source heat pumps are targeted at carbon emissions, but quite often they conflict with fuel poverty, and they have been installed in homes where energy bills have significantly increased for residents. So, we need to be really careful. I think for owner-occupiers, focusing more on fuel poverty, reducing energy bills and improving the conditions of the housing stock are probably more of a driver, because they understand that and it has more of an impact on their lifestyle, rather than the carbon emissions, but obviously they will work out together. But I think for owner-occupiers, it is much more of what the benefit is for them, because they won't invest otherwise. 

Thank you, Jo. I think Ed wanted to come in on what you were just saying.

Yes, just because we've drifted into what I think is really important territory. Setting aside the social housing stock for a second, there is a way to decarbonise, as Jo was saying, that meets the targets but hits fuel bills very, very hard, and it's all about moving from energy supplies from gas and things like that towards what is probably electric heat—the heat pumps and the kind of things that Jo has mentioned. That can be done. As long as particularly electrical energy supply continues to get cleaner in the way that it has done over the last few years, that can go huge ways towards achieving decarb targets. But, as Jo was saying, it can also hit people's pockets really, really hard. In the case studies that we've looked at, it can add enormously, that transition to electric heat, to fuel bills, principally because at the moment electricity per unit is a lot more expensive than gas. So, it's really, really important for us that any moves that are made to develop strategies for retrofit that decarbonise look very carefully at fuel bills and make sure that there's this package of work that is around the building fabric. And the work that we've done recently talks about finding a standard where you're able to decarbonise the home, you're able to switch from high-carbon sources of energy to low-carbon sources of energy without negatively impacting on fuel bills. Everything that we've seen in the last week or so in the news makes it really, really clear that that's more important than ever, with the conversation around 40 per cent of households slipping into fuel poverty, and things like that. It's a really big issue that could affect an awful lot of people.

Yes, absolutely. Thank you, Ed. Huw, you had your hand up but now you've taken it down. Did you still want to ask—?

No, because we'll come on to this. It just strikes me, from the conversation we're having, that social landlords have their hearts in the right place but they also have the benefit of having financial mechanisms lined up that steer them towards reconciling these conflicting objectives. So, it's no surprise that social landlords get on with it. What we have failed to crack over successive decades is lining up the financial incentives, as Jo was saying, that actually incentivise on a large scale, on spatial areas, private owners—owner-occupiers, private landlords—to get on with it as well. We'll come on to this, that's why I'm not asking the question, but I'd be interested in whether this session does flush out what is the package that UK Government, Welsh Government and others have failed to put forward that would really change this. Anyway, sorry, I'll leave that thought there. 

Well, you've put the thought in, and I think that Ed does—. Because you've put your hand up, Ed, we will go to you, but it's useful just to emphasise again that we're using these sessions today to try to decide as a committee where the areas are within this quite significant agenda that we want to be focusing on. So, it might seem that we're meandering around, but that's why we want to try and get to the crux of what the issues are that we want to focus on. But, Ed, you wanted to come in on Huw's thoughts—not his question, but his thoughts. 

09:55

It is appropriate to come in on that at this point? Because I think it's a really important thought to have, and I think it's a really relevant topic to be discussing. For me, in many ways, we've talked about the fact that it's probably more straightforward and more—. It's easier to see how to make improvements in the social housing sector, and, actually, maybe I've got some concerns that if we spend the time between now and 2030 really focusing on the social housing sector, it just grows the extent of the problem in the private sector, and it gives us less time to make progress there. So, I think there does need to be a plan developed for the private sector—for the private rented sector and for the owner-occupied—very soon. 

What we're doing at the moment is we're looking, like I said, very much at housing quality. It's about finding the levers, isn't it? It's about finding incentives to make people actually think about making changes in their own home. And if you can tie retrofit for decarb during things like delivering another bedroom, putting an extension on the back of the house, doing something within permitted development, making the house more valuable to then sell on, those are some of the ways perhaps that you can start to incentivise those sorts of changes in the private sector.

People don't like mentioning the green deal, for obvious reasons, but, actually, sometimes it's very much easier to learn from things that went wrong than from things that went right. So, there are schemes that we can look back on and learn from also to understand what we might do differently or fine tune, but I think it needs to be looked at as a matter of urgency, actually. 

Yes, and we're very likely to come back to this. Thank you very much for that. Joyce, we'll go next to you.

I'm just going to add my little comments to what was said. We used to, when we were in the European Union, which is another area that people don't want to talk about, have grants that would enhance the whole streets, especially if they were terraces. So, they would be given a grant where the owner-occupier might have put something like 27 per cent to bring that property up, because it would be a fairly large scheme. So, I'll put the question out there. We all know them because we can recognise them in our area. Is that a potential way forward for the UK to give the promised finance, where we won't be any worse off, to finance those projects in the way that they were before? I'm quite happy to leave that question there.

Also, we talk about houses that will need the most improvement. Surely, those houses will be very often in the hands of people who've retired, who find themselves with very limited funds, because very often all they have at their disposal is a very limited income, so there's a further challenge to the one that's been put on the table.  So, having said all of that, do you think that the Welsh Government's Net Zero Wales plan will progress the housing decarbonisation agenda at a scale and pace that we have all identified here this morning? 

Jo and Chris, you already indicated that you wanted to come in on this. I'll go to Jo first and then to Chris.

Thank you very much, Jo. Joyce, you finished with a very big question, so I'll go back to one of your earlier ones, I think, if I may. You talked about street-based schemes, and I think that's really important. I think area-based activity is going to be key for a number of reasons. There's a group called Bankers Without Boundaries who've been advocating some very interesting approaches to financing. They point out that in any given area—let's just pick a local authority—you need decarbonisation in all sorts of sectors. You need it in homes and businesses, in the public sector, in the public realm, in transport and in waste, in energy generation and storage, and so on. You need money for all of these things to make the decarbonisation work, and none of these are really siloed; they all have some impact and some interaction with the others.

The Bankers Without Boundaries approach is that you look at them as a whole in an area, and you look for multiple sources of funding, and you blend them in a way that delivers against the outcomes that each of those bits need. A really simple example is we're going to be facing substantially more overheating of homes. One way to do that is each home owner does something to their home. Part of the answer would be public-run tree planting, for example, to shade our homes, which delivers benefits both for the public realm and for the homes. So, I think an area-based approach that looks at blending the finance to deliver on multiple objectives is going to be a major part of the answer, and that then enables you to do stuff at a scale which you wouldn't otherwise be able to do, and offer maybe grants, maybe low-interest loans to people who need that support.

10:00

I was going to refer back to the Arbed programme, which was a really high profile funding stream for Wales and was really quite unique and novel at the time. That did target terraces of streets, it was great. But I think that one of the bigger problems with things like that is that the funding is very stop and start, which again makes it difficult for supply chains to develop. One of the problems that happened towards the end of Arbed was that the funding was running out and organisations came into the programme that didn't have the skills that were necessary to deliver high-quality retrofits, and therefore we ended up with some poorly delivered projects because the skills and supply chain weren't qualified to deliver the programme.

So, I think—and I think this is kind of appropriate to the optimised retrofit programme as well—although we all need things to happen quickly and we want things to happen quickly, we also need to make sure that that supply chain develops to deliver these projects to the quality that's required and necessary. Otherwise, owner-occupiers just will not invest in it, because they won't trust what is happening. What they can see elsewhere happening, they won't want that to happen to their own homes.

Thanks, Joyce. I'll go for the big question. The Net Zero Wales plan indicates that WHQS 2022 is going to provide a standard for retrofit alongside DQR providing a standard for new build. We need to establish what that standard is, obviously, as quickly as possible. People need to understand the goalposts to begin working out how to get to them.

There is some language in the plan that says that Welsh Government financial support for housing retrofit has historically been targeted at those least well-off in the hardest-to-treat homes, EPC D to G, and that this prioritisation is expected to continue. There isn't necessarily a correlation, in our view, between a household income and the EPC rating of the house they're living in. So, you've got people with very, very limited means living in homes which are rated EPC B or A, and then you've got people with lots and lots of money who are living in homes with really, really low EPCs. So, I think there's a problem there. Actually, what we need to do is we need to make a plan for all housing. We need to get all homes to a point where they perform adequately and people aren't left in fuel poverty. The language of that, EPC D to G, suggests that EPC C is acceptable. Actually, what we're going to find, and what we've seen in fuel bills over the last couple of weeks, is many households, many families, living in EPC C homes who cannot afford to heat their homes. So, we need to look very carefully at the threshold for where we do works and we need to look at the standard.

In the work that we've done, if you improve a house to EPC B, landlords or homeowners can do that in a component-based way. They can do that by taking one aspect of the house—the windows, the wall or the boiler—and uplifting that. Actually, what we need to see is we need to see homeowners and landlords uplifting and improving their homes in a holistic way. One of the benefits of a standard that is something like EPC A is that is requires that whoever's doing the work actually looks at the whole of the house and makes improvements in a co-ordinated way. So, we need to look at that target, that standard, very, very carefully, and we need to look really carefully at what it applies to. We think that, to get Wales to that 95 per cent decarbonisation reduction, we should be looking at the housing stock as a whole and not focusing on certain sectors. 

The other quick thing is that the proposal in carbon budget 2 to bring empty homes back into use and help owners to start their journey to net zero sounds really good, but again I think we need to see explicit decarb targets in there. So, we need to see really clear targets that are the same across all tenures and we need to see the whole housing stock be approached in this way.

Can I just pursue one aspect? I thank you for all of that. I know that we're limited for time, but I did make a point about who owns the houses, who's been left in the owner-occupier houses, and the profile in Wales is of an older generation, particularly in my area—Pembrokeshire, where I live, Ceredigion, which borders it. So, there's a whole cohort of people—are they identified anywhere—who probably haven't got the means, and they won't get any loans because they're too old and the banks won't give them any loans. So, if anybody has any thoughts on how you address that particular cohort, I'd appreciate it.

10:05

It's not an original thought of mine—it's one I acquired from somebody else. There's something like £300 billion of equity locked into homes in Wales. That does suggest that some sort of equity release scheme, aimed at decarbonisation, and safeguarded by the development bank, would be something worth investigating. I think the development bank needs to up its game when it comes to decarbonisation, and I think that's an area where they could intervene beneficially, to make equity release safe for people in support of decarbonising their homes.

Interesting. Thank you. Thank you very much. Jenny, we'll move on to you.

Thank you. Thank you very much for both your papers—both really clear. Just going back to the cost-of-living crisis, we had the Suez crisis in the 1950s, the 1973 tripling of oil prices—this is akin to that. And so in the context of what the Welsh Government can do in the short term to try and mitigate the tsunami of the cost-of-living crisis that's going to hit us this winter—because it's all slightly in abeyance at the moment, because it's warm, people aren't needing their heating—what can they do to try and mitigate what is going to be unbelievably challenging for low-income families?

I think the goal has to be reducing the heat loss from homes, but that will take a while to get going, but I think that can be accelerated. In the very short term, I see no alternative than the Welsh Government giving money to people, to help them with their bills, which would otherwise be completely unaffordable and they'd have to choose between heating and eating, and all the other things that we need to spend money on. So, short term, I'm afraid it's burning £10 notes, but, in the medium term, it's an accelerated programme of putting tea cosies around the house, if you want a metaphor for it. It's insulating the homes so that their heating demand is dramatically reduced.

Okay. So, why isn't this zero VAT on everything to do with insulation really kick-starting that activity now?

Because that's only one of the many behavioural levers that can be pulled, and, according to many systems scientists, that is the least effective lever that can be pulled. We don't operate in a society in which it is socially normal to insulate and decarbonise our homes. So, estate agents don't behave as though it's normal, banks don't, building societies don't, builders' merchants don't, Welsh Government doesn't, local authorities don't. We need many, many different parts of Welsh society to subtly alter their behaviours, to make it a socially normal thing. It's socially normal in the middle classes to have a new kitchen or a new bathroom fitted, and industry responds to that and has the systems in place to make it easy, fast and affordable. Residential decarbonisation is not socially normal in that way, and it's going to be a while before we get it that way, but there are techniques for identifying what these different segments of society, these different actors, need to do so that it becomes a normal activity and it's easy to do it, and it's easy to do it well. There's a lot of—. You have to turn to the behavioural scientists about that, but it's much more than simply financial incentives.

Okay, thank you for that. Ed, did you want to add something, or shall I move on?

Probably quite similar to Chris's point, really. But I think it's about getting stuck in, to a certain extent. And certainly, talking to many of the social housing landlords over the last couple of years, there's a tendency to put the harder-to-treat properties to one side, and they're probably exactly the properties that you're talking about, where there are really entrenched issues and there are big problems with massive fuel bills and that sort of thing, and I think we just need to have some clarity for the landlords over what they should be doing in those kinds of circumstances. So, there's a need to really accelerate—not looking at the kind of stuff that we know what to do with, but understanding what to do in the really kind of tricky situations. And the work that Chris is talking about getting stuck into, we just need to do it in a co-ordinated way, because the thing that the landlords are most nervous about I think, probably, is spending money on stock, which they then have to unpick, because they can't afford to do it twice. So, the work that's done needs to be done in a way that it actually has longevity and it fits into a holistic plan for where those houses need to be in 15 or 20 years. 

10:10

I did just want to add that—. I keep going back to the supply chain and the skills and the lack of people to deliver these projects and anything. We've worked with some owner-occupiers on one of our projects, and we went out to tender again to get people, just normal construction building companies, to go in and replace damaged windows, replace damaged doors, fit draught-proofing—very simple things that can save up to 10 per cent of your energy demand—and even finding people to do that kind of work to a decent enough quality and really care about what they were doing was very hard. I think that's the thing—to try and encourage the supply chain to step in and deliver this kind of work on the ground. And it isn't necessarily very expensive to start to do that 10 per cent, but, again, it needs to be done well, because otherwise people won't let the supply chain into their homes to do more difficult and what they see as less normal things, as Chris referred to, because they've had bad experiences doing what we would think of as fairly normal, standard construction or repair work. 

Thank you. We're going to come on to the supply chain a bit later, but I just wanted to go back to something that Ed said earlier, which is that electricity per unit it more expensive than gas. Now, that's not ordained by God, that's a policy decision. So, in the context of—. What is the role of the energy performance certificate as the metric for charting progress? Because I know there's a report being done for the UK Government—I can't remember its name, but I'm sure you know it—that indicates that the way we currently measure these EPCs is artificially benefiting gas over electricity. And I just wondered, given that we have to move away from gas, because (a) it's running out and (b) it's going to be the rise and rise of, for all the reasons we don't need to go into, is the EPC one of the levers for actually getting people to change the way they're looking at things, and to inform much more sustainable policy decisions. 

Do you want to go on that, Chris? 

Sure, yes. Jenny, the short answer to your question is 'yes, there must be something better than EPC'. EPCs were designed a long time ago to serve a different purpose, and we've been trying to use them to help drive decarbonisation, but they've proved to be a bit of a blunt instrument and not very helpful in some cases. I think we do need something better. There are two parts to that: there's how you define the target and then how you measure progress, and they may be quite different. EPCs as a measure of progress are not very helpful at all, I think, because they says nothing about what the actual carbon emissions are from the home. They say what the home's potential is but that's all.

The group that I chair has been asked by Welsh Government particularly to advise it on whether there's something better than EPCs, and we're working on that. There's evidence from Ireland and Scotland about a thing called the heat loss parameter, which we're looking at closely at the moment, which may be a better measure as a target for homes, because it's explicitly linked to the rate at which a home loses heat in cold weather.

When it comes to metrics for progress, I don't think there's any substitute for understanding what a home's electricity and gas consumption are, combined with the instantaneous carbon intensity of the electricity and gas supplies. That can be done on an area basis or an individual home basis or indeed for the whole of Wales. But I think the target needs to be thought out slightly differently, slightly separately, from the metric.

10:15

Okay. Ed, in your answer, is it not the case that the eco levy is loaded onto electricity bills as opposed to gas bills, but obviously your own contribution as well?

I can't speak on that to be honest, Jenny— 

—that's outside of my area of expertise. I was just going to expand on Chris's point, really, which is to say that the main reason that we're using EPCs at the moment is that they're a common language that everybody speaks across the industry, across the UK, and are an open source. In defence of them, I think standard assessment procedure 10 is on the drawing board and they are looking to increase the flex in it so that it accommodates things like new technologies and renewables slightly better. 

But fundamentally, this goes back to the discussion we were having around ways that you incentivise improvement in the private rented sector and in the owner-occupied sector. As Chris was saying, if you can simply make it really clear to someone when they're moving into a new apartment, or when they're buying a new house, how much it's going to cost to heat that house in real terms for the coming year, that should have a really big impact on the way that people choose where they live and how they live. So, I think that's something that could really be done very, very quickly to make progress happen much more quickly. 

The other thing is—and energy is outside of my area of expertise, like I said—there's something around the increases, particularly in electrical energy costs, which are coming and that are on the table, which is actually in many ways disincentivising improvements in energy efficiency, and I think that's something that really needs to be looked at really carefully. I think it's to do with standing charges on electricity. You can move into a very environmentally highly performing house that is using electricity to heat and suddenly be hit by really big bills that you weren't expecting. So, I think there's work to be done understanding what changes have happened in the cost of electrical energy supply and the degree to which they're actually going to potentially negatively impact on some of the levers and some of the incentives, particularly in the private sector to make improvements to energy efficiency and to switch to low-carbon heating.

Okay, all right. I know Savills has reported that people are prepared to pay extra for homes that are energy efficient, but clearly that goes back to the middle classes. Thank you. Delyth.

Okay. Diolch. Tthank you, Jenny. We'll move on to Joyce's next question. Joyce.

I'm going to move to the optimised retrofit programme, so we're moving on a bit—the key successes of that programme and the relevant transferrable learning for other tenures, and, Jo, you've talked about this, so maybe you want to go first.

So, just generally on the optimised retrofit, I think, again, it's like Arbed—Wales, again, are ahead of the game a bit in delivering a programme that's across Wales. It's looking at whole-house retrofit, which we have to do to achieve net zero. We have to look at every element of the house—it has to be the fabric and reduced demand, it has to combine renewable energy supply and it has to combine storage as well at the moment until the network reduces. 

I think we have to learn lessons from these programmes and maybe that needs to be done by an independent organisation. We also have to put our hands up and say that some things haven't worked so well, and we have to share what hasn't worked so well and react to that and come up with proactive solutions to make sure that each future round of ORP works better and that other future programmes across the UK, well, Wales—. And we can be a leader in this, but I think we have to be honest and open about what we're learning about the delivery of these projects, quickly, to deliver the projects better in the next rounds going forward. And that's regardless of whether it's social housing, private rented or owner-occupied, because there are things that can be done across the board, particularly about the detail of how the retrofits are being delivered. Because we're talking quite high level here, but there are a lot of details that—. Things like planning permission and accessing planning; air-source heat pumps in Wales need to be located—. You need to access planning permission for 3 m away from the boundary of a property—in England it's only 1 m—and to access planning permission can delay a project by 12 to 16 weeks. At the moment, we've seen prices increase by 10 to 15 per cent because we've been waiting for planning permission to deliver projects. So, not only should we learn about the big programme and how it's delivered, but we also need to be learning about these details and how to overcome those small details that are again preventing things from happening at pace.

10:20

Yes, just to—. I'm a big fan of ORP, and I think the best thing it's done, or it's doing, is around capturing data about the performance of the homes, both before and after the work has been done. If you compare it with the social housing decarbonisation fund work in England and Scotland, it is light years ahead. Basically, over the border, the retrofit schemes involving social landlords don't have any requirements—any serious requirements—to capture data, whereas ORP, every 30 minutes, our homes, the electricity and gas consumption, are being monitored and data transmitted back to the Active Building Centre in Swansea in a completely consistent way across all homes, all teams, all landlords involved, so that that the data can be analysed and lessons drawn from that. And the learning goes beyond the technical learnings—there are social learnings and economic learnings being trawled as well, being gathered as well, because the programme was designed to capture learnings all the way. So, I think—. It's early days yet—it's only been going, what, 18 months or so—but an enormous amount of lessons will be learnt and will be shared right across the UK and that's invaluable.

Thank you. Could we unmute Joyce? I think she's got a supplementary here.

Can I ask Chris: will those lessons be learnt—and it's fantastic and it's great what you've just said—in adequate time so that they have value going forward, because I think that's the whole idea, isn't it, of capturing data so that you can take that learning, hopefully, at speed, where possible, to go forward?

I think and I hope that they will be. I think, by the summer, we'll have something like 5,000 homes being measured, which is a great start, but we've got 250,000 social homes that can learn from those 5,000 and then we've got 1.2 million other homes that can learn. So, the opportunity is there to learn in time and I think we will learn in time. I think the people running ORP in Welsh Government are acutely aware that the lessons need to be learnt and disseminated as fast as possible. 

Yes, thanks, Delyth. It's simply to turn to the issue of the home log books and this whole-house assessment that we've been talking about. Clearly it's being driven within the ORP, but, beyond the ORP, Chris, I wonder if you can tell us what discussions you're having as the advisory group with Government on this. What stage are we at? Are we still tentatively treading towards it, but not doing anything?

We're still messing around in the foothills of that, really. We've said to Welsh Government very clearly that, in an ideal world, every home in Wales—not just socially owned; every home in Wales—would be surveyed and have its own building renovation passport in the next few years. We've suggested that three years would be a good target for that and that Welsh Government should mandate and support that. That discussion is still under way, but, until we have really good data, we don't know what to do and financial institutions don't know the opportunities they might have to invest in this. Builders' merchants don't know the potential for square feet of insulation or heat pumps or whatever else it is. Nobody really knows until we—. Training colleges don't know what needs to be installed. So, we need to get that data and we need it fast and the mechanism is: survey every home, create a building renovation passport for every home. In the overall context of things, it's not going to be very expensive either.

If I could just follow that very briefly—if I've got time, I'll come back to this later on—one of the things that might hold this back, even if there was a will to start it tomorrow, is the capacity there in the workforce to actually deliver this. Because whilst, as you say, in essence this would require—. It may be short, but it needs to be an expert-led look at every single home in order to develop a log book that is meaningful and that is kept up to date as well. Do we have the people to actually do that?

I think yes, if we start slowly and then ramp up in the classic S-shaped curve. If we try to do it all in the next 18 months, the answer would be a profound 'no', but, by approaching it surely and steadily and then ramping up, we will be able to do that. That of course would increase employment as well, which is good, and there will be a cycle in which people go back to homes as well, so we want to get up to a self-sustaining number. There's other work under way, which I think I mentioned in my written submission. There is an all-Wales building stock model being created. It's very nearly there; I think the Cardiff capital region is fully loaded now. That's a good base on which to store all this information, and then, when new information comes, you add it to that, and that can be made available to different user groups under different protocols so that they can make use of that information. So, yes, it can be done, and it can be done in a sensible time, and I think it can be done in a self-sustaining way.

10:25

Okay, thank you, all. We are into our final quarter of an hour now, so we'll move on to the private rented and owner occupied sectors, to come back to that, and we'll go first to Janet.

Thank you, Chair. The National Residential Landlords Association, otherwise known to us as the NRLA, has raised the possibility of conflicting directions of travel between the UK Government and the Welsh Government, in addition to local authorities' individual green objectives, and the potential for confusion amongst landlords. Now, rather than private landlords being subjected to up to three different directions from the UK Government, Welsh Government and local authorities, do you agree that there needs to be a more clearer and more concise message on the decarbonisation of housing from the Welsh Government itself?

I think your question answers itself, really. Absolutely, clarity is needed, and it ideally would come from Welsh Government, I think.

Okay. And how do you think that landlords in the private rented sector should be encouraged and supported to improve the energy efficiency of their properties? I liked the part you mentioned earlier, that one incentive could be whereby they're having some permitted development, or they're having an extension or something—that would add value to the house, whilst, at the same time, it would be an incentive. But are there any other initiatives that could be brought forward?

Forgive me if I've mentioned these already. One is, I think, the generation, the creation, of a building renovation passport for each of those homes, so that the landlord actually knows what's right to do and in what order. I think some low-interest or possibly zero-interest loans along the property assessed clean energy model, supported by the development bank. I think Welsh Government could take the idea of enhanced capital allowances to Treasury for private landlords; that's consistent with business policy, and that business policy could be expanded to private landlords who are, after all, small businesses. So, there are a number of things to do.

Possibly, it's going to be appropriate for social landlords to incorporate private landlords in the homes that they work on, thereby providing the necessary skills in procurement and delivery, which a small private landlord would lack otherwise.

Forgive me, Janet. Sorry to interrupt you, Janet. Before you carry on, I think Ed wanted to come in on this. 

I was just going to come in very quickly, Janet, just to say that it's almost certainly a combination of carrot and sticks, isn't it? We've been talking about carrots here, but there are also sticks that can be used to enforce higher standards in the private rented sector, and what you don't want to see is a scenario where the private rented sector is the sink for all of those hard-to-treat properties that the social housing landlords are having trouble making work. So, you've got to get the standards to an equitable level, so that the whole of the stock is being looked at under the same lens, and, if England is willing to push their private rented sector to an acceptable standard, there are all sorts of benefits in having geographically the same standard. I'm thinking particularly about Jo's comments about supply chain and the same components, the same standard being adopted geographically across different regions. But if they're not being pushed hard enough there, then, as Chris says, Wales really needs to lead the way and set the standard for the private rented sector, so that it's equitable with other tenures of housing.

Yes. One incentive at the moment—. I'm really keen to see empty homes come back into use, so turning empty houses into homes, and, at the moment, there is an initiative of £20,000 from local authorities to be given to landlords to improve their properties to get that stock back into the rented sector. Now, when you speak to these landlords, it's not being taken up. Some authorities have taken up three that they've brought back one year, or one, in some instances. So, we need to really look—. Is it that local authorities are not advertising the fact they've got this money? Is it the fact that landlords don't feel that's enough? When I spoke to landlords, that kind of money would be decorating, maybe new kitchens, new bathrooms. Should that amount maybe be increased, so that, when any empty homes are coming back in, they come back in as a decarbonised property? So, in other words, increasing that grant from £20,000 to £30,000 or £20,000 to £25,000. Is there any merit in that, do you think?

10:30

I think that one of the problems, and I think this is across the whole board, is that there's a lack of guidance on what to spend that money on. And although we can make an overarching guidance that says 'this, this and this', I think people, particularly the private rented sector and owner occupiers, need more individual, targeted information. And that information and guidance needs to be in a language that they understand. Because, obviously, we're all from the sector and terminology means something to us, but the general public, who are the private rented sector and who are owner occupiers, it means nothing to them. I think there needs to be, probably, an independent organisation that can speak to people in a language that they understand and give them relevant information to make them make choices. And again, it shouldn't be driven by carbon, but it needs to be driven by the other co-benefits that they will get from investing in their homes. And we're not talking about stock here; it's either their homes or the buildings that they own. So, I think there needs to be this organisation that helps, gives the help out.

I will bring in Joyce and then Ed, but, just for everyone to be aware that we're into our final nine minutes of the session now. And again, as I said at the start, there will be some areas that, obviously, we won't have had time to raise with you and we'll be seeking your evidence in writing on those. But, Joyce.

An obvious question. Somebody said that they're small businesses—and they are—so any business investment wants to recoup that investment, and, if we're talking about rented properties, the only way they can do that is by increasing the rent. So, my question is therefore obvious: how can we protect tenants who are residing perhaps in properties that, hopefully, will be made good in terms of reducing their fuel poverty, against the other side of—and what consideration has been given to it—increasing the rent so they can't actually afford to live there? So, that's my question—just a small one.

We'll go to Chris on this, and then, Ed, we will come back to you, because I know you wanted to come in before. But we'll go to Chris on this question.

One approach that I've heard suggested is that, rather than advertising a property with a certain level of rent, the total cost of occupancy has to be stated, so it's rent plus what it will cost to heat the home, and those two figures have to be made explicit before anybody is signed up for a lease. That might, I think, influence the landlord's wish to raise the rent to unaffordable levels.

Sometimes, Delyth, it's hard to find a silver lining. But, in the increase in fuel bills that we're seeing, that, obviously, does provide a greater incentive for those kind of changes to be made, where they can meaningfully affect fuel bills. 

The point that I was going to make was, again, quite a short one, but it's around one of the post COVID—. One of the things that's come out of COVID is that we're likely to see a lot of housing, of residential accommodation, being developed out of town centres, out of, potentially, previously commercial and office spaces. There need to be robust standards in place to make sure that, when that work is happening, when we're seeing town centres being converted into residential accommodation, it's done in a way, like Janet was saying, that actually delivers quality homes and where the work is targeted in a way that it's providing decarbonised homes, it's providing homes that are affordable to live in and also that are nice to live in. Because you can get some pretty awful housing out of office environments, actually.

Thank you for that. Right, we are into our final almost five minutes, so I think this will probably be the last question of the session. Over to Jenny. 

Very briefly, the PACE loans, do they include a charge on the property, so that, if the landlord or the homeowner sells, the taxpayer gets their money back? Chris, I think you're the expert on PACE loans.

10:35

I've boxed myself into a corner here. I'll have to get back to you with an answer to that. It's a loan against the property, not against the individual, so when the home is sold, the loan goes with the home. But, on the question of repayment, I will have to get back to you on that.

That's okay. Because it's quite an important issue in relation to area-based upgrading. In the past with innovative housing, the leaseholders who bought their houses got all the work done for free in street A, and then street B with the council houses across the road got nothing. So, there was quite a lot of inequity in that, given that the upgrading itself improved the value of that home. 

My final question is about the report from the New Economics Foundation that was done with the future generations commissioner, and in particular, Dr Donal Brown's indication that, given the financial precariousness of both registered social landlords and the lack of capital of some private landlords, it would be necessary to set up a stand-alone body to be the holder of all this debt so that the RSLs were still able to borrow money to continue to build new homes. I just wondered if any of you were able to comment on that proposal as the way forward. Chris. 

It was a very positive and encouraging proposal, and I think the sector received it pretty well. The sector has taken that forward since; it's exploring that in detail with one possible potential financial provider that is looking to provide off-balance-sheet financing for residential decarbonisation. That's in the early stages at the moment. The process is to explore what data exists, what data flows need to happen in order to provide the information that the financier needs in order to come up with its financial offer. It's starting with one particular social landlord who is, if you like, pioneering it on behalf of the sector, but if it passes the first step, then we'll move on to the next and the next. So, the sector has taken the suggestion in that report very seriously and is exploring it as fast as it possibly can.

Diolch yn fawr iawn. We're all very grateful to you for your evidence this morning. I'm sorry that we didn't—. There was so much that I think we could've really delved into in even greater depth, so there will definitely be further questions if you'd be happy to provide us with some further evidence in writing. I know that there are a few indications that we've made already and that we've already asked for further information on a few points.

Bydd transgript yn cael ei ddanfon atoch chi o'r hyn sydd wedi cael ei ddweud, a phan dŷn ni'n ysgrifennu atoch, byddwn ni hefyd yn gofyn am fwy o wybodaeth am rai o'r pethau efallai dŷn ni wedi'u trafod yn barod ac ychydig o bethau eraill doedden ni ddim wedi cael cyfle i fynd trwyddyn nhw. Ond, diolch yn fawr iawn ichi am y dystiolaeth, mae wedi bod yn sesiwn rili, rili defnyddiol a diddorol, a dŷn ni'n edrych ymlaen, fel pwyllgor, at weithio gyda chi ar y pwnc rili pwysig yma. Felly, diolch yn fawr iawn ichi i gyd. Byddwn ni nawr yn cymryd egwyl fer tan 10:50, ac yn ystod yr egwyl, byddwn ni'n profi sain y tystion ar gyfer y sesiwn nesaf. Os gallaf ofyn i'r Aelodau, plis, i ddod nôl erbyn jest cyn 10:50. Byddwn ni nawr yn parhau yn breifat, plis.

A transcript will be sent to you of our discussions this morning, and when we write to you, we will also ask for additional information about some of the things that we've already discussed this morning and some other issues that we didn't have an opportunity to cover. But, thank you very much to you for the evidence you've given, it has been a really, really useful and interesting session, and we look forward, as a committee, to working with you on this very important issue. So, thank you very much to all of you. We will now take a short break until 10:50, and during the break, we will test the sound levels for the next set of witnesses. May I ask Members to come back by just before 10:50, please? We'll now continue in private, please.

Gohiriwyd y cyfarfod rhwng 10:39 a 10:51.

The meeting adjourned between 10:39 and 10:51.

10:50
3. Datgarboneiddio tai - sesiwn dystiolaeth 2
3. Decarbonisation of Housing - evidence session 2

Croeso nôl i'n sesiwn y bore yma o'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Dŷn ni'n cynnal ymchwiliad undydd ar hyn o bryd mewn i ddatgarboneiddio tai, ac mae'n bleser gen i groesawu ein tystion i'r ail sesiwn dystiolaeth y bore yma. Gaf i ofyn ichi i gyd, plis, i gyflwyno'ch hunan ar gyfer y record? Gwnaf i fynd at Scott yn gyntaf, achos Scott sydd gyntaf ar fy sgrin.

Welcome back to our session this morning of the Climate Change, Environment and Infrastructure Committee. We are holding a one-day inquiry currently into the decarbonisation of housing in Wales, and I'm very pleased to welcome our witnesses to the second evidence session of the morning. May I ask you all to introduce yourselves for the record? I'll go to Scott first of all, because Scott is first on my screen.

Thank you, Chair. Scott Sanders, I'm the chief executive of Linc Cymru.

Good morning. I'm Louise Atwood, executive director of property and commercial at Linc.

Good morning. I'm Neil Barber, I'm executive director of property and investment at Pobl Group.

I'm Wayne Harris, I am the director of strategic asset management at Pobl Group.

I'm Tom Boome, I'm head of technical, innovation and climate at ClwydAlyn Housing.

Bore da, Chair. My name's Dave Lewis. I'm the executive director of asset management for ClwydAlyn Housing Association.

Thank you very much. Because we have such a large panel for this session, we'll be asking, please, if just one person from each organisation could answer questions, because otherwise, I think we could run out of time very quickly. We've got lots of things that we'll want to ask you; there may well be further questions and possibly further areas that we'd like to follow up with you in writing after the session. But in the interests of time, we'll go straight in to the questions, if that's all right. I'll just ask firstly what your views are on whether the Welsh Government has a coherent plan for decarbonising housing. Is it coherent, is it clear, is it being communicated? Whoever wants to go first, if you want to put your hand up. If I haven't seen your hand, you're welcome to do the 'hands up' function as well. I'll go to Scott first.

Thank you, Chair. Very quickly, I just wanted to say thank you for inviting us today, because this is such an important topic. We're very much supportive of what Welsh Government wishes to achieve, and we want to see a successful completion.

In terms of a coherent plan, I think it's fair to say that, because we're still working through the optimised retrofit programmes, a coherent plan doesn't exist at this stage because we're still testing and learning very much in that space of decarbonisation. Because we haven't got that coherent plan in play at the moment, it does mean, of course, we can't fully strategically plan ourselves as businesses to see how we can move forward. We've still got work to be done with our communities and our tenants to make sure they are fully aligned to the ambitions that we all hold. We need to prepare procurement passageways and also supply chains and community benefit models. So, the lack of coherent plan, which we understand, because of the testing, means that there's a lot still in trail that we need to achieve to make this successful. Also, the lack of plan really means that the timeline for 2030 needs further consideration for success to be achieved, and, alongside that, the funding model, which we're still a little bit blind on in terms of how that's going to play out, to make sure that that is aligned to a pragmatic timeline for success.

The last point to say on this, probably, is that we're not sure on the details associated with the private sector—that's the private owner-occupiers, the PRS, commercial industry—in terms of their approach to decarbonisation, because that, of course, is a far bigger carbon footprint than the affordable housing sector. We would love to know more about that, because we'd want to achieve one big plan so we can get to the economies of scale and success across Wales, not just in the affordable sector. So, although it's not coherent, there are lots of conversations going on with Welsh Government and the sector. It is very positive; it is just a matter of time in burning through it.

10:55

Thank you, Scott. Does anyone else want to come in on this? By the way, while everyone's thinking, I know Janet wanted to ask something on this area as well. Janet, did you want to come in here?

Yes. I know you've started it off, Chair, asking about the plan. Do you think the Government has a coherent and strategic plan for all housing stock in Wales? Because we've heard earlier today about the private sector landlords, the owner-occupiers. It seems to be targeted to an audience at the moment. Do you honestly think that there is a plan in place that will see all our housing stock brought together under this one umbrella?

Just to continue what I said, the plan at the moment is very much focused on affordable housing from what we can see, and that is fully understandable, because we're particularly working with a segment of society that would benefit from more affordable measures within their living environments. We're well placed, because we are fleet of foot as organisations, we can access grants, we can work collaboratively across the sector, we have good procurement supply chains. So, we're very well placed to test and learn and set a precedent for the rest of Wales. But in terms of knowing more about how the rest would follow, I don't believe we're sighted on that at this moment in time, so I couldn't say that I could see a global, coherent plan at the moment.

Thank you again, Scott, for that. Did anyone else want to come in on this or is everyone—? That's absolutely fine. If everyone is in agreement, that's absolutely fine. Janet, unless there's anything further you wanted to ask, shall I move on? That's fine. Okay. So, we'll move on to Joyce.

I want to ask about your involvement in the optimised retrofit programme and any key successes and challenges that we can take on board both now and going forward. 

Thanks, Chair. I think that it's probably fair to say it's a little bit too early to talk about the successes from the ORP. Linc have been successful in every round of the ORP funding so far to date, which is fantastic news. We've got grant funding from Welsh Government to retrofit, I think, around 400 homes, which is about 10 per cent of our stock. But the funds have come through quite quickly, and, obviously, trying to then get into 400 houses—survey, plan, carry out those extensive works with residents in—takes quite a period of time. So, we're at early stages yet. We've got a a lot of learning from the survey work that we're doing, but not necessarily from the installation work that's ongoing.

I would say in terms of installations, what's really important is that we take lessons learned from the innovative homes programme, albeit from the new build sector, but there's a lot there that we can learn. We delivered homes to a passive hous standard, which put in technical kit such as mechanical ventilation with heat recovery units, we've got modular where we had air source heat pumps, and we've got a lot of learning there that we can then apply to the ORP programme. So, we need to make sure that it expands both those programmes to really maximise the value. But I think in this particular one, in terms of retrofit, we're probably not going to see that real learning until we've got two to three years of full data coming out, and full seasons of data coming out, from people's energy bills as well. So, it is a longer term project, unfortunately.

Everyone's happy. Joyce, are you happy for me to move on to Jenny? Jenny.

Thanks very much. I just wondered if you could give us a brief summary of the key transferable lessons from the ORP for other housing tenures. They're all hopefully listening intently to what you can tell us. Who would like to go first? I can't see anybody waving a hand.

11:00

Yes. I was just going to say that I think this one is Tom.

Yes, engaging with tenants, one of the biggest things is helping them to understand not just the need for but the knock-on effects of these works. Now, the ORP obviously focuses specifically on certain items and I think lessons learnt from elsewhere within other sectors, it would be with regard to engagement and explanation. But, a lot depends on how the tenants use their properties when it comes to new, innovative heating methods, et cetera. So, a lot is to do with communication and updating them on how to use these modern or innovative products, but at the same time there's a lot of lessons to be learnt through funding models, et cetera. But transferable skills with regard to tenants is quite key.

What role do these building renovation passports play, do you think, in educating the private sector, whether landlords or owner-occupiers? Who wants to go on that one because at the moment everybody seems to be frozen?

Okay. Hopefully I'm frozen in a positive way.

In terms of the building passport, I think the key for that, though, is if we're going to really make that accessible to all we need to make sure that everything we do is jargon-free. So, I know, when you move into a new-build house, whether you're using an air source heat pump or whether you're using a gas boiler, the last thing you want to do is to try and read a technical piece of jargon that is about 25 pages long. What you actually want is somebody to teach you how to turn the thing on, turn it off, and how to alter it. So, it's got to be very, very simple. That is something that's really, really important in this. And, I think, actually, we need to stop referring to these things as 'innovative' as well, because we aren't actually doing anything necessarily really new. Air source heat pumps have been around on the continent for decades. I think that if we use the word 'innovation', it actually tends to scare people as well, in that it's something strange and to be feared and needs a significant amount of learning. It isn't; it's just a slightly different dial on your wall. And I think that's the approach that we need to take. We need to demystify this because if we try and make out that it's all spangly and new, I think we'll actually scare people more than we need to. And then, if you're scared of something, you're less likely to use it as well. So, I think that's certainly a big lesson learnt in this.

I think the other lesson learnt is don't underestimate the amount of disruption that that's going to cause. If you're fitting all internal wall insulation and replacing a kitchen, that takes time and it does cause disruption, so you just need to be prepared and make sure that that's clear, so that people don't come into this with perhaps the wrong expectation that this is going to be a finished-in-24-hours piece of work. So, those are two things that I think I would suggest that the private sector and in particular PRS and private landlords take on board when they're thinking about how they're going to deliver this.

Okay. As somebody who never reads technical manuals, I completely agree that it's got to be jargon-free, and I think that's been picked up by other witnesses. However, there is another audience, which is obviously the construction industry, that needs to understand how the different widgets that you've put into the ORP function and how they can be replicated. So, is there another document that captures all that? David, you wanted to come in. David Lewis, I believe. But you may have wished to simply add to what Louise was—. Do you want to start off?

11:05

Diolch yn fawr, Chair. Thank you, yes. It's probably just to expand a bit on what Louise was on about before. I think the lessons learned from the housing sector is to make sure that the private sector understand the importance of fabric first. So, what we shouldn't be doing is entering to fit in or retrofit in green tech, such as air-source heat pumps, without having a look at the fabric of the building, and I think we're best placed as an organisation and as a sector to have those valuable lessons. So, within, say, the next 10 years, we'll be really good at retrofitting, especially around the fabric, and that's where our lessons learned are transferable skill, and maybe one day we could offer that service internally. So, where we have large direct labour organisations, internal workforces, maybe we can offer services out to the private sector, through a trusted partner, and I think it's really exciting, the green revolution, and we're part of it.

But to answer your question: documents, yes, they're quite easy to read. So, we've got different generations coming into our homes. So, at the age of 50, it's quite difficult for me to look at tech, but what we've got to understand is that our new customers, our new residents will be the younger generation, and they'll be more attuned to the changes of innovation, and they'll be brought up with green tech. So, I think there's going to be a transition period over the next 10 years to convince people like me how green tech works, but also looking at the new generation of customers and how they will interact with the houses, because they'll be more attuned than we are today. Thank you.

Fine, okay. But if these building renovation passports are, obviously, easy to read—Daily Mirror style—where is the information being captured as to how we replicate the excellent projects you've delivered elsewhere?

I think, as a sector, I also cover not just the asset, but also the new build. So, a lot of that learning is coming through, because we are now delivering all our new stock to EPC A. So, if we were to talk to our engineers or to our technical consultants, I think they're fairly comfortable now in how we need to deliver this, because they've got the lessons learned from the new build, which they can then bring in to the retrofit.

I suppose the challenge really is that period of time for the supply chain where, actually, you've got somebody who's used to dealing with gas now going and dealing with a different type of system, or whatever. Again, that's just going to be skills, and we're working with the likes of Travis Perkins at the moment doing toolbox talks in Newport, and they've got a particular training centre. So, we need to upskill. It needs to form part of all the construction campuses and colleges' curriculum programmes. It's standard now at university, so that will make a difference, because those new entrants into the marketplace will have a full understanding, far better than we do, of it.

I think it's probably a little bit of time. I don't think that building passport, whilst it will be able to tell you what's in that property—it will be able to give some detail—but I think it's really about signposting people to say, 'Right, okay, this a particular product. This is how you maintain and manage that.' And then you go and look at that, otherwise it's going to be the size of War and Peace. So, more of a signposting document, I think, to give more technical detail before they go ahead and do any work on them.

Okay. Just because we're short of time, I'll just move on to asking you whether the current approach under the ORP sufficiently focuses on maximising the life of existing components. One of you made a very important point about not needing to replace kitchens every 15 years or bathrooms every 25 years. Certainly, that's not what I've done. Whereas in England, it's 20 and 30 years. But it's also about maximising the life of the existing gas boiler, and those sorts of issues. So, how does the ORP recognise that we need to reduce and reuse and recycle because of our carbon emissions? Louise.

Sorry, I seem to have been given all these questions and it's the same—

I'll let them talk after this one. I got the impairment one, because it's a challenge we're dealing with at this moment in time, actually.

Under the Welsh housing quality standard we have an obligation to change the kitchens every 15 years, so that's where those timescales that we've quoted come from—it's under WHQS, and we have to report against that. Quite often, some kitchens take longer, or are shorter for whatever reason. Unfortunately, as you can imagine, a kitchen and a bathroom don't all marry up, and if you want to do internal wall insulation you've got to basically rip the house to pieces to be able to do that. Therefore, you're taking your bathroom out early, which means that you're having that depreciation element that comes out of our income and expenditure for that financial year. So, that then reduces that year's surplus, which we weren't expecting to do. Now, that's fine on the odd case-by-case basis, but if we're going to have to deliver by 2030, we need to do more than 10 per cent of our stock every year. The challenge comes when you have to absorb that significant level of depreciation through your I&E account every year, so therefore that's not the way that we're going to be able to deal with it.

So, we do need to manage it, not least the fact that there's actually a significant waste in carbon in getting rid of perfectly good products, which I think, morally and fundamentally, is also incorrect anyway. So, it's a fine balance between retrofitting, and the most efficient way of doing that is a deep retrofit, all at the same time, and also doing it over a period of time to make sure that we don't just chuck away anything that's perfectly good, which will also then minimise disruption and visits into people's homes. Because otherwise, if we've got to change 10 components, we have to go back into somebody's home, potentially, every 18 months to do that. Well, that's the last thing that you want to have done. So, it is going to be a balancing act, and I think that one of the ways to overcome that is to extend that time period to really make sure. Because if we've got a compressed time period by 2030, we're going to have to take everything out and replace it. If we have a longer time period, that enables us to maximise the value of existing component lives already in place. You can't do the two together. So, there is going to have to be a bit of give and take on that one, I think. That would be my recommendation on how to deal with that.

11:10

Okay. So, are you saying that WHQS needs to be less clunky and revised to enable providers to make rational decisions in terms of individual properties and all the other things they have to take into account about fuel poverty and the need to change the heating system on property X?

Definitely. We've got almost two programmes. We have our annual programme at the moment, where we go and do our work so that we're in compliance with WHQS, but we also try and then make sure that we deliver the best customer outcomes. So, if we have a void, and that property is becoming available and their kitchen is due in 12, 18 months, we'll bring those works forward so that we actually do that when the property's empty. Yes, we take a little bit of a hit on depreciation, but that adds a better customer service and outcome for our tenants. So, because of this very rigid way that WHQS is set out—and the same for the decarb—we don't have the ability to have that flex, because obviously we are very tightly monitored against those particular programmes. So, if there was an element of flex—. I know we can have acceptable fails due to timing, but we don't then really get down into the detail when we're talking to regulators. So, maybe we need to have a wider conversation with regulators, and explain the rationale behind acceptable fails more than just simply a percentage figure.

Okay, thank you. Unless anybody else has something to add, I'll hand back to the Chair.

Did anyone else want to add anything on this? Wayne, I noticed that you had your hand up at one point. Was there anything that you wanted to add in?

Yes, thank you, Chair. I think the point was one that Tom was responding to, and it was about the lessons learned. I think, not to underestimate that quite a few householders will actually say they don't want works at all, because of the disruption. So, I think that's quite a challenge. In the social housing sector perhaps we can do something more about that, but in the private sector, if the private householder just says, 'I don't want to improve my home', that's quite a challenge. It is back to that point that Louise raised about a lot of disruption. So, that's probably one of the biggest lessons. About 10 per cent, at the moment, of our customers are actually refusing to have a photovoltaic system with battery storage, which could probably trim getting on for £300 a year off their electricity bill. They're saying, 'No, thank you, I just don't want the disruption.'

11:15

Thank you. I'm going to move on to funding and whether you think that there's sufficient funding to decarbonise houses in accordance with the ambition. 

Thank you. This is absolutely key to everything. As I said, it sits alongside a pragmatic programme timeline as well. I think where we are at the moment, the optimised retrofit programme is being funded by Welsh Government, which is good. It's allowing sufficient money to come in to trial and to test at a pace that we can manage. So, that's good. But, ultimately, to move to a full programme, there is going to have to be a significant change in the way that funding is structured to make that happen. And I think when we were just talking a minute ago, when Louise was talking about when you would replace something, it is one thing having a timeline for the replacement of a programme, but ultimately, if we are looking at 2030 and we have eight years left and we're still learning now, trying to spend about £5.5 billion to decarbonise the affordable housing sector is unachievable in as much as no group of housing associations could ever remain within its financial covenants from its lenders within a timescale like that for that size of expenditure.

The pathway to success for funding is going to have to be a mixture. It's going to be a mixture of things. There are going to have to be more grants, capital grants, there are going to have to be interest-free loans put in there, we probably will need to look at the rent structure in terms of how that's played out when we're looking at how, if a registered social landlord is going to be funding works within homes, it repays the capital that it's had to take out itself as private capital. Where does that come from? When we're looking at affordable rents, this year, they increased by 3.1 per cent, which is a sizeable increase for residents. It remains within the affordability boundaries that we work within, which is critical, but it doesn't then necessarily align itself to the level of investment we're talking about to decarbonise all the homes. So, there has to be a conversation in that space. 

I think also part of the jigsaw will need to be looking at off-balance-sheet lending. So, that's perhaps setting up special purpose vehicles as a collaboration to see whether we can fund through a separate vehicle, as a collaborative entity, to take it off the balance sheets of RSLs, which then helps some of the covenants that sit within the organisations. That, in itself, is not easy. It's complicated, it takes time to set up and establish, and I'm sure you're all familiar with them.

So, going back to the crux of it, is it the right level, is it sufficient? At this stage, no. Do we know what it looks like, moving forward? No. And I think the outturn of the optimised retrofit programme, when we've learned a lot more, will allow Welsh Government to be able to then establish what that pot needs to look like, in line with the ambition, both in terms of EPC A, if that is the ultimate rating we're going for, and the timeline for success. 

Joyce, I think Huw wants to come in here. Is it okay if we bring him in now?

Thanks, Joyce, and Delyth. I just wondered, if one of us was sitting there as a Minister at the moment, I guess one of my questions for you would be: well, at what point do we bottom out how we mainstream continual investment in social housing? Because we're working with the current technologies, we know we've got to roll those out and get them deeper and further into the housing stock. Those technologies are different from what we had 10 years ago, and far different from what we had 15 or 20 years ago. So, this is going to be a rolling programme. You of course are, in a sense—and don't take this in the wrong way, but when you compare it to the private rented sector or private home-ownership sector, you're in the fortunate position of being able to apply for grants, do partnerships with Government and look at those innovative new approaches. So, when do we get to that point, if we were sitting here, if Delyth or I were sitting here as a Minister, when we can bottom this out, how you achieve a rolling programme of investment? And the second question I'd be asking as a Minister is: what do you expect from the Welsh taxpayer to make this happen?

I think that's a very good question. The point about rolling programmes has been one that's been talked about for quite a while, and annualised programmes have always been the problem for the type of progression that we're all looking for. So, I think we've seen with ORP that there's been three-year funding placed down, which has been helpful because it's allowed us to do some short-term strategic planning, but, ultimately, what we're talking about here is unprecedented scale of investment that we all have to look at in the same way, which is over a much longer period. 

So, in terms of when do we get to that position of having a rolling programme, we need to have that conversation now, because, ultimately, we have to bring our funders with us, we have to bring the supply chains with us, we have to bring the training centres with us, we have to bring the production companies with us, and they'll all want to see a long-term rolling programme that they can get behind and invest in, and change the nature and scale of what happens in Wales in terms of delivery. 

We've seen a—. An interesting example, I suppose, might be when we look at modular construction and factory-based construction more generally, and how complicated that has been to try and get momentum and stability for to deliver new homes, because, again, that's been more annualised, in terms of their understanding of what's coming through, the way that they build up a pipeline. Production has to be reliant on getting cash through their companies, and that's reliant, then, on other things that are important to today's conversations around planning, speed of planning, infrastructure understanding, getting the grids aligned to where we need them to be. And all of these things have to be aligned in a rolling position alongside funding. So, 'absolutely now' is the answer to the question, from what I can see.

11:20

Thank you, Scott. Forgive me for interrupting—I think that Louise wants to come in on this, and then, Joyce, we will come back to you, I promise, but, Louise. 

I just want to say on this one, we've got, generally—. In every year, housing associations will deal with 8 to 10 per cent of their stock in terms of planned programmes. We know, roughly, how much it costs to refurbish an entire house—it's about £25,000, obviously, subject to size, and you can add some extra over, then, for the additional kit that's going in. We know, roughly, what percentages we need, but I think the challenge we've got with ORP at the moment is that, first of all as well, it's competitive. So, we're talking to you as those individuals that have been successful in that funding. There are other organisations across Wales who haven't been successful in that, but they still have an obligation to deliver this retrofit programme.

So, I think we need to be honest and say it's no good making it a competitive programme, because we all have to do it. So, if we have a clear amount of money and we have a clear planned programme that is over a 10 to 15-year period, then we can all submit how much money we need, depending upon the stock and the variety and the location—yes, there'll be different factors—and then we put in a request for our individual programme, rather than making it an annual competitive programme where you have winners and losers, because that drives perverse behaviours in its own right as well. And then that could be reviewed on annual basis, along with inflation and various cost changes throughout the year as well. I think that's probably—. If you have a smooth programme that we know that we need to deliver, we can work with that, and that gives certainty to our supply chains and gives us the ability to procure in a more efficient way, on three to five-year terms with contractors, rather than on a 12-month basis where, actually, you then only give them six months to deliver the programme, because they've got to gear up as well. So, I think that would be how I would like to see it—actually plan it more like a traditional planned programme, rather than on a competitive annual basis. 

Thanks, Louise. Scott, if I could ask you to be as brief as possible, because I know that Huw wants to come back and, Joyce, you're being very patient, but, Scott, you wanted to—. I'll go to Scott and then Huw, and then back to Joyce.

Just very quickly, it's just recognition of what Louise said in terms of that every RSL is in a slightly different position, because we're also—. Decarbonisation is one conversation, but we're also investing in the regeneration of communities, in homelessness and new build development, in our tenants and their well-being, and everything else. We're all investing slightly different amounts in different ways in different timelines, which means we have to give respect to that so that we can actually plan in a way that is appropriate for the business as well as the target. So, it has to be flexible, just to tag on to Louise.

Thank you, Scott. Huw, you wanted to come back, presumably on something that Louise was saying. 

No, I'm going to shut up. I'll leave it until the private session afterwards. 

Yes. Well, okay, let me try this: Scott or Louise, on that basis, if Welsh Government were able to say, 'Well, we can look at that longer term rolling programme', but the obligation then, just speculating, was on you as a very powerful sector out there to use some of those more creative models of levering in funding that you've talked about, Scott, will there be a point at which that then allows a diversion of funds into other sectors, not the social landlord sector but into others, to do the massive scale that needs to be done there, or is that unrealistic? I guess what I'm pushing at is: will you always need a large dollop of Welsh Government standing by you as well as other grant funding and so on, or can you see a way in which this is mainstreamed not only in terms of a rolling programme but mainstreamed in terms of the way you fund it?

11:25

I think that's a very difficult question to answer and I certainly wouldn't want to answer it on behalf of the sector—

Yes. I think the way that we're structured as businesses and the types of relationships we have with funders and the types of covenants we have alongside that would require grants to play a part if we're going to be stretching our businesses to achieve the goals of Welsh Government, as we all want to. But I think the detail associated with how much and over what period of time is probably for another conversation once we understand the models better.

My question follows through what Scott just said about the layers of expectation being perhaps different in different places and—if I understood you right, I don't want to misrepresent what I thought you said—the emphasis being rather broad and not easily managed in every case to also, then, deliver in this area. So, my question, if I understood what you said correctly: you've all got your expertise, you're all different social landlords; do you share that expertise to cut down on the burden, if I can put it that way, within your respective organisations, and also perhaps to reduce the cost?

Yes, thank you. I think, Joyce, the clear messages—we are getting much, much better at that. We recongise the scale of the challenge ahead. So, from the RSL perspective, we do recognise Huw's point about the funding. We do feel very privileged in Wales that Welsh Government have been far-sighted—they've funded innovation through the IHP programmes, through the ORP. That money is making a major difference.

When we talk about what we're learning and we're talking about timescales, please, please do not think that the RSLs are kicking this can down the road. We're putting lots of energy into it, lots of resources, lots of our own money into it as well, because we know how important it is from the perspective of the planet, from the Welsh policy perspective, and we're all aligned with that. But the problem is that some of the first IHP schemes that we were involved in in new build—we've only had people living in them now for a very short period of time. When we think of the challenge ahead, it feels daunting, but it is amazing how much we've learnt, how quickly we're learning, and how we're looking to put that into practice and get the data that will allow us to bring even more confidence to tenants. Some of the work that we're doing on Parc Eirin in Tonyrefail is about sales and how this starts the flow into the private sector.

You'll also see much greater collaboration between RSLs in respect of the work we've done with Welsh Government on the supply chain pressures. We want to build that and we really want to take that forward from the decarb perspective. There's already work going on in terms of special purpose vehicles. You will see that a few of us have introduced ourselves today in terms of property and investments. So, Louise and myself, who previously would have been very, very focused on the new homes part of this, because we know how desperately we need new homes in Wales—. We've reorganised things within organisations so that the property perspective now covers the existing stock and the new build, because we see the benefit in being able to inform both elements and the purchasing power. So, I hope that provides some reassurance in that regard. 

11:30

Thank you, Neil. And, Tom, you wanted to come in, and then I think Janet wants to come in after this. But, Tom. 

Yes, thank you, Chair. I was just going to say, Joyce, I haven't been in the sector for too long, only about a month, but, having worked in the private sector and also the public sector before this, I've been really impressed at the effort, the collective effort, towards the collective goal. There's been a—. I'm involved in the zero carbon housing performance hub, which is, basically, a collective agreement that says, 'Well, actually, we've done enough testing, let's learn, collectively, the lessons.' We're learning from Pobl. North and south Wales, we're still sharing our lessons that we've learnt from, again, as Neil said, a short space of time, across a larger area. That's helped us to be able to look at scaling rather than continually testing. So, I'd just say that I've been impressed, as a relative outsider, if you like, but—. I've been impressed at the efforts to collaborate, because we all recognise the difficulties and the challenges, and we're all working to that common goal. 

Thank you. In terms of tenants and retrofitting and decarbonisation of homes, have we got any data on whether tenants have responded negatively or positively to installation of decarbonisation measures in their homes?

Sorry, just to come back in there, Janet. I think, as has been mentioned, we're still sort of—. And Louise mentioned about the preparations towards it, but also, as Wayne pointed out, there has been some hesitancy. There's obviously allowing people to see the benefits, but there is hesitancy for the disruption. But, from my point of view, I think a more coherent plan with regards to timescales, including disruptions, would fill the residents with more confidence, moving forward. There has been wide-scale acceptance, but there are still difficulties in encouraging that sort of adoption of these technologies. 

The reason I ask is because I know that, sometimes, private landlords get slated for not maintaining their properties, but you'd be amazed how often I'm approached by some landlords that say they're trying to actually get into people's properties to make the necessary improvements that are needed, but tenants sometimes just do not want the disruption. So, you can find yourself going round in circles. 

I think that Wayne and Louise wanted to come in on this, actually, so I'll go to Wayne first, and then I'll come to Louise. Wayne. 

Just briefly, Chair. We have found on our Penderi estate in Swansea, where we're putting in photovoltaic panels with battery storage, and then some properties are only getting the batteries, and then they're going to share the energy that's been generated between all the homes equally, that, initially, there was quite a lot of reluctance because of the concerns. It is running at about a 10 per cent 'no, thank you' at the moment, but we are finding some of the early adopters, if I can put it like that, some of the tenants who've now started to see the benefit, they are coming out, knocking on neighbours' doors; some of them are inquisitive, because they can see the equipment on the roof, and going, 'Is it really making any difference?' and we are getting back in now to properties that initially had said 'no'. 

So, I think there is some learning going on there. We're learning what concerns tenants as well, and we're changing the way we say things and the documentation that we're giving out as well, and using some local advocates—so, some of those tenants who've had the products and are able to say, 'Actually, this really is a good thing.' They're working with us then to persuade some of those tenants who are more reluctant. 

Thank you. I just want to give you an example. We actually have a scheme in Neath where we have been putting in a communal air source heat pump into a block of flats. We used a modular air source heat pump plant room that was craned in. But we are still struggling to get into certain properties to get people to actually allow us to connect to the individual meters that are required. That's two years, and that's only 33 flats. We had an identical scheme further up the road, where we've been more successful at getting in. But I think we have been absolutely stunned and shocked at the difficulties of trying to get in, because we're doing this on the basis that we had economy-inefficient Economy 7 heating in there previously, which tenants didn't like. But we have—. I cannot emphasise enough the difficulty of getting in, because you can't just get in once—you have to do the pipework, the meters, the commissioning, you have to upgrade the electricity supply, so therefore we've had to change the fuse boards, we've had to go and dig the road up because we've had to get in new pipeworks for all the system. So, it's been a long, hard slog.

And I think, actually, what we could do is take a lot of lessons learned from the public communications that they've used for COVID, and actually utilise that level of public communication—on radio, on media, on all channels—to really push the green agenda. Because, at the moment, I feel that Welsh Government, while they're talking to us about it, are not talking to Joe Bloggs about it, and that's how you're going to win hearts and minds. So, I think there needs to be a very clear communication plan, using all different forms of media, to then get that buy-in, to then help speed up and emphasise the importance and the benefits of what we're trying to do, because we're not going to be able to do that just on our own. And that will then also spread across the—. That will drive demand in terms of sales, that will change the mindset of the people who work in the likes of Redrow, Barratt and so on, because they'll be hearing about it all the time. It'll become the new norm, and then main housebuilders won't be able to say that they don't want to deliver it because of its cost, because it becomes a standard public expectation of what people are going to see in new homes. So, I think that is one thing I would like to see: a very clear communication plan, very much akin to what they've done with COVID, and over a sustained period of time.

11:35

Thank you. It's funny, it was something I was going to raise with the Minister, because, to be fair, the Government are putting lots of money, throwing a lot of money, into this decarbonisation programme. But if these barriers exist, then—. And it's funny you should mention the likeness of the COVID, but I do think then there needs to be some communication on the part of the Welsh Government that seeks to reassure residents that, in the long term, especially with fuel poverty, which is rife amongst many people now—. We need some clear, very simple messaging from the Welsh Government, but, as you say, on a constant basis. Thank you.

Thank you, Janet. I'm going to bring Jenny in here, and I know that, David, I think that you'd indicated you wanted to say something as well. But I'll just bring Jenny in first.

Thank you very much. I just wanted to highlight something that was in your written evidence, which is that, as soon as you start having a community energy scheme, you then have a whole load of Government tariffs and network transport costs that you don't get if you've just got individual electricity generation in individual homes. Surely, this is completely the opposite direction to where we need to be going. And I just wondered what conversations you might have had with UK Government, because they set these rules.

Yes, that would have been me who put that comment in, Jenny. I'm not aware that we've had any conversations with UK Government. We have got consultants who have been making a lot of noise about this at a UK Government level and a Welsh Government level—so that's Sero energy that we're working with. It seems not to be a major problem on new-build schemes—they're able to structure it in such a way that the nearest sub-station, somehow, becomes in the legislation considered to be the meter, the final meter, before the energy leaves that site. But, for retrofit properties, this is a legacy of the feed-in tariff scheme, where everybody, dotted around the country, was expected to put PV panels on their property if it faced south and wasn't overshadowed, and then they would be selling that energy all over the place. What we're trying to do, particularly in Wales, is to have what we call aggregated energy schemes, where we recognise on our estates that, whether it's our tenants or potentially private owner occupiers, not everyone's got a roof that's suitable: it could be full of roof lights; it could be over-shaded by trees; it could facing the wrong direction. But what we can do is we can maximise the solar generation on the properties that happen to be facing in the right direction, and then, with a degree of equity, share out that between everybody by utilising a battery in every home, and that's why we're coming up against this problem. It's because it's a retrofit issue, as opposed to a new build. 

11:40

Thank you, Wayne. David, you'd wanted to say something a little earlier. Can I bring you in here?  

Diolch yn fawr, Chair. Yes, it was just to basically expand on what Louise was saying and to answer Janet's question regarding the no access. We've just got to realise we're coming out of a two-year pandemic and people's health and well-being are suffering. So, we need to understand the difference between resistance to new tech or if somebody's got underlying issues. And as an organisation, we pride ourselves on doing early interventions and welfare checks, so we have repeat phone calls. So, we do welfare checks, making sure we identify problems before they exist, and that will then hopefully help us get access to do the tech. So, if there's a resistance to tech we need to know, if it's different to the resistance of somebody coming in. So, yes, just to expand on that. I don't want to take anymore time up. Thank you, Chair. 

Yes, thank you. I agree with all the points raised. I also would add and emphasise the importance of the data. So, we are now starting to see the results, where we can show tenants, homeowners, the difference, the true difference, that these measures make in terms of the bills that they're paying, and that's going to be critical in terms of—. There are loads of other elements that we've got to get right in terms of the communication, the respectful way that we go about doing this work and making sure that they're involved in it, but for people to be able to have confidence in the difference that this is going to make to their standard of living or their cost of living is hugely important, and perhaps, as that builds, that's going to play an integral role in the funding of this, the funding solution, as well. 

Thank you, Neil. Janet, are you happy for us to move on to Joyce? Yes, okay. Joyce. 

I'm going to talk about skills—I think it has been mentioned already—about pipelines feeding into skills. So, do you think that we have the requisite skills across the board to deliver what is an ambitious but necessary programme in Wales? 

I think myself and Scott were going to say a few words on this. The simple answer is 'no', we don't at the moment, not at the scale that we require. We've definitely made steps in the right direction, but, collectively and with Government support, and with colleges and other training organisations in the private sector, we really need to get stuck into this urgently. Otherwise, as this explodes and then mushrooms, we're going to create a real bottleneck, and we've already seen, with supply chain pressures over the last year, how that manifests itself in the types of price increases that we've never, ever seen before, so it's that capacity, that ability to manage quality. But, therein, we're talking about a lot of challenges. There are great opportunities here as well, aren't there, in terms of how we develop these skills, how we can bring pace and scale to what we can manufacture in Wales as well. Scott, I don't know if you wanted to add anything.

Actually, Louise is going to add something, because she's got a slightly unique angle on this. 

Thanks, Scott. Sorry, I seem to be talking a lot today. I've got two thoughts particularly around skills. I completely agree with what Neil has said. We don't have the numbers to come through, and we're seeing that very much in new build and we'll certainly see that in the retrofit; all it does is drive cost. I think two areas that could be worked on a little bit: I think we need to—. A bit controversial this one, but we need to open up beyond just Welsh suppliers. Welsh-first is always my approach, but we cannot deliver everything that we need to do internally in Wales, so we need to accept that we take products from England or Europe. I appreciate that that has implications in terms of importing carbon and so on, but I think that's really important. Potentially it's a role for Unnos to set up some factories around this, whether we start producing some of the kit or the tech internally and actually build on a manufacturing base within Wales. I think there's a real employment opportunity.281

My second point is: I've got two boys in school at the moment. One's about to choose his GCSEs and the other is just about to start and at no point do they talk or do anything about construction in school. I'm the only lady on the call and I'm normally the only woman in the room when it comes to construction as well. This needs to be a clear pathway in the education system that we need to be talking to our children about, because that does not happen at the moment. You don't build a skills base overnight, but I think we definitely need to be looking at incentives, very much like you did with teacher training, to get people into that area of education as well, and operation. I think, fundamentally, there needs to be a very clear programme there throughout the whole education process—a large challenge, I appreciate that, but one that I think could be quite fruitful quite quickly.

11:45

Can I come back, Chair? I was so pleased to hear what you've said about the gender-based workforce, because I'm a founding member and chair of the all-party group on construction and we focus particularly on the gender gap, which is massive, and also the shortage of construction skills in schools. 

My next question is pretty obvious from the experience that I've got: is it still the case, considering that we're talking about high-tech skills, that construction, when young people, like your sons, are having any conversation around their career opportunities and development—? Is it still the case that there's a need for those people who are informing young people to be better informed themselves? Because my understanding—from all the builders I speak to and those deliverers of skills—is if you can't do anything else, go and build. Is that still the case? That's what I want to know.

Yes. I had a very interesting conversation with my nieces the other day, because one of my youngest is particularly interested in architecture, and the other two were just simply saying, 'Why would we ever want to work on a building site? It's a dirty, mucky thing to do'. Great strides have been made, but we still need to do a lot more and the image of construction needs to fundamentally change, because it is not all about wearing muddy boots and laying bricks. And that is still, if you ask kids, what they're opinion is, because that's how it's portrayed in books, that's how it's portrayed in cartoons and that's how they learn. I think we need to do a bit more creatively around that as well, but it's just not even an option in schools, so they don't get the airtime at all.

No, I didn't, but I absolutely agree. I've got two brothers who made their whole careers as carpenters and they've done very, very well out of it, but it isn't promoted in school—it's something that's seen as a last resort. I do think that there are lots of things that we can do to improve the construction sector, because it is very fragmented the way that it's set up—it's quite high risk and high reward. We've got a huge sub-contractor element and I think Welsh Government's drive to introduce a considered approach to project bank accounts, where we can help manage risk and give sub-contractors certainty about getting paid, is going to be really beneficial as well. But there are huge strides. In the area of Wales that I'm from, in Caerphilly county borough, there is heavy industry and mining et cetera, and there are a lot of people who want to go into that sort of work as opposed to going to university. So, I think it's something that we should promote much more as mainstream, and definitely get more women on site—I totally support that.

Probably everyone on the committee will agree with you strongly on that. We are just about out of time, but there is something that I know that Jenny wanted to come back to. Jenny, was there something that you wanted to raise?

11:50

Yes, if there's time. Just briefly, just to ask how you think the next two phases of the optimised retrofit programme should differ in the approach to the earlier phases, bearing in mind that we've got to really raise our game across all tenures. Neil.

Just quickly on this one; this has already been touched upon. We're really pleased with the support that we've had from Welsh Government for innovation, but it's been a bidding process, and often, we're all under pressure to come up with something new and innovative to attract that funding. We're all sort of in the same position on this; we would like this to be about not searching for the 'new'. We'll keep an eye out for that, but this is about bringing pace, bringing efficiency, bringing more understanding to some of the things that we've already got in train, getting better at capturing the data, sharing that, sharing that information—so, building on much of what we've done without always searching for the new, but not closing the door to that.

How do we actually have a level playing field so that all tenures realise they've got to meet these targets? Is it some sort of independent quality assurance scheme that everybody's got to meet by a certain date?

Sorry, Jenny, was that across all tenures?

Yes, because at the moment the problems are in the private landlord and the owner-occupier sector, where people are just not paying attention.

I think it's going to need to be a bit of carrot and stick. I think it's right the way that we're all seeking to make strides in the affordable housing sector to begin with. It's proof of concept, we can bring some reassurance around that. Hopefully what you've seen today is that what we're asking for is a little bit more flexibility and a little bit more time, because if we introduce a deadline of say 2030 or 2033, that'll have some unintended consequences. But the private sector do need to start with what Louise touched upon—these messages that they just can't make decisions now, and over the next couple of years, thinking that nothing is going to change, because it will. They're better off planning for that rather than it being something draconian further down the line, because it will have to happen.

Thank you. David and Louise, if I can ask for as brief an answer as possible, please, because we're over time. Can I go to David first, and then Louise?

Diolch yn fawr, Chair. Just to Jenny: what we don't want to do is repeat the performance of the old Arbed, where we're just slapping insulation on, or injecting cavity wall insulation. We've got a lot of retrospective defitting of insulation that we had all the best intentions for. As an organisation or a sector, yes—TrustMark or something like that, using the PAS 2035 principles. It must be across the whole of Wales, so that we've got a consistent approach on how we actually retrofit fabric first, not just filling up cavities with wall insulation, because there's a grant to do it and it feels good; it's not, it was the wrong thing to do in certain areas. We're learning from that now, and we don't want to repeat any of that going forward. Thank you, Chair.

On building regs, why are we building to standards that—? I know that's an unpopular one, especially for us in sales, because it's all about the profit that you generate, but I do think that building regs need to have a clear line to come in line. And yes, in terms of licensing of landlords, there needs to be a clear programme of improvements, just like we have in the affordable housing sector, where you move to EPC D or EPC B by certain dates, so people can plan it in. Because without that licensing and without that push, people won't do it.

Diolch yn fawr iawn. Thank you all very much.

Diolch am y dystiolaeth y bore yma. Bydd transgript o'r hyn sydd wedi cael ei ddweud yn cael ei yrru atoch chi i wirio eich bod chi'n hapus ei fod e'n dransgript cywir. Dwi'n siwr y bydd ychydig o bethau y byddwn ni eisiau dilyn lan gyda chi, efallai doedden ni ddim wedi cael cyfle i fynd atyn nhw, mewn ysgrifen hefyd. Ond diolch yn fawr iawn am y sesiwn y bore yma. Mae hyn yn rhywbeth y byddwn ni fel pwyllgor yn awyddus iawn i fod yn edrych i mewn iddo fe mewn mwy o fanylder. Diolch yn fawr iawn.

I'r Aelodau, byddwn ni nawr yn cymryd egwyl ginio fer. Mae gyda ni ugain munud. Os bydd Aelodau yn gallu bod nôl erbyn 12:15 ar gyfer sesiwn breifat, bydd y sesiwn gyhoeddus am 12:20. Diolch. Gwnawn ni nawr barhau yn breifat. 

Thank you very much for your evidence this morning. There will be a transcript of the meeting that will be sent for you to check that it's accurate. I'm sure that there will be a few items we'll want to follow up with you that we didn't have an opportunity to pursue, and we'll do that in writing. But thank you very much for the session this morning. This is something that we as a committee will be eager to look at in more detail. Thank you very much.

For the Members, we'll take a short lunch break now. We have about 20 minutes. If Members could be back by 12:15 for the private session, the public session will start at 12:20. Thank you. We'll continue now in private.

11:55

Gohiriwyd y cyfarfod rhwng 11:55 a 12:20.

The meeting adjourned between 11:55 and 12:20.

12:20
4. Datgarboneiddio tai - sesiwn dystiolaeth 3
4. Decarbonisation of Housing - evidence session 3

Prynhawn da a chroeso nôl i'r sesiwn yma o'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Dŷn ni'n cynnal ymchwiliad undydd ar hyn o bryd i mewn i ddatgarboneiddio tai. Mae'n bleser gen i gyflwyno ein sesiwn dystiolaeth 3 ar gyfer y diwrnod heddiw. Gwnaf i ofyn i'n tystion gyflwyno'u hunain ar gyfer y record. Gwnaf i fynd at Clarissa yn gyntaf.

Good afternoon and welcome back to this meeting of the Climate Change, Environment and Infrastructure Committee. We are undertaking a one-day inquiry into the decarbonisation of housing. It's my pleasure to introduce our third evidence session for today. I will ask our witnesses to introduce themselves for the record. I'll go to Clarissa first.

Prynhawn da. My name is Clarissa Corbisiero. I am the director of policy and external affairs and the deputy chief executive of Community Housing Cymru.

Good afternoon, committee. My name is Gavin Dick and I'm from the National Residential Landlords Association.

Thanks, Gavin. And Matthew or Matt—which would you prefer to be?

Matt, Delyth. Prynhawn da, bawb. I'm Matt Dicks, I'm the director of the Chartered Institute of Housing Cymru.

Fantastic. Thank you very much to all of you. There are lots of things that we'll want to ask, so there may be some things that we don't get round to, and if we don't, we'll follow up in writing if that's all right. If you'd like to come in on any question, if you'd just put your hand up. It'll be easier, I hope, with this panel; in the last panel, there were six people giving evidence at the same time.

I'll go straight into the questions if that's all right. Do you think that the Welsh Government knows and understands the scale of the challenge around decarbonising housing? Are there any data gaps you think that need to be addressed? And if I can ask you at the same time if you could also tell us whether you think that there is a coherent and clear plan from the Government on this agenda, please. Gavin.

Good afternoon again. I would say 'no'. There's a complete lack of information. If you look at decarbonisation as a whole within Welsh housing, no-one knows what the situation is of every house in Wales. We've publicly said that we think a survey of every single house in Wales needs to be undertaken. You can then understand the baseline data of what is required to happen and you can then plan a timeline for this to happen, understanding the scale of the problem and understanding what's needed to happen to each household. Each house is different, so therefore, a different approach is required for every house. And yes, there is a cost to it. I think we worked out that it's going to cost somewhere in the region of £350 million. But that would give you baseline data for the whole of the Welsh housing stock to then plan. Many of the works that are going to be required are going to have to be done at a street level. Therefore, you need to know what all the different housing in that street looks like and what the challenges are for each of those houses. That would then give you an understanding of what skills are required, what upskilling is required in the local area and how to deal with all the different problems that arise from that.

Thank you. Gavin's right. There are undoubtedly data gaps. I think it's important to remember that it's absolutely a huge and complex task, so it's understandable that there are data gaps. I think that the optimised retrofit programme gives us an opportunity, if we do learn from it as we go, to try and fill some of those data gaps. But at the moment, we simply don't have the knowledge that we need around cost, around what works, how long it's going to take to roll out—all of those kinds of things that would allow us to scale up quickly.

I would agree that, at the moment, there are elements of a plan, but there isn't a full, comprehensive costed and worked-up plan, and the things that are missing within that for me are: a really clear sense about how on earth we finance this huge and really, really important task; how we learn from what's gone before; and how we scale up the skills that we need to deliver. As I said, optimised retrofit helps us to do that. The Welsh housing quality standard, the new standard, will also, I hope, give us detail on some of that. So, there are elements of a plan, but it's not in a comprehensive, ready-to-go kind of way.

12:25

Thank you for that, Clarissa. Lots of things that you've mentioned already, we'll be obviously coming back to these in greater depth, in the areas that we'll be discussing with you in this session. I'll move on now to Joyce Watson.

You've started answering what I was also going to ask, but I would like to understand whether you think that the ambition, the policies and the proposals that are set out in the Net Zero Wales plan are going to progress the decarbonisation agenda at the scale and pace that is held within that.

Also, apart from saying 'no', which I suspect you're going to, if you can tell us what needs to change, because we need to make recommendations.

Absolutely. Thank you. And I think what's helpful about the Net Zero Wales plan is that it sets how we do it, in that broader context of the work that needs to be done across the piece. That's a very helpful endeavour. I think what's missing, as I said before, is a sustainable financing mechanism. So, what we think needs to happen is for some detailed research to take place on what the blended approach to financing decarbonisation in the social housing stock needs to look like. We've got some ideas and there has been some initial work taking place. The Future Generations Commissioner for Wales, with the New Economics Foundation, for example, have done some work, but at the moment, they are simply that: there are some interesting ideas, but we need some proper work to develop that into something that could actually work and could give confidence to lenders and the sector that, actually, you could make this a reality. So, that's one element we think needs to come through to make it a workable plan.

The other is a really clear sense of what the standard looks like and how it's going to be monitored. As I said, the WHQS should help with that, but there's also a discussion about whether the energy performance certificate, for example, is the correct mechanism to use to monitor this, and there are some very clear pros and cons around that, which we might get into in more detail.

Gavin had his hand up first, and then we'll go to Matt. So, Gavin.

Sorry, Matt. I presume we're going to come back to the EPC in time, but I mean, to begin with, I think the first thing is that the private rented sector's guidance is set by Westminster and not Welsh Government. So, to begin with, you've got a divergence in where the power is coming from to make decisions, and I think that is a challenge in itself. Equally, you've got the owner-occupier sector, where there's very little guidance at all. There are some elements coming down the road with green mortgages, and the mortgages are going to a certain point by 2030—provisionally a C. It's also, then, the unmortgaged provision as well. But where I would say there is also a greater need is understanding how that's going to be funded for those who can't afford it. So, we can talk about those who can afford it, but there's also a great amount of people who can't afford it, and what does that mean. Also, what does it mean for communities? We published a paper last year pointing out that there's a great variety of housing stock that potentially can't afford to make the change to net zero. So, yes, you've got a net-zero target, but it's the incremental stages towards that, and do they all work together. So, you could have the social housing going down one route, private rented going down a different route, and owner occupied going down a different route, and the three don't necessarily collide together at the end. You could have different targets, as we've seen in the consultation on MEES—minimum energy efficiency standards—talking about an environmental impact rating over an energy efficiency rating. That could create different outcomes that aren't necessarily to the benefit of where Welsh Government wishes net zero to be.

Yes. I didn't come in on the first round of questions in terms of the overarching understanding of data gaps and whether the Welsh Government had a coherent plan, and I'm kind of going to what everyone's talking about, but I mean there is a big evidence base out there. We've had the future generations commissioner's report in terms of giving us the overall funding challenges. You know, you couple that with the Jofeh report a couple of years ago, and that gives us more context, and we've had the work from the Welsh School of Architecture in terms of the different archetypes of housing and how much that costs. Gavin and Clarissa have identified some of the key gaps, but that's just for the social housing sector, in essence. What's the plan for home owners in terms of bringing forward funding for that?

Funding is the biggest gap in terms of the ambition in relationship to the funding that's currently coming forward from the public purse, and understanding how housing organisations are going to fund and finance that, particularly in terms of the current financial and fiscal landscape we're facing. None of us are going to want to see rents raised 10 per cent—of course we don't. That's not going to happen, so we've got to keep rents affordable, we've got to build 20,000 new affordable homes and we've got to decarbonise and tackle homelessness. So, there are gaps there, there are also gaps in the tenure understanding.

There's a big gap, we think, in skills and understanding what skills are going to be needed to deliver this. So, we launched a report yesterday of initial findings from a quick survey of the sector about what they're doing around skills, where the investment's coming in to skills, and we asked for that ahead of the Senedd elections. We're going to get the next zero skills strategy in November, autumn, but we're feeling that we should know that already if we want it to deliver. We're running out of time.

I think there's also a gap around the embodied carbon side of this, as well, which no-one really talks about. So, it was interesting hearing from people from Welsh Government at our conference yesterday about all the products that we need to deliver low-carbon housing, not just the insulation, but the technology. Components are coming from all over the world, so what's the carbon footprint of that? We need to develop industry and manufacturing here to deliver that. Clarissa's right: ORP offers us the beginnings of a route-map of how we do it, but, again, what's the offer for PRS? What's the offer for home owners? There are huge gaps in terms of what's being offered through the public purse at the moment to what we actually need.

I think, again, Clarissa hit the nail on the head, it's about,'Well, if we're not going to get that security of long-term funding from Welsh Government—.' And I understand the fiscal landscape they've got to operate in well, then we need to work together and innovatively to find different ways of sourcing that finance.

12:30

Thank you, Matt. Joyce, are you happy for us move on to Janet? Okay, we'll move on to Janet now. Janet Finch-Saunders.

Well, you've actually answered one of my questions about whether Wales requires specific decarbonisation targets for all housing tenures. But if specific decarbonisation targets were set for individual housing tenures, what steps do you think Welsh Government could take to encourage and support landlords and single-property owners, owner occupiers, in decarbonising their own properties?

Thank you. As I said at the beginning, I think the biggest challenge is that we don't know the scale of the problem. So, an individual assessment of every house—every house is different, we know that, the way that it's been constructed, the age, the orientation and the value. Therefore, you can then work on what needs to happen.

So, we know that older housing, particularly in the private rented sector, is dominated by pre-1919 housing, and Wales has got the oldest housing stock in the United Kingdom. That needs a significant challenge. A lot of those properties face significant cost to get to a higher level, and how is that going to happen? That can't all be funded by the landlord, ultimately, in the low-value areas in Wales, and that needs to be addressed.

Equally, for the owner occupiers, the different age groups of people within that, how are they going to fund it and what's going to happen? So, I think at the beginning you have to understand what the foundation is, and that is an assessment of every house in Wales, then, from that, you can drive out what is required in each community, you can then work out what the skills are, get people to address the issues, so builders, developers can look at that. If you're going to have a district heating network into an area, how is that going to happen, when is that going to happen and when do people connect to it? If it's going to have external wall insulation, when's that going to happen, how's that going to be funded, when do people buy into it? A lot of things need to happen to begin with, so that people can then plan for the future, and at the moment we don't actually know where we are to know where we're going.

So, am I right to assume that—I have to give credit where credit's due—Welsh Government are looking at tackling this head on and have put substantial amounts of money in the budget too, in their retrofit decarbonisation programme? I know, across Wales, there are ad hoc schemes going on in different parts of Wales. Should we really be going back and using some of that funding for delivery? Should we actually be using some of the funding now and saying to Welsh Government, 'Well, come on, we need this data'? It's a bit like the second homes argument: how do you determine a second home? And there's work needed there to determine what is a second home, what isn't a second home, what's a holiday let, what's a—? So, should there really be a concentration now by the Welsh Government to do that data collection and find out exactly how many houses are owner occupied, how many are in the private rented sector, how many are in registered social—? Do you know I mean? All the different sectors.

12:35

Yes. You can't get away from the fact that optimised retrofit is mostly for social housing. That's only 15 per cent of the housing stock in Wales. You need to address the other housing stock in Wales. And I think, from that, you need to then look at PRS: that's known where it is; that's what you've got Rent Smart Wales for. The rest is owner occupier. The question though is: is the owner occupier without mortgage, or an owner occupier with mortgage? Those who can afford it, those who can't afford it—that needs to be addressed. And then it's about the scaleability of things. So, I would say, yes, right from the very beginning, you need to address the issue of understanding what all the housing in Wales is, and from that you can then draw up a plan.

Well, I've declared an interest, but I am an owner occupier, and I've got to be honest, ours is an old house, and I've often thought that I quite fancy that cladding that you put on the outside and then you can render it and things. But, honestly, I think, 'Well, should I be doing that or should I be doing something else?' And I think, really, if I could ask some advice rather than ringing companies up, because I've tried ringing companies up, and, honestly, it's a minefield. And I've had other owner occupiers come to me and say, 'What's all this support that the Welsh Government are giving now to retrofit, because I've got a very cold, draughty house, and I want to play my part in terms of the climate agenda?' And so, really, I think I would appreciate guidance myself. So, I resonate with what you're saying. So, how can the Welsh Government, apart from collecting the data, how can they also be putting that advice out?

Gavin, we'll come back to you. Forgive me, I'll come back to you, Gavin, and then I'll bring Clarissa in, because I know that she indicated she wanted to come in, and then Huw's got a question as well, Janet, if that's okay. But Gavin first, yes.

Thanks. From that, once you do a survey of a property, you'd be then creating what's know as a property log book or passport, but they're all the same thing. That would then tell the person what is needed to be done to that property and in what order to do things. So, effectively, you've got a no-regrets policy. So, do the insulation first—the fabric of the building first—then look at the heating system, and then look at renewables. It's by going down that—. So, having an assessment of every property, then each property would then have a property passport, you'd know where it is, the tenant would know what's going on, the owner occupier would know, and so would the landlord. From that you can then build from that. So, what is the order to do work so that there are no regrets? From that no regret, that would also build up—. You can anonymise the data, so you can say, 'In this area, this is the number of properties that need external cladding.' Therefore, businesses can gear up for that. 'This is the number of properties that need insulation. This is, therefore, how to gear up for it.' You can actually do that from understanding what the property passport is for each property. It's a bit like home information packs back in the horrible days of many years ago. But, actually, understanding what the property is, that gives the owner occupier or the tenant an understanding of what the property is, the state of the property, and the journey that property's going to go on to get to zero carbon in the future. But if we haven't got that, everyone's fumbling around in the dark to find out where they need to go.

Thanks, Gavin. I think, Janet, Clarissa wants to come in on this as well.

Thank you. I just wanted to respond to your initial point and, actually, I think that the conversation, I think, has perhaps made the point I was going to make, which is around the importance of confidence. And I think, Janet, you've just given us a really great example, actually, of how confidence to invest is absolutely key. So, targets get a lot of attention, and they can be really useful—they can drive momentum, they can drive funding, and they can drive energy and commitment towards delivering on something that's incredibly ambitious—but they've got to be accompanied by a delivery plan, and that delivery plan has got to inspire confidence in individual home owners, but also in social housing sectors as a whole to be able to invest. So, I think the delivery plan is really key.

The additional point I just wanted to make was about the cohesiveness of any target. And so, what we're seeing at the moment is that we're unsure when the target might be for the social housing sector, but we've got a fuel poverty target in 2035. Across the border, we've got targets that are at a completely different time frame to what we're seeing in Wales—Wales have been much, much more ambitious about this. Actually, a lot of delivery also depends on the market speeding up, investing at scale and driving down costs within the market, and actually being cognisant of different targets all over the place, actually, I think is a really important part of our ability to be able to deliver at scale, but also to deliver at a price that provides value for money for those individual organisations, and also for the public purse.

12:40

Huw, I think before you come in with your supplementary, I think Matt has indicated that he wants to say something based on what Clarissa is saying as well.

Yes. We support the New Economics Foundation work that's been done on this. Tenure specific targets can be a positive driver, but I suppose just raw, tenure specific targets don't indicate, perhaps, the need as well, you know, in terms of fuel poverty. Because we can't discuss this in isolation—that it's just about insulating homes and putting in low-carbon energy sources et cetera—there's another whole agenda here in terms of the context of what's going on more widely in terms of cost of living, energy prices, the fiscal situation that we're looking at. So, we need to have targets that address that, and understand that, actually, those fuel-poor homes in particular need to be looked at first, within the context of a wider sort of tenure specific, target-driving process.

But just the point that was being made earlier about, you know, the investment in the wider housing, cross-tenure approach in terms of home ownership—. I mean, the magic money tree that the Welsh Government is going to have to shake for that—it's an almost impossible ask. So, in terms of understanding how we can sort of, through an optimised retrofit programme in the social housing sector, build up those skills, and as Clarissa was saying, build up the sort of market provision and drive down prices so that when we're coming round to providing information, as Janet says, to owner-occupiers, there's more information, more domestically produced products that drive down prices over time—.

Yes, thanks, Delyth. I'm still struggling to see—and this echoes a comment I made to the previous panel—the package of measures, sticks and carrots, that would give us the step change that we've struggled to achieve over years and decades within the private home ownership and the private rented sector. There isn't house by house, there isn't patch by patch, initiative by initiative, scheme by scheme in different areas that actually lifts the whole vessel. Am I missing something here, or can you direct us as a committee towards some examples, perhaps internationally, where the scale has been just as significant in the private home ownership and private rental market, but it has been achieved? And if so, what have they done that is different from what we are doing?

I think Gavin wants to come in, because you've just unmuted yourself. Clarissa did the same thing as well, so I'll bring in Gavin first.

Sorry, Clarissa. I think the challenge comes back to—. So, the private rented sector is governed by MEES, minimum energy efficiency standards. That's set down by Westminster, not the Welsh Government, so I think that's part of where the problem sits. You've got two different bodies trying to push the target. MEES—landlords will go and hit the target. That is what they will do. The challenge is under the new auspices of what MEES is being proposed as—you've got two different targets in there. You've got an environmental impact rating and an energy efficiency rating, and I think that poses a challenge as well. For the owner-occupier sector, that is down to individual home owners, and, again, I think it comes back to that people don't know what they need to do to the properties. Equally, landlords don't really know what they need to do, and I think that comes back to the argument about a property passport, so people know what they have to do. From that, you can then govern by looking at it from a local authority perspective. You would then have the data, maybe anonymised, but you'd understand what the challenges are in each community, and then you can start building up and look at it from a community perspective.

I think that's where the biggest challenge is going to be. It is a cost element. It's going to be a cost to set this up to begin with—no-one can deny that—but I think if you want to raise all ships at the same time, you're going to have to do it at community level, and you're going to have to know what the challenge is at a community level before you can actually move forward. From that, you can then address the plan. Each community will be different. House prices are different, house values are different, the wealth of individuals is different, so you're going to have to address it at community level in what the values in those areas are in relation to what they can afford. That is where Welsh Government can step in. Much of this will be done individually, but that's why it'll be done piecemeal, because everyone is working to a different timescale, with different budgets. People change their kitchens, their bathrooms, their houses to a different timescale—normally when you move house or a tenant moves out or moves in, that is when work is done. So, you've got different timescales by definition, and I think it's about how you co-ordinate those timescales the best that you can. 

12:45

Gavin, just to come back on that, everything you've described there describes the complexity of this and describes exactly the reasons why we've been unable to achieve this over successive decades. What is the thing that would transform, let's start with the private rented sector, to do this? As you've said, it's not purely money, there are issues of confidence, there is the issue of personal decision making, but all of that argues to me that we're never going to do it. We're never going to do it, we're always going to be behind the curve. Are we missing something?

No. I'm a bit more confident than you probably are that this is going to happen. I think part of the problem is how the targets are set out—and unfortunately, it is more target based; MEES is a target-based system. So, in 2026, a 'C' for new tenancies or new contracts, and then 2028 for all. I think that poses a significant challenge and it's not to be underestimated. I think that's where the problem sits. I don't underestimate that this is a significant problem. This is a huge challenge, probably the biggest challenge any Government has faced in the last 50 years, about how to actually transform housing, because we are talking about a significant change from the way that housing is today to where it's going to be. And I think it's a very difficult challenge. I'm not trying to underestimate the challenge it is, but as I say, the PRS is governed by MEES. That is set down by Westminster. That is a target-based system. And I think that can create bad targets and create problems in its own right, because it's not looking at it from a community perspective, it's not looking at how things can work as a community, moving forward, it's looking at it as an individual property. For owners themselves, owner-occupiers, there's nothing pushing them. There's nothing, apart from if you look at when properties change hands. That is the only time it's going to happen, and I think that needs to be looked at. But, again, we all know of properties with 30 years before they're sold. That's too late. So, there has to be some intervention. 

Forgive my interrupting you, Gavin. I'm very aware that we're more than halfway through the session and there are quite a lot of—. I'm sorry to interrupt you, but I think that Clarissa and Matt both want to come in and Jenny also wants to ask a supplementary on this. So, I'm sorry to interrupt you. Could I ask for as brief as possible contributions on this, because there are so many different things that we want—? I know that this is a very complex area. Can I bring in Clarissa briefly, then Matt, then we'll go to Jenny? So, Clarissa. 

No additional comments, thanks, Chair. 

Yes. That's a very, very interesting question from Huw, and a fundamental one, and I'm just having time to think about it. At a philosophical level, what do we need to do? Well, we need to drive down the cost of retrofitting our homes and carbon neutral energy sources, so how do we do that? Publicly funding 5,000 air-source heat pumps, or whatever it was, isn't going to do that, there needs to be much more Government intervention to affect the market on these products and supporting our manufacturing base to get involved in these products more domestically, which is an opportunity, actually, for us, but also hardwiring into the increasing capitalisation of the housing system in this country the benefits, or making it beneficial from a lending and borrowing perspective that you want to decarb your home, particularly from a home ownership perspective, and how that feeds through the whole housing system and affects capitalisation, affects the cost of building, affects the cost of products, et cetera. Some of that's within the remit of the devolved settlement; a lot of it isn't. But, fundamentally, that's what we need to do.

Chair, I'm in your hands. I've got a series of questions, particularly on the private rented sector, but I'm happy to ask them now or later. 

Okay. Just going back, the private rented sector is where the highest number of fuel-poor households now are, because obviously the social housing sector has made a lot more progress in this regard. So, what are the carrots and sticks that will get the private rented sector focusing on what we all need to do anyway? Is it no-interest-rate or low-interest-rate loans with a charge on the property, or is it regulation that will actually force people to focus their minds on this matter? Gavin Dick, I think we need to start with you.

12:50

Thank you. If I start with regulation, regulation under minimum energy efficiency standards is in play. That says that, currently, if a property is not making an E, local authority can prosecute the landlord, and we'd want them to. It's quite clear, if you're not meeting that—or you can go on the exemption register. The challenge is, and it's the scope of regulation—that's going to take it to a C, either on environmental impact rating, so carbon rating, or energy efficiency. If it moves to environmental impact rating, that moves a dash to electrification of heat, which I think creates a lot of worry, especially around fuel poverty and around challenges in delivering that, because you've just had electrification, and we know the difference between electric and gas costs.

In relation to energy efficiency, which is probably where we need to start, looking at the fabric, I think the sticks are there in that I think the next generation of MEES by 2028 will improve the fabric, and the fines are there for those that don't do it. I think the carrots are not there. The carrots that need to be understood are those around planning permissions. We'd like to see, especially around external walls, planning permissions removed. You can either create a default, 'This is what's acceptable', in each area, but also, where you're putting external wall insulation that then grabs pavement, because that's property gain, it's frowned upon, and you can have local authorities that say, 'No, you can't do that.' So, I think it's understanding what on the planning side needs to be dealt with as well. Those are the carrots. They're not great carrots, but they are some.

I also think then it's about explaining to people what they need to do. I'm a big fan of local government being the agent of that. I think local authorities can definitely show what is possible for houses, and explain to landlords, 'This is what needs to happen to your property and these are the steps you've taken', so a no-regrets policy. So, you do this first, then you do this, so that you don't have people putting in projects, then taking them out again.

So, I think the sticks are there. I don't think there are enough carrots. I think the challenge will be in the low-value property areas and them actually getting finance to do the works. To do the external wall is probably going to cost more than £10,000. To put a heat source pump in and the associated pipework can go up to over £20,000. That's probably nearly a third of the value of some properties. I think that's where the challenge will really kick in.

Okay. Well, let's just focus on fabric first. So many of the properties in my constituency in Cardiff Central, and it would be very similar in Swansea—the landlord wouldn't live in these conditions, so we have to move now, before the next winter. What are we going to do to actually get landlords to step up to their responsibilities, to not have people literally unable to pay for the energy costs, which are obviously rising exponentially, if there was funding available to support landlords to do it?

As I say, the regulatory framework is already in place. So, if landlords have properties that aren't meeting minimum standards, that already can be enforced by Cardiff Council against properties that aren't meeting them. So, that is already there in play. Where I would say—

Yes, but D is just very, very cold and people are spending ridiculous sums of money and it still doesn't make the property warm. So, there's got to be something much greater that's got to happen in the context of the rise and rise of energy prices.

A landlord can't control the cost-of-energy crisis increasing—

I think what they can do is improve the fabric of the building. I think the challenge around that is that, when you get to external walls, as I've said, it's very expensive. Insulation isn't. Value added tax has been taken off that. So, that is affordable. I think external wall is a challenge, a significant challenge, and that's probably best delivered at a community level, i.e. a street approach, and that means working with social, private and owner-occupiers. That involves the council actually speaking to everyone in the street, working out what that solution is, and working out how to deliver that.

I'm not saying this is an easy solution. I think this goes back to the point made a minute ago—these are incredibly complicated, incredibly difficult problems that we're trying to solve, and they have to be done with a street-by-street approach. They are going to be difficult. They are going to cost local authorities money just to engage with all the different parties, just to get to the point where we actually start doing some of the work. I think it is about going round to the properties, understanding what the challenges for those properties are, and then, from that, you can move forward and address the issue. So, if it is insulation that is the biggest challenge, how is that going to be addressed? A number of properties, both in the owner-occupier and the private rented sector have lack of insulation. Why? It's been free for many, many years. What is the stumbling block to get to that? There's a bit of behavioural psychology required in this to understand what those challenges are going to be to get them over the line. So, it is door by door, street by street, addressing the issues that everyone has, and then moving that forward. 

12:55

Okay. What is the role of Rent Smart Wales is transmitting the message that we can't hand around on this one any longer, that we absolutely have to get on with it for all the energy security and fuel poverty issues that we don't need to rehearse? 

Rent Smart Wales has got an overarching role; I actually think the role belongs to local authorities themselves, because they know best their communities, whether it's the ward councillor, whoever; they know what's required in those areas. Rent Smart Wales can come with an overarching envelope, but I think with a street-by-street approach you're going to have to involve the local authorities and all the different actors in it, and that's going to be where the challenge comes from—so, understanding what those properties are, what the journeys those properties are going to go on, and then you can have the interventions. But, at the moment, I don't think we know, with those properties, the state they are actually in, and what is required for those properties. Yes, we know they have poor insulation, but how do we move those properties forward? What insulation is required, and how is that delivered? I think that is what's required.

Okay. Do your members understand that they too have responsibilities? They can't just leave it to local authorities, or just leave it to Welsh Government; they own these properties, and therefore they have responsibilities to ensure that they're much more energy efficient than they currently are.

As I say, they're regulated under MEES—minimum energy efficiency standards. That is regulated. Quite clearly, they're also regulated under the housing health and safety rating system, which says that they have to have a minimum heating condition in them. 

So, if there were to be some sort of low or zero-rated loan scheme, private landlords would take that up, would they, if they got enough clarity on the technical detail?

I think some would, and some would pay for it themselves. I don't think this is one of those things that is just down to cost alone. I think it's also down to the complexity of what the problem is. If you did it at scale, costs would come down, and I think that would have a greater impact. That's why I was saying a street approach would have a greater impact. 

Janet, I'm going to bring you in here, if that's all right, because I think that your question ties in more with this, and then I'll come back to Joyce. Janet, on the private rented sector. 

Okay. In what ways would your organisation like to see phase 3 and 4 of the optimised retrofit programme include the private sector, and what challenges do you foresee to the Welsh Government's full commitment to the decarbonisation of housing if the private sector is not included in these coming phases?

As I say, I think understanding the behaviour within properties has got to be addressed to begin with. Understanding what properties are doing and what's happening in them has to be addressed. We proposed in, I think, ORP 2 that they should just do an assessment of what is the energy consumption in properties taking place at the moment, across all tenures in different parts of Wales, to understand what that would be. So, in ORP 3, and ORP 4, I would actually say it comes back to the central point; if you had a building passport for every property in Wales, you could then build on from that into what needs to happen to that property, and then you can pick up on the issues of, 'This is what that street's going to look like; this is how it's going to look in the future.' I think that is the easier perspective. So, I would say ORP 3 and 4 should be rapidly expanded to include all housing, and a passport for each property in Wales, to understand the scale of the challenge that's required. From that, you can then address a lot of these issues. We've said it should be done, I think, in the next three years, which is a significant challenge—we're not hiding away from that—but we think that's what's required to address the issues and hit the targets Welsh Government wishes to hit.

13:00

Thank you. Matt or Clarissa, did you want to add anything to any of what's been said on this?

Well—. Sorry, I didn't stick my hand up, Chair.

It's fine, you've started to speak. Clarissa, is it okay if we go to Matt first? Matt first, and then we'll go to Clarissa.

Apologies. Just more widely on the discussion about the PRS, of course we need to incentivise the PRS. We've got a lot of people living in the rented sector, but we realised that there are a lot of challenges for them. There's new fire safety legislation coming online, there's the Renting Homes (Wales) Act 2016 coming into force, which will increase costs, and the co-operation agreement wants to look at rent control, which will decrease income streams, possibly, depending on what happens from that. So, there's a lot coming down for them as it is. A lot of the PRS sector in Wales is small—one-man or one-house bands—and a lot of regulation coming forward might do the opposite of what we're trying to do and force people out of the sector. So, we need to be careful about the size of the carrot, or the balance between the size of the carrot and the size of the stick.

It's going to need the sort of public finance that we've been talking about throughout the evidence, and getting that balance right, and fundamentally looking at ways of pulling in that finance to support all tenures in retrofitting their home. Those sorts of interest-free grants, et cetera, is one way. The property assessed clean energy scheme that the New Economics Foundation is suggesting, through the levy on council tax, that's another means of financing retrofit, and working with the Development Bank of Wales to trial equity release models, at low interest rates, to fund the retrofit in the PRS. We need to support the PRS. There are a lot of people living in the PRS, as Jenny says quite rightly, who are living in fuel poverty. That's what we were talking about earlier—about getting not just target-driven and outcome-driven, but looking at need as well.

I just wanted to add to the wishlist for ORP 3 and 4, just slightly outside of the PRS space. Just to reflect that the ORP is a fantastic programme, but the process of applying for it, and indeed for Welsh Government, civil servants, and others to manage and administer that programme, is absolutely huge. So, as we start getting into rounds 3 and 4, and even beyond, thinking about how we move away perhaps from a competitive process that is really, really time-consuming for all involved, to something that's a bit more streamlined, I think would be something that would be worth considering for future rounds. And also just priorities moving forward. We've talked a lot about data, so I won't labour that point, but tenant engagement and what learning we can get from early rounds, but also a focus on that in future rounds, would be really helpful, I think.

I was going to make the point about tenant engagement that Clarissa was just talking about there—the importance of bringing that into the situation, consulting and understanding what their needs are in the whole process.

Thank you very much. Joyce, you've been very patient—we'll come back to you.

I'll conflate two things. I was going to come on to tenant engagement, but I'm going to bring that forward. We've got an energy crisis and a fuel poverty crisis going on now. People aren't perhaps feeling the energy crisis in the way they will come October—for most people, that's when it's really going to hit. So, in terms of trying to decarbonise, and also to help people come out of fuel poverty, or at least not head too far into it, what could the Government and yourselves do immediately? I'm going to conflate this with the engagement of the tenants, because the previous witnesses have told us that, in some cases, the tenants don't see the value of the proposals, and they very often have difficulty in persuading them to take onboard the necessary changes. So, I've conflated the two. 

13:05

Thank you, Joyce. Who would like to pick that up? I'll go to Gavin first, and then Chris. 

In relation to the energy crisis first, I think tenant engagement is vitally important and I think it's something that's very missed out in many of these situations. The challenge we have in the private rented sector is around understanding the use of energy in properties and behaviour change within properties. It's a case of people moving between properties with different heating systems and understanding how to use them at their best, even though there are manuals provided. So, I think there is an education element about how you heat a home, how you ventilate a home, but also there's a big worry around a move to a target for electrification of heat. The cost of electrification of heat would increase fuel poverty dramatically, and I think that is a great worry. Electric heat is 41p per kWh, versus 7p for gas. I think those numbers are just absolutely scary for everyone, it doesn't matter what your income is. Those sorts of numbers on heating property in winter through electric sources is worrying.

I think to address it, we need an understanding of what can be done to support people individually in properties, whether that is new models for helping people from a local authority or Welsh Government, that they will guarantee heat in people's homes for three hours a day through the next generation of heating models—so, if you look at heating by the hour by energy companies, saying 'We will heat this home so we know that person's got a warm home for three hours a day' or something similar to that. I think we do have to address it at that scale, because of what the threat is to people with the new cost of energy. I think those who are in danger of fuel poverty or those who are in extreme fuel poverty need real support, because they are making a decision: 'Do I heat, do I eat or do I pay the rent?' I think you really have to start thinking about it with an element of do we provide heating in people's homes for a set number of hours a day so that we can guarantee that that home will be warm for that person so that they don't have detrimental impacts on their health.

I think engagement is partly down to that as well, engaging tenants on what is going to happen to the property in the future, when that's going to happen and how to use the property in the most efficient way possible so they don't have excessive bills. It is incredibly complicated. It's not, again, an easy answer, but I think we need to engage tenants at the earliest possible opportunity, explain to them the challenges of what heating is and how to use the heating system most efficiently in that property. I think it is a very difficult challenge facing everyone, whether you're a landlord, whether you're an elected member, or whether you're just a person living in a house. These are big challenges come the end of this year, and I think an explanation about how we use that, so that they're not in fuel poverty or they're not having the worst impacts of fuel poverty, has to be addressed. 

Thanks, Gavin. I'll bring Clarissa in, and then I think Janet has a supplementary. 

Thank you. As other people have said, a fabric-first approach is absolutely the priority. But fuel poverty, of course, as this committee knows well, is not just about changes and structure of the buildings, so reducing energy bills and also income maximisation are an absolutely key part of that. In answer to your question about what our members can do right now to provide support, what we're seeing is a huge investment in support around income maximisation. Indeed, some of our members are reporting that the people that they're supporting are actually coming to them having already maximised their incomes. It's becoming harder and harder to be able to find opportunities to provide support. We are, like many others, lobbying at UK Government level around the uprating of benefits in line with inflation. Back home in Wales, I think there is a question about what we can learn from schemes like the tenancy hardship scheme and other schemes, which are intended to support at a point of crisis, about how we increase access, how we simplify the landscape, so people can access our support really easily, but also about how we start over time to shift that away from top-up funding, which supports people at a moment of real crisis, to prevention. So, housing associations, we think, can help with some of that, thinking hard about the support that they provide, as well as doing work to try and keep their rents as affordable as possible.

On your question about tenant engagement, I think we've spent a lot of time in this committee already talking about the complexity of the landscape—how much we don't know, how much is yet to figure out. And I think lack of clarity and clear comms feels to be at the heart of some of this. Until we are able to understand what the landscape looks like, what the delivery plan looks like, and we're able to say that with some certainty, it's very difficult to think how we can communicate that really, really effectively to tenants. But also I think investing in tenant-facing services, so that there's empowerment around this—. It is different to Welsh Housing Quality Standard 1, where actually there was a lot of appetite to have a new kitchen or a new bathroom, or for the works that needed doing in some homes. Actually, this is a completely different kettle of fish and actually we really need to invest in tenant-facing services to be able to build understanding about why this is needed and when that work might take place.

13:10

Thanks, Clarissa. We're into our final four minutes of this session, I'm afraid. Time really has got the better of us with this session. Janet, you had—. So, this is probably going to be the final question on this.

Just a quick one that's arisen whilst I've been listening to everything today, and that is, yes, there are good landlords, private sector landlords, and there are those that, I think it's fair to say, the stick might be needed. But where you have a situation where private landlords with only a few properties, or indeed one property—. I suppose for them, the tenant, if you like, pays for the energy costs, so, apart from putting value on a property, it could be that some private sector landlords decide to put their heads in the sand and think, 'Well, it's not bothering me, because I don't pay the energy bills.' Has that been factored in by any of you giving evidence today, that there could be that reluctance just on the sheer scale of, 'Well, it doesn't affect me, so why should I do it?'

[Inaudible.] If I could ask for as brief as is possible—[Inaudible.]

I will be. I would say, if a private rented property is not meeting standards, the local authority has the enforcement powers to take action against it, whether it's heating or whether the property doesn't meet minimum standards. Those powers already exist and—

No, I didn't mean that, sorry; I meant for any enhanced improvements. So, they might be meeting it but only just, and yet, you know, further retrofit is needed.

Well, the next—. As I say, the Government consulted on the next generation of MEES, to move properties to a 'C' for new tenancies, effectively, from 2026—April 2026—and for all tenancies from 2028. Those were consulted on and, those, we expect the legislation to be brought forward this year on that. So, many properties are already moving to that stage already. So, the regulation is actually keeping up. The concern we have is if it moves to an environmental impact rating rather than energy efficiency and the impact on fuel poverty.

I was just going to say, I don't find any evidence of that, Janet. There may be some landlords out there who do feel that, but I think cost is the main prohibitive part of it and I think there are ways of attaching the financing to the property, rather than the individual.

So, the PACE scheme that I mentioned, which the New Economics Foundation has recommended, that sort of levy through council tax, that will finance the retrofitting, but that attaches the debt to the property rather than the individual and would be secured by some sort of property tax bill, so—. Underneath all of what we've discussed today is the financing and the cost of it all. So, that is the main gap, I think. And we've all said this at the beginning: how do we—? There has to be a balance between the public purse and how much the public purse can afford in the climate that we're in and how much the sector, across tenure, needs to be more innovative about drawing down different forms of finance—there are papers out there, there are lots of different models out there—and tapping into that ESG side from lenders. Lenders are really keen to get involved in the ESG—that's the environmental, social and governance—side of lending.

We had a presentation from a guy from Lloyds Bank at our conference yesterday. They're really keen to get involved in that and demonstrate that. So, we need to tap into that, because it's not going to all come from the public purse; there's just not the money there, and appetite in other places perhaps isn't there either. So, we need to be innovative about that and look for other streams of financing, and that, for me, is the main gap—and the skills side of it as well.

13:15

Diolch yn fawr iawn. Wel, mae amser wedi ein trechu ni y prynhawn yma. Diolch yn fawr iawn ichi i gyd am y dystiolaeth. Mae yna sawl maes arall lle byddwn ni eisiau gofyn ichi am eich barn, felly, os mae'n iawn gyda chi, byddwn ni'n ysgrifennu atoch chi yn gofyn am fwy o fanylder ar rai pynciau. Bydd hefyd transgript o'r hyn sydd wedi cael ei ddweud yn cael ei ddanfon atoch chi i wirio ei fod e'n gofnod cywir o'r hyn sydd wedi cael ei ddweud yn y sesiwn, ond, am nawr, diolch yn fawr iawn ichi am eich tystiolaeth, a oedd yn ddefnyddiol iawn. Byddwn ni mewn cysylltiad eto yn fuan. Diolch yn fawr iawn. Thank you very much. Thank you.

Aelodau, byddwn ni nawr yn cymryd egwyl fer er mwyn testio sain y tystion nesaf, felly byddwn ni'n cymryd egwyl fer am 10 munud, os byddwch chi'n gallu bod nôl erbyn jest cyn 13:25. Fe wnawn ni barhau yn breifat nawr.

Thank you very much. Well, time has beaten us today. Thank you very much for the evidence that you've given. There are several other areas we would like to ask you questions on, so, if it's okay with you, we will write to you to request further information on some topics. There will also be a transcript of what has been said today for you to check for accuracy, that it is an accurate reflection of what's been said in this session, but, for now, thank you very much to all of you for your evidence, which was very useful, and we'll be in touch with you soon. Thank you very much. Thank you.

Members, we will take a short break to test sound levels for the next set of witnesses, so we'll take a short break of 10 minutes, if you could return by just before 13:25. We'll continue in private.

Gohiriwyd y cyfarfod rhwng 13:16 a 13:25.

The meeting adjourned between 13:16 and 13:25.

13:25
5. Datgarboneiddio tai - sesiwn dystiolaeth 4
5. Decarbonisation of Housing - evidence session 4

Croeso nôl i'n sesiwn dystiolaeth prynhawn yma. Dŷn ni fel Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith yn cynnal ymchwiliad undydd i mewn i ddatgarboneiddio tai, a'n sesiwn dystiolaeth olaf ar gyfer y diwrnod yw hi nawr, a byddwn ni'n croesawu ein tystion ni i gyflwyno'u hunain ar gyfer y record. A gaf i ddod at Mark yn gyntaf, plîs?

Welcome back to our evidence session this afternoon. We as a Climate Change, Environment, and Infrastructure Committee are holding a one-day inquiry into decarbonisation of housing in Wales and this is our final evidence session of the day, and I'd like to welcome witnesses and ask them to introduce themselves for the record. Can I come to Mark first of all, please?

Prynhawn da. Mark Bodger, the engagement director for CITB, the Construction Industry Training Board in Wales.