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Creating ever higher standards |
The Housebuilder magazine interviews Mark Clare, Chief Executive of Barratt Developments PLC, 1 March 2008.
Barratt currently builds around one in eight of the new homes in the UK. So it is fortunate that its chief executive has wholeheartedly backed the government’s zero carbon agenda, or ministers would have a rather large headache on their hands.
Mark Clare is in fact determined for Barratt to take the lead as the industry gears up to meet its targets by 2016. And he has undoubtedly got the plc off to a strong start. It has the bid for the government’s first carbon challenge site, Hanham Hall in Bristol, where it will go on to build a new scheme of 200 homes - the UK’s first zero carbon community.
Barratt has also been shortlisted for the second carbon challenge site and has recently entered into a partnership with energy supplier E.ON, to investigate opportunities for providing renewable energy to its future schemes - an essential element of achieving zero carbon standards.
Mark Clare has also taken up the chairmanship of the UK Green Building Council where he will work alongside chief executive Paul King and UKGBC members to help drive the industry forward, while sharing research and best practice along the way.
“I want Barratt to really get ahead of the pack,” says Clare. “Aside from the sustainability drivers, the focus of being mainstream early adopters will give us real competitive advantage, including more access to land and opportunities to grow the business faster.”
In just a few short months, Barratt has come a long way from renewable solutions it was trailling at its eco show village in Chorley, Lancashire. This particular scheme was useful to gain an understanding of the relative merits of various microrenewable technologies, including solar thermal, ground source heat pumps and micro wind turbines - the latter of which was found to be not particularly effective, to say the least. “Some of the technology was found to be very unreliable and not customer friendly, “Claire points out. “Some of it was quite expensive and not fit for purpose for putting into a customer’s house.”
Barratt has since moved on, and low carbon district energy supply is the next step, rather than dwelling-by-dwelling technologies, which can only ever be part of the solution, he says.
Clare’s background in the energy industry - he became chief executive of Barratt in October 2006 following four years heading up Centrica’s British Gas residential energy division, has proved advantageous in getting to grips with the zero carbon agenda. “It’s certainly meant I have been able to talk to the right people in the sector, and to engage with them quickly to come up with solutions.”
Clare also suggests that his comparatively short history in the housebuilding industry has been advantageous in enabling him to take a fresh perspective. “I saw how we have to do things differently. It means I’m not caught up in knowing exactly how we did things in the past.”
He is “delighted and excited” by the opportunities presented by the carbon challenge, he comments. “It’s very positive, very uplifting.”
It is not hard to see how this must make a welcome focus from the far-from-positive news on the housing market against which the industry will be battling in the coming months. Clare admits things are tough on that front, but he does not consider that this will impact on achieving zero carbon targets.
“This agenda is almost a parallel universe,” he says. “I don’t think the government is going to pull back on its targets, so whatever the short term challenges we face, things are not going to be the same in the long term. Things are going to be fundamentally different in the future.
“We have substantial regulatory and volume targets to meet: we have a lot of competing challenges and initiatives, including the affordability challenge. The regulatory environment may need to become more fluid to enable us to meet the challenge; a lot of things have to fall into place.”
He continues: “The volume target is undoubtedly the biggest short term challenge. We will build what we can sell, and in this environment we will not build faster at the risk of destroying values.
“If we are facing two y ears of slowdown, and this leads to less spend on land, the effect of this will be seen over the next two to three years. If the trajectory of growth slows, supply will stagnate and the targets originally set (of 240,000 new homes a year by 2020) will be a real mountain to climb.”
But Clare is adamant about the need to persist with the zero carbon agenda. “There is no reason why the slowdown should prevent us from delivering on the environmental side, despite the level of investment needed to achieve this.”
This, however, depends on the government ensuring that the national timetable is not rendered obsolete by local authorities being permitted to introduce their own more stringent environmental standards on a whim, according to Clare. This is the prospect threatened by the private member’s bill currently passing through parliament, which would pave the way for a roll-out of the so-called “Merton rule.”
“We simply can’t have a plethora of different standards required to deliver,” he insists. “We need certainty of timescale to deliver in volume.
“Essentially, this whole agenda means we will be building very differently to the way we have been building in the last 50 years. That’s the big step change for us from where I’m sitting.”
“Barratt has always been known for being creative and innovative; for leading industry change. Now we’re going to be stretching this much further”.
Investment of energy: Barratt joins forces with E.ON
Barratt’s new partnership with leading power and gas supplier E.ON has seen the pair team up to look at ways of meeting the low carbon energy supply requirements, without which the zero carbon agenda will remain a pipedream.
E.ON launched a sustainable energy business last year, and the partnership will initially focus on ten sites comprising thousands of homes, with a view to exploring cost effective low carbon solutions including combined heat and power and microgeneration. Alongside the Hanham Hall carbon challenge scheme of 200 homes, sites will include the 90-unit former Osborne refrigeration factory scheme in Southampton and the St Andrew’s hospital site in east London, where 20% of the energy used will be renewable.
Mark Clare comments: “Energy companies have a lot of learning to do, and we are starting to see real activity now.
“Housebuilders and the energy industry are currently focused on different things. The energy industry is focused on how to deliver gigawatts of renewables, through supplies such as clean coal, carbon sequestration, nuclear energy and mainstream renewables. But it is currently not focused on local requirements for individual developments, because that’s now how it is structured.
“We have brought an energy company onto the UKGBC, because both sectors need to work together; we will need to see a lot more engagement between them to achieve these targets. And energy companies are waking up to the fact that this agenda offers them a lot of big business opportunities.
“If we are talking 200,000 zero carbon homes per annum, then that is around 1% of total supply, and in terms of new supply this represents a material chunk of business in its own right.”
Selling sustainability: bringing customers on board
Customers are an essential element of the equation for a plc making the switch to building zero carbon housing in just a few short years. Not least because - aside from selling homes in the first place, making them affordable, and making them attractive to mortgage lenders and in terms of resale values - achieving this target will demand significant behavioural changes from buyers.
“Bringing them on board will require a major education programme in which both government and developers will need to invest,” says Mark Clare.
“Understanding what our customers think is the big challenge. Until we get customers’ reactions and understand their experiences of living in zero carbon housing we will not be able to start building them in any volume.”
Barratt used its eco show village at Chorley as an opportunity to take feedback from customers: more than 1,000 filled out questionnaires on the scheme and its use of microrenewables. “A lot said the new technology was too noisy, or too obtrusive for example, and we got a lot of comments around price. People said they would be happy to contribute to the cost, but they generally wanted to see a payback over five to seven years. People would only be prepared on the basis of saving money.”
“The whole point is ‘does the improved energy efficiency make a new home more attractive?’ This is going to lead to a much bigger differentiation between new and secondhand homes than we have seen over the past ten years or more.”
Clare predicts that the customers who will buy into its zero carbon community at Hanham Hall will be buying in because of the “good life Factor.”
This will be a community in which people will be living a very different way. It will attract a different kind of buyer who will be after that kind of look and feel - as it will have greenhouses, allotments, an educational centre which will provide information on zero carbon living.”
He continues: “Government has a real role to play in this educational process, and it needs to go much deeper than a few ads on tv. More needs to be done to convince customers to make this shift in lifestyle.”
Mark Clare is chief executive officer of Barratt Developments.
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