CA-2024-001754 - [2025] EWCA Civ 990

The starting point is s.43 of the Deregulation Act 2015. If this is brought into force, it would insert subsection (1A) into s.1 of the PEA 2008 so as to disapply, in relation to the provision of new dwellings in England, s.1(1)(c) (which allows policies in a DPD to specify development energy efficiency standards for new development greater than the energy requirements of building regulations). In 2015 the Government intended to bring s.43 into operation in 2016. That sets the scene for the relevant part of the WMS made by the Secretary of State on 25 March 2015 (the “2015 WMS”), the day before the Deregulation Act 2015 received Royal Assent.

At that stage the relevant energy requirements for the purposes of s.1(1)(c) of the PEA 2008 were contained in Part L of the Building Regulations 2010, as amended in 2013 (“the 2013 standards”). In addition, the Code for Sustainable Homes had been introduced by the Department as a voluntary national code for achieving better levels of performance than the 2013 standards. But by 2015 the Government had decided that the Code should be withdrawn. It was in this context that the 2015 WMS stated:

“For the specific issue of energy performance, local planning authorities will continue to be able to set and apply policies in their Local Plans which require compliance with energy performance standards that exceed the energy requirements of Building Regulations until commencement of amendments to the Planning and Energy Act 2008 in the Deregulation Bill. This is expected to happen alongside the introduction of zero carbon homes policy in late 2016. The Government has stated that, from then, the energy performance requirements in Building Regulations will be set at a level equivalent to the (outgoing) Code for Sustainable Homes Level 4. Until the amendment is commenced, we would expect local planning authorities to take this statement of the Government’s intention into account in applying existing policies and not set conditions with requirements above a Code level 4 equivalent. This statement does not modify the National Planning Policy Framework policy allowing the connection of new housing development to low carbon infrastructure such as district heating networks.”

Level 4 of the Code for Sustainable Houses was set so that carbon emissions would be 19% lower than under the 2013 standards.

In summary, the Government intended that upon the commencement of s.43 of the 2015 Act in 2016:

Following a change of administration in May 2015 it was decided not to introduce the Zero Carbon Homes policy and s.43 of the 2015 Act was not brought into force.

In March 2019 the Government announced that it intended to implement the Future Homes Standards (“FHS”) from 2025. Homes built to the FHS would be compatible with the UK’s 2050 Net Zero Target for carbon emissions in the Climate Change Act 2008. The FHS would amend the Building Regulations 2010 so that new homes would produce CO₂ emissions at least 75% lower than those formerly permitted by the 2013 standards and avoid the need for any retrofitting in the future to achieve compatibility with net zero.

In October 2019 the Ministry consulted on two options for uplifting the energy efficiency standards in Part L of the Building Regulations as an interim measure from 2020 on the way to the introduction of the FHS in 2025. The first option was for a 20% reduction in carbon emissions compared to 2013 standards. The second option was for a 31% reduction in carbon emissions. The consultation also described the FHS and a timeline for achieving it.

The Government’s response to that consultation exercise was issued in January 2021. It chose the second option so that an interim uplift would be made to Part L of the Building Regulations, requiring new homes to produce 31% less CO₂ emissions compared to the 2013 standards.

The response also noted that:

However, medium-sized and large developers made the following points in response to the 2019 consultation:

The upshot was that the Government decided not to bring s.43 of the 2015 Act into force “in the immediate term”.

The Building Regulations were amended in 2021 so that the improvement in standards proposed for Part L came into effect in June 2022. In a submission to the Secretary of State dated 26 April 2023 officials advised that the new Part L level was better than the level 4 Code standard, so that the extract from the 2015 WMS (see [34] above) had become redundant. Moreover, Inspectors examining different DPDs had taken opposing views on whether the 2015 WMS should be treated as extant policy or out of date. One option suggested by officials was that a new WMS be issued clarifying how LPAs could use the power in s.1 of the PEA 2008. Officials advised that to take no action would perpetuate delays in the examination and adoption of DPDs and adversely affect housing supply. The Minister accepted that in principle a new WMS should be issued encouraging LPAs to adopt policies keeping as close as possible to national standards.

On 14 April 2023 the appellant brought a claim for judicial review of a report by examining Inspectors which concluded that a DPD was unsound because a policy which set energy performance standards higher than Code level 4 was in breach of the 2015 WMS. On 20 February 2024 Lieven J allowed that claim ([2024] EWHC 359 (Admin); [2024] PTSR 817).

In the meantime, on 17 July 2023 officials made a further submission to Ministers. They set out two policy options for consideration:

On 12 September 2023 officials made a submission to the Secretary of State on reviewing the work carried out to prepare the FHS for consultation and the ministerial decisions which had been taken. The briefing explained that “when developing this policy proposal, environmental considerations were taken into account in line with the [EPPS]”. A “full Environmental Principles Assessment” was included as an annex. The assessment had found that the policy proposal would have a positive permanent effect upon the environment. The briefing also referred to the intention to publish a new WMS. Mr. Palmer explains in his witness statement (paras.26-31) that the 2023 WMS was developed in tandem with consultation proposals for the FHS.

On 5 October 2023 the Minister, Mr. Rowley, was sent the draft text of the 2023 WMS. He had previously been sent the EPPS assessment for the FHS on 12 September 2023. He was now also sent the EPPS assessment for the draft 2023 WMS.

The relevant part of the October 2023 draft of the 2023 WMS reads as follows:

“In 2015, in reference to an uncommenced provision in the Deregulation Act 2015 which amended the Planning and Energy Act 2008, a written ministerial statement (WMS) stated that until that amendment was commenced, local plan policies exceeding minimum energy efficiency standards should not go beyond level 4 of the Code for Sustainable Homes. Since then, the introduction of the 2021 Part L uplift to the Building Regulations set national minimum energy efficiency standards that are higher than those referenced in the 2015 WMS rendering it effectively moot. A further change to energy efficiency building regulations is planned for 2025 meaning that homes built to that standard will be net zero ready and should need no significant work to ensure that they have zero carbon emissions as the grid continue to decarbonise. Compared to varied local standards, these nationally applied standards provide much-needed clarity and consistency for businesses, large and small, to invest and prepare to build net-zero ready homes.

The improvement in standards already in force, alongside the ones which are due in 2025, demonstrates the Government’s commitment to ensuring new properties have a much lower impact on the environment in the future. In this context, the Government does not expect plan-makers to set local energy efficiency standards for buildings that go beyond current or planned buildings regulations. Any planning policies that propose local energy efficiency standards for buildings that go beyond current or planned buildings regulation should be rejected at examination if they do not have a well-reasoned and robustly costed rationale that ensures:

 That development remains viable, and the impact on housing supply and affordability is considered in accordance with the National Planning Policy Framework.

 The additional requirement is expressed as a percentage uplift of a dwelling’s Target Emissions Rate (TER) calculated using a specified version of the Standard Assessment Procedure (SAP).

To be sound, local plan policies should make it clear that the local energy efficiency standard need not be met where applicants can evidence that it is not technically feasible to do so, including in relation to the availability of appropriate local energy infrastructure (for example adequate existing and planned grid connections), and access to adequate supply chains and skills.

This WMS supersedes the ‘Housing standards: streamlining the system (plan-making)’ parts of the 25 March 2015 WMS. Planning Practice Guidance will also be updated to reflect this statement.”

The EPPS assessment dated 5 October 2023 for that draft of the WMS was in the following terms:

“Under section 19 of the Environment Act 2021 which comes into force on 1 November, when making policy Ministers must have due regard to the Government’s environmental principles policy statement. This includes the principle that policy should seek not only to prevent and mitigate environmental harm, but also to embed opportunities to improve and promote environmental protection and enhancement (the integration principle).

We have identified the following environmental impacts of the policy: Plan-makers have the power to set energy efficiency standards for housing which are greater than existing national regulatory standards, with the potential to further reduce carbon emissions from homes. The policy contained in the Written Ministerial Statement (WMS) aims to improve the consistency of application of any such locally mandated energy efficiency standards in new homes. The forthcoming Future Homes Standard (FHS) will set national standards in line with the objectives and provisions of the Climate Change Act 2008. Our assessment is that any energy efficiency improvements above the FHS would return marginal carbon saving benefits compared to the cost uplift of doing so. The policy contained in the WMS which sets out the requirements that plan-makers must meet in setting higher standards, may limit wider counterfactual environmental improvements from e.g., reducing energy consumption through the setting of better local fabric, compared to the FHS, however these again have diminishing returns.

Any environmental impacts of the policy need to be balanced against the potential positive impacts on housing affordability and availability. The policy in the WMS could also support a smoother and more cost-effective transition for the construction industry to higher standards. Furthermore, the counterfactual of varying standards across local plans could have viability impacts that reduce or delay the supply of newer, more energy efficient and lower emission homes. Thus prolonging the use of less energy efficient older stock.

On balance, we consider the policy in the WMS to not have the potential for significant negative environmental impact. Once the FHS in force, the environmental benefits of going beyond the standards set by the FHS are at best marginal and unlikely to be cost-effective.”

Mr. Rowley approved the draft WMS for publication.

On 9 October 2023 there was agreement across Government that the WMS be published at the same time as the consultation document on the FHS. That consultation referred back to the principles which had been described in 2021 for the FHS and set out more detailed proposals, including technical specifications and metrics, which the Department had subsequently worked up.

The relevant part of the version of the WMS published on 13 December 2023 reads as follows:

“In 2015, in reference to an uncommenced provision in the Deregulation Act 2015 which amended the Planning and Energy Act 2008, a written ministerial statement (WMS) (HC Deb, 25 March 2015, vol 584, cols 131-138WS) stated that until that amendment was commenced, local plan policies exceeding minimum energy efficiency standards should not go beyond level 4 of the Code for Sustainable Homes. Since then, the introduction of the 2021 Part L uplift to the Building Regulations set national minimum energy efficiency standards that are higher than those referenced in the 2015 WMS rendering it effectively moot. A further change to energy efficiency building regulations is planned for 2025 meaning that homes built to that standard will be net zero ready and should need no significant work to ensure that they have zero carbon emissions as the grid continue to decarbonise. Compared to varied local standards, these nationally applied standards provide much-needed clarity and consistency for businesses, large and small, to invest and prepare to build net-zero ready homes.

The improvement in standards already in force, alongside the ones which are due in 2025, demonstrates the Government's commitment to ensuring new properties have a much lower impact on the environment in the future. In this context, the Government does not expect plan-makers to set local energy efficiency standards for buildings that go beyond current or planned buildings regulations. The proliferation of multiple, local standards by local authority area can add further costs to building new homes by adding complexity and undermining economies of scale. Any planning policies that propose local energy efficiency standards for buildings that go beyond current or planned buildings regulation should be rejected at examination if they do not have a well-reasoned and robustly costed rationale that ensures:

•

That development remains viable, and the impact on housing supply and affordability is considered in accordance with the National Planning Policy Framework.

•

The additional requirement is expressed as a percentage uplift of a dwelling's Target Emissions Rate (TER) calculated using a specified version of the Standard Assessment Procedure (SAP).

Where plan policies go beyond current or planned building regulations, those polices should be applied flexibly to decisions on planning applications and appeals where the applicant can demonstrate that meeting the higher standards is not technically feasible, in relation to the availability of appropriate local energy infrastructure (for example adequate existing and planned grid connections) and access to adequate supply chains.

To be sound, local plans must be consistent with national policy enabling the delivery of sustainable development in accordance with the policies in the National Planning Policy Framework and other statements of national planning policy, including this one.

The Secretary of State will closely monitor the implementation of the policy set out in this WMS and has intervention powers provided by Parliament that may be used in respect to policies in plans or development management decisions, in line with the relevant criteria for such intervention powers.

The above supersedes the section of the 25 March 2015 WMS entitled 'Housing standards: streamlining the system', sub-paragraph 'Plan making' in respect of energy efficiency requirements and standards only. Planning Practice Guidance will also be updated to reflect this statement.”

I have italicised the text which was added to the version of the 2023 WMS approved in October 2023.

There is no dispute that the 2023 WMS is to be read as accepting that LPAs may set energy performance standards which exceed current building regulations up to the level of the draft FHS before the FHS is finalised (see the reference in the WMS to “planned building regulations”).

The remainder of the chronology leading up to the Minister’s decision on 19 March 2024 has been set out in [6] above.