AECB News : Regulation; Why we don’t want or need it, and should stop asking for it!

a soapbox

Tom Jarman argues that regulation can be undesirable and unnecessary.

In most industry events and workshops it is not long before talk turns to the ‘ask of government’, which in turn leads to a wish list of financial or regulatory assistance. And because this is an instinctive thing to do, it is hard to distinguish between what we genuinely need, and a replacement for something we can do ourselves already. This blog argues that regulation can be undesirable and unnecessary, and calls for regulation are too casually made. Ultimately, any sector needs to engage positively with Government. This blog argues for a much better filter before any ask, and that this self-discipline is much more likely to create a basis for positive engagement.

Introduction

What do we want? Regulation! When do we want it? When we’ve done all we possibly can as clients. OK, so it’s not the cry of revolution I remember from my student days, but it’s as heartfelt. I attended an event earlier this year where we split into tables to focus on some key questions. And inevitably the focus was on two in particular; what is our ask of Government, and what policies and regulation do we need. These weren’t the only questions but they dominated the discussion and left very little time to focus on what clients could do.

Client responsibility

…is my particular bugbear. Clients have a responsibility to understand what they are procuring, why, how it aligns in the long term, and identify and mitigate specification, delivery and outcome risks. The fact is that all of this can be done independent of regulation, and this highlights my main concern; regulation too often creates dependence and is used as barrier to change, innovation and client responsibility.

We need to be much more robust in ensuring that everything within our remit has been done before we start discussing our ask of government. This isn’t to say that regulation doesn’t have a role, but to acknowledge that it carries much more risk than is generally acknowledged, as I’ll explain.

Regulation as a baseline

Regulation can too easily become the baseline for what a client delivers. My area is newbuild and retrofit, and too often regulation is set as the standard to which we deliver, in particular Building Regulations. The tendency is to procure this at lowest cost which becomes the default specification. But it isn’t; it’s a measure of minimum compliance and is not the same as fulfilling your responsibility as a client. Where some might see compliance and value-engineering, I see a standard that keeps you out of jail delivered as cheaply as possible. It is used as the baseline for the business case; what do we have to do?, providing both a false starting point and a demand for a new guide to what we have to do.

Further implications follow from this distortion of the business case. Regulation carries critical mass so it becomes the most economic standard, and unless the business case process is subtle enough to recognise where regulation fails it becomes a process to reinforce business as usual. This is also a criticism of the business case process (and it’s obviously more robust cousin, the ‘hard-nosed’ business case), which tends to squeeze out innovation due to its inherent unknowns – but I would argue depending on regulation for your baseline and a business case process that ensures BAU go hand in hand in an organisation’s culture.

Dependence on regulation

Dependence on regulation is also based on assumptions about the quality and intent of regulation. The one most familiar to me, as you may have guessed, is Building Regs. This has areas of weakness that can cause serious issues with fabric damage and occupant health (and ironically more so if well built on site as I have previously argued). Whether you read Passive House Plus or the popular press, new homes have been associated with condensation, damp, mould, overheating and poor indoor air quality. We can deal with these now through upskilling, specification and tendering, site delivery – and being much more confident and robust about the sorts of organisations we want to partner with in the future. Regulation will not solve these issues for us.

And if you think regulation in and of itself raises standards, I give you the Code for Sustainable Homes Level 4. Up until 2014 this was the energy efficiency standard for all HCA co-funded projects. And what happened as soon as it was removed as a requirement? It was effectively abandoned by the client group that had used it en-masse. The regulatory requirement hadn’t underpinned the integration of a higher standard of energy efficiency into day-to-day practice. It didn’t develop a group of informed clients who could understand it in terms of value, or sought to use their collective power to ensure that it remained as a build standard.

Do we really want regulation to govern delivery?

And this is why I am very dubious about calls to mandate low energy buildings through regulation; I have stated before that we dodged a bullet when the 2016 Building Regs weren’t implemented. We need to recognise the extent to which low carbon buildings carry risk – I cannot stress this point enough – and the only way to identify and manage risk is to become informed clients. Again, regulation isn’t going to do this for us. It would be an enormous mistake to mandate low energy buildings while we still have a commissioning and client base that are either ill prepared, or unwilling to invest in preparing for, the consequences. Industry might say that it will respond to regulation, but this doesn’t change the fundamental risk factor – a large client base that lacks the technical expertise to identify and mitigate risk, seriously challenge viability arguments, and have an informed dialogue about cost uplift, mitigation and value. In 2015/16 social landlords commissioned nearly 32,000 homes, the best part of 20% of total newbuild, with just over 37% entering the private sale or shared ownership markets. I suspect the majority were built to Building Regulations at lowest cost, with little post-occupancy monitoring and evaluation. If the scale of this procurement, social value and simple self-interest in operational consequences haven’t been enough to drive better quality and practice, is regulation really the answer?

So to conclude…

As clients we need a laser-like focus on our responsibility so that any ask of Government meets a genuine need. It is too easy a default position to ask for regulation to replace the hard slog of cultural change and challenging business as usual, but to what extent have you questioned your processes, assumptions and current outcomes? Regulation does create a baseline and common rules of the game, but its limitations and risks need to be acknowledged.

We have to be realistic. Any Government is going to be immensely distracted by Brexit for the next decade. There is no way a habitual call for regulation or money is going to gain an audience, let alone influence or respect. We need to ensure that everything we can do as clients has been done. This needs to be the first question to focus on, not the tail end.

And a final thought. An organisational culture dependent on regulation creates a focus on cost over value, process over outcome. Are these really healthy, resilient organisations? Are they change ready, do they have a culture that seeks to understand and interpret the external environment? Are they going to have challenging conversations and attract people that will feed their renewal? It is time to take the regulatory drip out and inject some energy, innovation and very clear self-examination into our veins.

This blog was originally published in February 2017 at www.multicomfort.co.uk.

Tom Jarman, Director, Low Carbon Journey Ltd

Tom has been interested in sustainability since the first bottle banks were opened in his home town in the late 1970s. He has since worked in the private and public sector, managing teams and in project development and management. He now works in low carbon new build, deep retrofit, future energy systems and building information modelling.  

© 2017: Tom Jarman and the AECB (for Terms and Conditions click here)

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