Housing: Modern Methods of Construction

Motion to Take Note

Moved by

That this House takes note of the role of Modern Methods of Construction in the housing construction sector.

My Lords, it is a great pleasure to introduce this debate and to propose this Motion. As many noble Lords will be aware, my noble friend Lord Moylan won the ballot for this debate, but he has been appointed to the Opposition Front Bench and so is unable to stand where I am standing. Fear not: he is on the list of speakers so he will get his two minutes’ worth to say what really should be said by me standing where I am. He is chairman of the Built Environment Select Committee and chaired our inquiry into modern methods of construction. I had the pleasure of serving on the committee during that inquiry, which is one of the reasons he asked me to speak today.

This debate comes at a time when our country is in desperate need of more housing. The previous Government had a target of 300,000 homes per annum. As I understand it, the new Government have a target of 1.5 million homes over the term of the Parliament, which noble Lords with a ready reckoner will quickly work out is the equivalent of 300,000 per annum, possibly back-loaded. There is considerable doubt, given the demographics of our country, whether either figure—300,000 or 1.5 million—is enough. It is certainly the minimum we need, but even so it has not been achieved in recent years. We got over 200,000 recently, but it looks as though this year the figure will be nearer 150,000. There is a strong case that we need an increase of 400,000 homes a year.

The problems in achieving this target have bedevilled housing Ministers for generations: our planning system, skills shortages in the building trades, and sometimes violent local opposition to new housing. MMC, as I shall call modern methods of construction for speed, could have a role in solving at least some of those problems. With MMC homes can be built fast, or faster than using traditional methods on-site, and it would go a long way towards resolving the dire shortage of skilled construction workers, whether they are bricklayers, plumbers, electricians, roofers or carpenters.

Perhaps I ought to explain what MMC is. Those of us of a certain age will remember prefabs, which after the Second World War were used to urgently house people made homeless by the Blitz. They were factory-built homes that could be transported on the back of a lorry to parks and open spaces, where they were then connected to the services—drains, water, electricity and gas. I remember many of them in Chiswick, where I was brought up. They were much loved by the tenants who lived in them, possibly because they were placed on public open spaces and had small gardens.

MMC is a modern version of that idea. The homes, or the components that are assembled to make up a home, are factory-built and then transported to the building site, which is preprepared with services such as foundations, sewerage, water and electricity. There are seven categories of MMC, and in ascending order they require increasing amounts of assembly on-site. I propose to concentrate only on types 1 and 2. The first is when the unit or home is fully finished in the factory and needs only to be lowered on to the foundations at the site and connected to the services. Type 2 is best described as a flat-pack version of type 1—or an IKEA tribute act—where the components of the structure are stuck together on-site. The other five MMC types have some benefits but require much more work to assemble them.

My Lords, the housing sector is struggling. It is universally acknowledged that the country does not have enough affordable homes. This Government have committed to solve the housing crisis for good, but how best to do that where previous Governments have failed? The shortage of labour supply means that traditional building methods cannot deliver housing targets, and traditional private builders have shown that they cannot meet the need.

There is a consensus that MMC must be a major part of the solution, but delivering MMC has been challenging. Some companies have gone bust. Against a backdrop of insolvencies across the construction sector, the perception of MMC has suffered disproportionately. There has been a lack of clear strategy surrounding MMC. A long-term housing plan could provide the certainty to invest in MMC and deliver the Government’s ambitious housing targets.

Social housing must clearly play a central role. Housing associations are planning to build, via MMC, about 10% of the new build currently forecast by the regulator. With the right mix of low-cost incentives and support, that proportion could double.

The recent National Housing Federation survey found supplier insolvency to be the biggest risk to uptake. The Government underwriting risk contracts would have an immediate effect on MMC delivery.

The House of Lords Built Environment Committee’s inquiry into MMC urged the Government to step back and set achievable goals and develop a coherent strategy. The noble Lord, Lord Carrington, gave a thorough and fair picture of what we found. The previous Government committed to a £10 million-backed MMC task force, but it never met. Will the Minister commit the new Government to a central body dedicated to research, training and promotion that will allow MMC to flourish. Will the newly established New Towns Taskforce embed MMC in its delivery plans? At the next spending review, will my noble friend press for a long-term plan for new and existing social homes, including specific policy steps to increase the use of MMC in the social housing sector?

My Lords, I declare my interests as a vice-president of the LGA and vice-chair of the All-Party Group on Fire Safety and Rescue. I congratulate the noble Lord, Lord Carrington, via the noble Lord, Lord Moylan, on securing this important debate and on his excellent speech. I note that MMC are already used successfully in student and hotel accommodation in this country.

I shall focus on two things, the first of which is fire safety. Yesterday, the Grenfell inquiry final report was published. From these Benches, our hearts go out to those who lost family members and friends and, of course, their homes and everything in them. Fire safety standards must be at the heart of modern building methods. As importantly, the recommendations of both the Grenfell inquiry and the Hackitt report should be implemented, so that maintaining and adapting all buildings is always done in the context of fire safety.

Secondly, all new homes from now on should be built to M4(2), or lifetime, standards. This is not just about disabled people, although we certainly need to be able to live in and visit homes, whether owned or rented, that meet our needs. Shockingly, well over 90% of homes do not. I am talking about the homes we need to have as we get older. Habinteg Housing Association’s research shows that M4(2) significantly reduces the cost of care assistance, because people can manage for much longer in their own homes with level access, grab rails, wet rooms et cetera. But there is a further benefit too: staying in your own home, which is what people really want to do, delays the need for expensive residential care. There are typical savings of over £20,000 for basic home care services in unadapted homes, and considerably more in residential care. Lifetime standards would save substantial public money in the NHS, and in welfare too. The extra cost for building is well under 10% yet the quality of life and lifetime savings to individuals and the state make it an obvious thing to do.

My Lords, I declare my interests as a civil engineer, both in practice and as an academic, at Cambridge University, and as a consultant to Laing O’Rourke, the company that pioneered MMC in the construction industry. I am currently a member of the House’s Select Committee on the Built Environment; I was not a member when that committee, chaired by the noble Lord, Lord Moylan, undertook its short inquiry on MMC for housing, culminating in its excellent letter to the Government.

However, I was a member of the Select Committee on Science and Technology, which in 2018 undertook an inquiry highly relevant to today’s debate, its report being entitled Off-Site Manufacture for Construction: Building for Change. That report concluded that off-site manufacture, synonymous with MMC,

“provides clear and tangible benefits which make a compelling case for its widespread use”.

Recognising these benefits, in the Autumn Budget of 2017 the Government announced a “presumption in favour” of off-site manufacture for five specific government departments: transport, health and social care, education, the MoJ and the MoD. Significantly, that presumption in favour was not stated as applying to MHCLG. For infrastructure generally, there have been many success stories: high-rise buildings, hospitals and schools are increasingly being built with MMC, demonstrating excellent design, significantly faster and higher-quality construction, and less waste.

The Science and Technology Committee heard that a significant barrier to MMC for house construction at scale was the need for longer lead times: the housebuilder has to commit to a production schedule well in advance of actual unit sales, risking that market conditions might deteriorate. This and other barriers could be overcome if there were a substantial guaranteed pipeline of MMC housing across the country—the point made by the noble Lord, Lord Carrington of Fulham. My question for the Minister is therefore this: should not MHCLG—and Homes England—confirm its wholehearted support and announce forthwith a presumption in favour of MMC, as five other government departments have done?

My Lords, I support modern construction methods. In February 2003, Lord Prescott published a seminal document, Sustainable Communities: Building for the Future. Ministers would be well advised to look at this, rather than trying to reinvent the wheel. We then in ODPM promoted off-site construction and committed to encouraging the private sector to invest in factories and new techniques.

In an Oral Question I asked on 8 June 2023, I made the point that you cannot switch factories on and off, and a stable demand is a prerequisite. What stops a big uplift? Both off-site and onsite require new skills and techniques; they are not separate.

I once visited a factory in Birmingham and three weeks later visited a site in Stratford-upon-Avon to see the construction of what I had seen in a factory. It was made clear to me that techniques on both the site and the factory are linked. The Government need to ensure that the new skills are developed, and they need to create demand. Perhaps a density directive, which Lord Prescott used, to stop wasting land could help.

My final point concerns the Building Research Establishment. Lord Prescott and I visited it in its early years of being a Tory privatised body to see examples of modern methods. I had visited one in opposition, when it was government-owned. Given the Grenfell report, the BRE should no be longer be involved in certifying modern methods of off-site construction techniques or products. Such work should be seen to be fully independent and professional.

My Lords, I declare my interest as a King’s Counsel practising in planning law. I have many clients in the housebuilding and construction sector. I am also chair of the advisory group at the property developer SAV.

There is widespread recognition that MMC have a range of important benefits, including, in particular, faster and greener construction of the new homes this country desperately needs. It is therefore both curious and regrettable that this widespread recognition has not yet translated into widespread uptake. I draw attention to the role that the planning system could play in stimulating the critical mass of pipeline and demand necessary for the MMC market to flourish.

By that I do not mean greater planning regulation; there is arguably enough of that already. Instead, I encourage the Government to look to how the planning regime has encouraged greater uptake of custom and self-build housing in recent years, through a combination of legislative targets for local authorities to deliver specific levels of custom and self-build housing; a favourable planning policy climate for that kind of housing; and relief from the community infrastructure levy and VAT for those who develop them. Those measures are generally judged to have been successful in stimulating greater uptake of custom and self-build housing over the past decade. A similar package could help do the same for MMC.

There are also good reasons for inferring that variations between local authority development plans in relation to the standards required of new housing development are having a repressive effect on MMC, the business model of which requires greater consistency. National standards, for example, through national development management policies, may be a solution to this. Such ideas would need to be worked and consulted on thoroughly. The committee’s letter has flagged that there are significant gaps in the understanding of the MMC market, meaning that rushed solutions risk unintended consequences. But there is, in my view, undoubtedly a case to answer for the planning system playing a role, and I encourage the Government to consider it.

My Lords, I have personal experience of building and owning two houses of non-traditional construction. One was built in 2006 of larch, pine and oak with a green roof, solar panels, hemp insulation of the external walls and an internal wall forming a heat sink built of granite recovered from the burnt-out cottage it replaced. Large south-facing windows maximise solar gain and ground-source heating is carried under the floor.

Labour costs were saved by assembling large sections, built to size by expert workmen in comfortable factory conditions. Although the noble Lord, Lord Carrington, referred to the difficulty in obtaining a warranty and insurance as a barrier to the uptake of MMC, I had no problem in that regard. As Peers for the Planet pointed out in its briefing for this debate, a fireproofed wood construction brings a 25% reduction in embodied carbon emissions.

The other house, built in 2016, is a Passivhaus—the gold standard of energy-efficient construction—and there were no difficulties with a warranty or insurance. The block-built walls have an external thick layer of high-density expanded polystyrene coated with render. It looks like a traditional house, and blended without objection into a highly prized conservation area. The insulation is under the floor as well as in the walls and roof. The windows and doors are triple-glazed and there is active filtered ventilation. South-facing large windows and smaller windows facing north result in a warm house with no need for heating of any sort for eight months of the year. The solar panels take care of the hot water. The lesson, as the noble Lord, Lord Carrington, pointed out, is that modern design and innovation is everything, and the sooner the planners and builders get the message, the better.

My Lords, the speaking time in this debate is two minutes. I apologise for being hard on this, but it is important that we allow everybody the opportunity to speak without cutting short the Minister’s response.