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Government must embrace modern methods of construction or risk missing 300,000 homebuilding target

3 July 2019

The Housing, Communities and Local Government Committee has warned the Government that an over-reliance on traditional building methods will see the UK fall far short of its target to build 300,000 new homes a year by mid-2020s.

Government must unlock MMC potential

In a report published today, the Committee urges the Government to unlock the potential for modern methods of construction (MMC) to build homes quicker, more cheaply, while maintaining build quality. However, they will need to act quickly to increase capacity and improve investor confidence if it is to have a meaningful impact on UK housebuilding targets.

Modern methods of construction comprises a range of innovations including the use of new materials, digital working and precision manufacturing techniques in the house building process. MMC processes can be used alongside traditional building methods and allow for greater use of off-site construction.

At present, use of MMC in housebuilding is low and the Government will need to act quickly if it is to make an impact in meeting house building targets. Supply chain capacity will need to be increased, and greater focus placed on ensuring the workforce has the required skillset for developing technologies. The Government should work with Homes England and training centres, such as the Advanced Manufacturing Research Centre, to develop targeted programmes targeted for use in the manufacture of MMC homes.

Initial work to develop centres of excellence, bringing together businesses and academia to support innovation, is welcome but could be strengthened by coordinating with the Transforming Construction Programme and Construction Innovation Hub. These networks could form an ideal arena for testing and standardisation of MMC processes and components, as well as ensuring they comply with building regulations.

The Government will also need to improve data collection and sharing if it is to overcome reluctance to utilise MMC among lenders, insurers and home buyers. To gain the confidence of the industry as a whole, as well as consumers, they must establish a database of MMC homes to demonstrate the long-term value and durability of MMC. The Committee backs the creation of an “MMC Scheme”, setting out a single set of standards for warranty providers, to provide greater certainty.

Expansion of MMC faces many additional challenges including difficulties accessing land to build on, opaque and confusing building regulations and high upfront costs. The Government should investigate the specific impact of the current regulatory systems and access to funding on MMC, and consider options for measures designed to overcome existing barriers.

Chair's comments

Chair of the Housing, Communities and Local Government Committee, Clive Betts MP said:

“If the Government is to have any chance of meeting its target of 300,000 new homes a year it cannot simply rely on traditional methods of construction. They must make a serious effort to support the use of new and emerging technologies that have the potential to have a transformative impact on the speed, cost and quality of home building. This is not simply about shifting production away from the building site and into factories. It is about seizing opportunities that modern technologies allow, whether it be precision manufacturing, use of new materials or digital working.

“First and foremost they must create the conditions to improve investor and consumer confidence. Reluctance is understandable. The perception is that the building innovations of the sixties created homes that failed to survive half a century, while rows of Victorian terraces are still standing. Proving quality and longevity will be key. That is why we have called on the Government to collect and publish the data that prove new building methods work, and also show if they have failed.

“The Government will also need to support the industry to grow the capacity needed for MMC to play a greater role in national housebuilding. They will need to ensure that the right training schemes and apprenticeships are in place so that we have the skilled workforce that can utilise MMC techniques. They must also work with the industry to support the development of robust supply chains and support innovative businesses develop.

“The housing system is in urgent need of a major boost and if the Government is to have any chance of meeting its ambitious target it must grasp every opportunity new technologies allow. But they must act fast and act now.”

Main conclusions and recommendations

  • The Ministry should report annually the total amount allocated to MMC developments across all its different funding streams and implement a coordinated strategy across all relevant government departments to increase MMC homebuilding.

The Ministry should track how much of its total spending on housing goes towards MMC developments specifically. It should also implement a coordinated strategy with other government departments that oversee schemes such as construction skills provision and research and development (R&D), to increase MMC housing output. It should monitor how many homes are built using MMC annually, in order to evaluate the impact of this strategy.

  • Homebuilders should use more digital technology in their processes and not simply move construction off-site.

There is some disagreement about which methods should come under the banner of MMC but to take advantage of the predicted benefits, such as improved quality, homebuilders must use more digital technology.

Improving confidence in MMC

  • The lack of long-term data on the durability of MMC homes in the UK is a considerable barrier to industry actors engaging with MMC housing schemes.

Financial service providers, including insurers, mortgage lenders and valuers need to have certainty that MMC homes are safe and durable if they are to engage with them.

  • The Government should develop a digital database that records the design, processes and materials used in the construction of buildings.

Digital technology makes it possible to create a database that would store and track data about built environment. It should record the materials and processes used in the construction of homes. It could also track repairs and alterations in larger housing developments and make this information available to relevant stakeholders, including insurers and fire services.

  • We welcome the proposal for an "MMC Scheme" that will set out a single set of standards for warranty providers against which to make decisions.

Currently, warranty providers set their own standards against which to assess homes. The "MMC Scheme" which is being developed by the MCHLG Joint Industry Working Group will provide financial service providers with more certainty about the quality of MMC homes.

Supporting growth of MMC

  • The Government must ensure skills programmes, apprenticeship schemes and the new T Level give learners the skills they need for both traditional techniques and MMC and encourages more young people into the sector.

The shortage of workers with relevant skills is one of the main constraints to increasing homebuilding in the UK. It is vital the Government increases skills provision and turns homebuilding into an appealing career choice for young people.

  • There is a lack of robust supply chains for MMC homes.

Supply chains for MMC homes are underdeveloped in the UK. The Government should help to aggregate demand for MMC products to provide certainty and allow businesses in the supply chain to invest in factories to produce relevant components and machinery.

Building homes and accessing land

  • Local authorities need to start building homes in far greater numbers than they have done in recent years.

In the past, local authorities have been major homebuilders and have contributed significantly to the total number of homes delivered. If we are to get close to delivering 300,000 homes per year, local authorities must supply a significant proportion of them. Social housing is particularly well suited to MMC because it often includes large numbers of similar homes which reduces unit costs and provides certainty of demand to the supply chain.

  • Helping homebuilders to access land for development is key if we are to increase rates of homebuilding.

Homebuilders cite the lack of access to land as a constraint to increasing housing supply. It is even harder to access privately owned land for MMC developments than traditional developments. The Government should help MMC homebuilders to access land that it controls so they can increase their overall delivery of homes and shore-up demand for the supply chain.

Removing regulatory barriers

  • The Government should urgently set out a clear plan for the review of the building regulations, including the whole suite of Approved Documents, and consider how they relate to MMC buildings.

The current system of building regulations is confusing, and homebuilders told us it is difficult to apply the guidance to MMC buildings. We welcome the Government's review of Approved Documents in light of the Independent Review of Building Regulations and Fire Safety, led by Dame Judith Hackitt but the review should go further and consider specific guidance for homes manufactured off-site.

  • The building regulations should set more stringent energy performance targets for homes to take into account achievable levels of energy efficiency.

At present, many new homes do not achieve the high levels of energy efficiency possible with MMC. The Government has set a target to eradicate the UK's net contribution to climate change by 2050 and the built environment has a major role to play in achieving that target. The Government should strengthen energy performance targets to reflect this.

  • If current schemes are insufficient to provide the finance needed to increase MMC output, new schemes aimed at MMC developments should be considered.

MMC homebuilders require capital upfront to pay for factories and assembly lines. This presents the biggest barrier to SME homebuilders that do not have reserves to draw on to invest in MMC. Private investors are cautious about investing in innovative methods of construction, so the Government should ensure it is enabling homebuilders to access the finance they need for MMC.

Further information

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