Examination of witnesses
Rosie Toogood, Jamie Ratcliff and Tim Carey.
Q9 The Chairman: Thank you very much, lady and gentlemen, for coming and helping us with this inquiry. Before we start, please introduce yourselves from my left so that we get you on the record. If you have anything brief to say to start with about yourself, please do so.
Tim Carey: I am national product director for Willmott Dixon. We are a privately owned main contractor with a turnover of about £1.5 billion a year. I chair our national team looking at innovation off-site. I am also a member of Buildoffsite.
Rosie Toogood: I am chief executive officer of Legal & General Modular Homes. I joined the business about 10 months ago, having spent a 25-year career in Rolls-Royce aerospace, leading engine development programmes, supply chain management and manufacturing businesses. At Legal & General Modular Homes, we have invested over £50 million in designing, manufacturing and assembling modular homes. We are just at the point of going through the final stages of pre-production and about to go into production. We aim to address the social and affordable housing market initially and the later living products following that.
Jamie Ratcliff: I am assistant director of housing for the Greater London Authority. I am responsible for a budget of about £5 billion, mainly to invest into affordable housing. I am a passionate advocate of innovation in the construction industry. I was on the advisory panel for the Farmer review of the UK construction labour model, and in a personal capacity also wrote a piece for Policy Exchange called “Mass-delivery of Manufactured Homes for Rent”.
The Chairman: Thank you. In exploring the advantages and disadvantages of off-site manufacturing, what is it that makes people go for off-site construction? What are the key advantages they see? On the other side of the coin, what is it that puts them off? What are the disadvantages?
Rosie Toogood: Speed is a clear advantage in terms of ability to deliver in shorter timescales. The quality of the products that are delivered is a really important advantage, as well as certainty and more predictability of cost. In terms of disadvantages—and I have heard some of the previous panel discussion—it is not easy. There is no silver bullet and it takes a lot of diligence and dedication to get a model that works.
Tim Carey: I agree with the advantages. The biggest advantage is the fact there is not enough capacity out there any more to deliver projects, especially housing, using traditional methods of construction. We are almost past the point of no return. We have seen off-site manufacturing go in cycles and it has always reverted back every time we have gone through an economic down cycle. The circumstances are such that we now need to be there for good.
One disadvantage is capacity. Sometimes the market perception of off-site is something which it is not, so while there are a number of larger suppliers and manufacturers, such as Rosie’s company, the majority of off-site manufacturing is still very much a cottage industry. It is still very much men and women in sheds building stuff traditionally, just not at the coalface. A lot of the off-site manufacturers want to scale up and want to invest but they need certainty. We can discuss that later.
Jamie Ratcliff: I agree with Tim’s point that there is not an option from a housing point of view. If we are serious about building the homes this country needs, we are not going to do it through traditional construction. There is still going to be lots of traditional construction, but we need to add to it in new ways of precision manufacturing many more homes in factories. I stress the point about speed being a benefit. That particularly appeals to build-to-rent providers. Everyone in London who is delivering build-to-rent—professional, large-scale rented homes—is looking at ways they can speed up construction through precision manufacturing of homes. To them every extra week they can shave off the construction timeline is an extra week in rent. That driver is not necessarily there for for-sale developers but it absolutely is for build to rent. That is working well.
Picking up on Rosie’s point around costs, that is going to be particularly relevant in relation to small sites. In London, through the London Plan, we are aiming to see a significantly higher proportion of homes delivered on small sites, which can be very expensive to deliver through traditional construction; you have the same overheads on those sites, whereas if you can have a repeatedable design that you can drag and drop to lots of locations, you can deliver it much more cost effectively. There is also a macro-benefit in terms of economic policy. London is where most housing growth is needed, but it is also under a lot of economic pressure. Wages are expensive here; you can build homes in places where there are fewer jobs and deliver an economic benefit to those places while delivering homes where they are needed most. At a countrywide level that is really important.
There are two challenges, one of which is fundamental to the way the construction industry works—it is really bad at partnerships and collaboration. People do not trust each other and to make this work you need that trust relationship and to work together at an early stage. You need to commit to it and depend on your partners and work through the problems. For whatever reason, culturally, lots of people in construction find that very difficult.
You will also hear a lot of discussion around innovative technologies not being tried and tested and there being problems with them, I just do not buy that. Mostly we are not talking about fantastical things such as aerogel. It is tried and tested ways of building homes broadly three different ways: timber frame, which has been around for thousands of years; steel-framed buildings, which have been around for 150 years; and concrete-framed buildings, which have been around for 125 years. They are not massively innovative things, but we need to be doing much more of them.
Lord Fox: We heard from the previous evidence that somehow the development side and the business side may be what have held back the rapid adoption of this technology. In the L&G decision to gain control of the means of production, if you like, I can understand wanting to invest in houses as being a revenue stream that sits in parallel with its business, but what was the decision-making process that went on when you were sat round the table saying, “We are not just going to build houses; we are going to build a factory that builds houses”? How did you come by that decision?
Rosie Toogood: There were two main driving factors. Legal & General is passionate about investing in schemes which deliver socially and economically beneficial outcomes.
Lord Fox: You could have done that through traditional manufacturing.
Rosie Toogood: Correct, and we are doing so. We have a number of traditional housebuilders within the Legal & General capital portfolio, but we saw a growing gap in capacity availability in the industry and a growing gap in terms of the skills and competencies required to do it. The concept that we are developing at the factory is all about manufacturing homes: not building in a shed, as Tim said, but truly getting to the point where we are designing, manufacturing and assembling homes, creating new skills and new capacity for the industry.
Lord Fox: You are doing real vertical integration.
Rosie Toogood: That is right.
Q10 Lord Hunt of Chesterton: I was very interested in what you said. A few months ago in this Committee we had people talking to us about fusion and fission. Legal & General, for example, is investing in one of the most advanced areas of modular fusion energy, and so on. It seems of a piece that you are very advanced. My question is about going from that to awfulness. Last week in the Times there was a report of visiting a building site. I will not name the name but you can read last week’s Times. Houses were being completed with just plasterboard and people’s feet, not surprisingly, went through. Is mass production or modular production going to avoid the kinds of errors or problems that you have with ad hoc methods—as it were traditional methods? Presumably, that is one of the reasons for using more advanced techniques. You have a situation such as was reported last week of a very major company putting up buildings, which people have put all their savings in, and it failed. Many of them fail. Will the use of off-site manufacture help avoid that kind of terrible situation?
Tim Carey: Absolutely, it should do. Any other industry would not choose to construct something in the way that we do in construction. We would not build an aeroplane on the runway, would we? Undertaking the research and development to design the product in the right way to make it suitable for design, manufacture and assembly creates fewer interfaces than there would be traditionally. In effect, we should be able to produce the same product and deskill the circumstances to deliver that product as well. There is also much greater control in a factory environment than there would be necessarily out on the site.
Lord Fox: Did it take a relatively new entrant in the development market to introduce this rapidly? We have two examples of a long-standing developer and a relatively new developer. Is the advantage of being a new developer that you can bring new techniques in and it is harder for an established developer, or is that a spurious argument?
Rosie Toogood: I cannot speak for Tim, and he can follow me, but Legal & General has a very positive, disruptive mind-set and a very determined goal here. That has allowed me the freedom to assemble a great team in Sherburn-in-Elmet from a number of different industries. We have people from the automotive industry, aerospace, electronics, construction and design consultancy. We are melding those skills together and bringing the best of the best of the best from those industries to bring new thinking and new ways of doing things. We want to truly understand the customer requirements and take them into the design. It is about really and truly getting underneath the design and designing to a level of detail that is not commonly seen in construction. We want to expand that into a bill of materials and bill of process, as the automakers and aerospace makers and other standardised industries would, and drive the level of process standardisation, consistency and repeatability that has been proven over a number of years to drive up quality. That is the journey that we are on. We have invested heavily to do so. It is not an easy journey, but we are a long way down the track and right at the cusp of getting into production and starting to serve in volume the UK market.
Lord Vallance of Tummel: Two of you mentioned in particular affordable housing, which is quite intriguing, because one can argue that there is no affordable housing market at the moment. Housing has become less and less affordable as time has gone on. You mentioned in passing the word “disruptive”. Are we on the edge of a disruptive technology for the building industry for houses? Is this a step change where you could enter it in a very different way, ignoring much of what is going on in the traditional market and change the whole thing?
Rosie Toogood: That is certainly what we are about. I used the word disruptive deliberately. We believe we are tackling the market in a very different way and tackling designing and manufacturing in a very different way. That would allow us to scale up the factory rapidly and build in volume.
Lord Vallance of Tummel: Is there anything in public policy terms which is holding back that disruptive edge?
Jamie Ratcliff: First, the affordable housing situation is not quite as negative as you paint it there. We are starting to see things change. In the last financial year we started the highest number of affordable housing starts in London since devolution of affordable housing funding to the Mayor.
Lord Vallance of Tummel: This is of interest to the Committee. Could you define the price of an affordable house with a couple of bedrooms?
Jamie Ratcliff: The affordable housing that we are funding is one of three types. A low-rent product, which is based on council rents, is about £150 a week for a two-bedroomed home. Secondly, a London living rent product, which is based on a third of local incomes, on a London-wide average—it varies from place to place—is about £1,000 a month for a two-bedroomed property.
Lord Vallance of Tummel: You are talking about the rental market. What about the price to buy?
Jamie Ratcliff: The third one is affordable home ownership, which is primarily part buy/part low-rent shared ownership. The price of that varies from place to place and you buy a share in it and pay a low rent. The average household income of people buying those is about £40,000, which is pretty much the same as the average household income across London as a whole, so ordinary Londoners are buying those homes.
Coming back to your point on public policy, it is quite significant in terms of the way that housing associations, and perhaps, to an extent, local authorities react to off-site precision manufacturing—they had the experience of being told to do it before. In the 1960s, under the subsidy regime, councils were highly incentivised to build homes in precast concrete panels. In the past, the Housing Corporation made housing associations use modern methods of construction, and English Partnerships, through procuring partners on land, made people use certain techniques. That meant they were doing it for compliance reasons rather than being bought into it, and some of the problems that some of them experienced make them negatively disposed to doing this. It only works when we see organisations fully buy into it and see the benefits. The benefits are around quality and speed. The arguments of speed that apply to build-to-rent should apply equally to affordable housing, where you will get more income in at an earlier stage, and some of our partners are definitely seeing that.
Swan Housing Association has set up its own factory in Basildon using cross-laminated timber and a number of our other large partners are committing significant parts of their pipeline to precision manufacturing homes. They are doing it because they see the business drivers for themselves and not because they are being told to.
Lord Vallance of Tummel: Is off-site manufacturing more helpful for high-rise buildings than others? Presumably, the answer is yes because the price of land is more than the price of the building itself. Looking at the affordable sector, is there some link between the size of the building you want to build and the use of the technology?
Rosie Toogood: I would argue that, with good design, modular housing can address all markets and all tenures.
Lord Vallance of Tummel: I can see that, but from a London point of view, where land comes at a great premium and the value of the land is much higher than the value of the buildings, are you looking to having affordable housing in high rise, or a mixture, or what?
Jamie Ratcliff: We have taken off the brakes on density in terms of the London Plan and we are trying to optimise the density in every location, whether that is on very small sites, very large sites, mid-rise like mansion blocks or tall buildings in appropriate locations. There is a mix of everything. Most of these technologies top out at perhaps 20 or 25 storeys, although there are a couple of 30-storey plus steel-framed buildings in Croydon. One is student accommodation and one is for Pocket homes, which delivers an innovative affordable home ownership product. They can get quite tall. It could work very well on small sites where you could have something that is very replicable and could be delivered at very low cost. We have been talking to a couple of manufacturers which can deliver homes at what look like fantastically low costs—three or four-storey townhouses or small blocks of flats for infill sites around London.
Tim Carey: It is about scale of opportunity as much as scale of building. Most of the technologies can go up to the relevant heights, as my colleagues have said. One of the barriers at the moment is that there are too many design standards. I know it is often preached, but there is a lack of harmonisation of design standards, particularly in the affordable sector. Like anything with manufacturing, the more you can make of the one thing the better.
Lord Fox: Whose standards are these?
Tim Carey: Registered providers, London standards. There is a whole spectrum of spatial standards, and that puts lots of different flavours on what an internal layout should look like. To achieve scale and efficiency, it makes it more difficult than it would otherwise be. If we could solve that problem, we could really get volume.
Q11 Lord Hunt of Chesterton: What changes could be made to the public procurement processes, in particular for public sector housing, so we can have more sustainable and economic housing? To add to that, a point which we discussed with the previous panel is whether we can have highly intelligent customers who will help us to improve the procurement process. There needs to be more training if all these different organisations are buying housing. You have a specialist branch in the GLA, but all sorts of people are involved in making these decisions about housing and sometimes they are rather amateurish.
Rosie Toogood: In any major change you always have the early adopters who are the enlightened advocates of that change, who will move first and prove out the concept. We are working with a number of councils, local enterprise partnerships and housing associations which fit in that mould. I know Jamie, through his work in the GLA, is also encouraging that. I think we will start to see groups of councils and local enterprise partnerships coming together.
One thing that would really help is a long-term pipeline of demand. We touched on the fact earlier that keeping the flow in a factory is really important in terms of driving efficiency, quality and improvement. It is really important to have long-term aggregated demand pipelines in the industry. Collaboration and changing the way in which contracts are let fits with a long-term aggregation of demand so that you are not contracting scheme by scheme; you are working in long-term partnerships with some of the major housing providers. Those sorts of things would really help modular to take off. Promoting innovation and skills through technology centres, much like the Manufacturing Technology Centre in Coventry and the Advanced Manufacturing Research Centre in Sheffield, can provide a real benefit to the industry.
Lord Hunt of Chesterton: In Germany, I believe many insurance companies are quite involved in investment. Is what you are doing with Legal & General similar to what is being done in other countries in Europe or is it very new?
Rosie Toogood: I cannot comment directly on that.
Lord Fox: Mr Carey, you mentioned the standards issue: who could drive the standards together? The second point on aggregating demand is whether we wait for the councils, local authorities and housing associations to do this naturally or could the Government do something to bring these things together and create aggregated demand? In London there is a big aggregated demand almost naturally, but outside of London in smaller authorities what could central government do in both cases to drive standards together and to aggregate demand?
Tim Carey: On the first part—and I have to confess I am not an expert on the various groups that can be established—I would suggest some kind of specialist group/task force that was charged with working with various interested parties to aggregate their thoughts and deliver a standardised suite of harmonised design standards. Similar things have been done in the medium to longer-term past. If we leave the industry bodies and registered providers to themselves, trying to get an agreement without an external influence would be very difficult. I think it needs an independent body to do that for them or to work with them.
Jamie Ratcliff: I am pleased to say that we have just procured some work with some partners—manufacturers, a large housing association, a build-to-rent provider—and commissioned Cast consultancy and Bryden Wood to come up with the beginnings of a standardisation guide, which would address Tim’s point. But that is coming from two perspectives, one of which is on the client side of how you can have a more standardised layout which can be more replicable and built at a higher quality, and secondly on the manufacturer side of there being too many small manufacturers which have a bespoke product that no one else can do. That creates a lack of resilience in the supply chain. If only one quite small company can do something and it goes wrong, that is a big problem. We need to look at standardised fixings and at different technologies that can fit together if something goes wrong.
Lord Fox: If you are able to give us a few details, I think that would be quite useful.
Jamie Ratcliff: I can certainly send a link to the outline of it and it will be progressing fairly soon with some more announcements.
Rosie Toogood: We are working with Jamie on that project with Cast. We are one of the sponsors of that activity because we feel that that standardisation drive is really important.
On the subject of aggregating demand, we are also doing work with local enterprise partnerships and bringing groups of councils and housing associations together through the various industry and trade bodies to try to create a like-minded group of early adopters who will work with us on developing the modular products. Anything that can come from government to help encourage that positively and in favour of modular would be welcome.
The Chairman: We will get evidence from the people you have mentioned in due course, but can I move on to Lord Borwick?
Q12 Lord Borwick: The planning system is so often most of the critical path of a new development. How could the planning system be changed to encourage the use of off-site construction and make it all happen quicker?
Jamie Ratcliff: The current planning system is agnostic about how homes are built. Through the development of the draft London Plan we looked at it in quite a lot of detail. One thing we explored was whether you could give some kind of height reward to people who were doing standardised homes, on the basis that you might not get as many homes if you had a standardised block of things that fit together and you might need to go a bit higher. That did not work for two reasons: we have ripped up the density standards and said that the optimum density should go everywhere, so it is about trying to get as much as possible, and because the technologies top out at a certain level, it might not be that useful to give somebody a height reward. Within the current planning system, I think it is quite difficult.
In 2015, I spent some time in California and they have a very different planning system from us, but their system of accreditation, which is somewhere in between our planning approvals and building control, was carried out in factories, some of them in the Far East or a long way from California, and was able to give certainty and predictability through their equivalent to the planning system by doing that. It feels as though we should be more open to some innovation in that space.
Lord Borwick: As far as Legal & General is concerned, what changes would you suggest, not to keep it agnostic but to bias the system in favour of off-site construction?
Rosie Toogood: I think the work that we are doing on standardisation will help. We find that by working with the early adopters with a positive mindset we are able to get through the issues that we need to get through and deliver.
Q13 Lord Fox: The Government’s industrial strategy has involved a number of different sector deals and it was announced in November that there is going to be a construction sector deal. The details are still emerging, so now is your chance to try to feed in what the construction sector deal should focus on to deliver the promise that we are hearing for off-site construction.
Jamie Ratcliff: Announcing new pots of funding is not necessarily the most helpful thing because some of the previous pots of funding that have been announced have not been deployed.
Lord Fox: The intimation is around pots of funding for new construction methods and things such as that, so there is an element of that.
Jamie Ratcliff: For example, we have been talking to government for well over 18 months about London’s share of the accelerated construction fund and, while I have been told progress has been made, there is no confirmation of the money we are going to get, so we can get on and do something. We have said that we would like very much to use that money to drive much more precision manufacturing of homes and it is caught somewhere in the machinery of government. If more pots are announced and they take just as long—
Lord Fox: Point made.
Lord Hunt of Chesterton: Can you explain why there is this reservation about introducing higher standards? You are saying you want a higher standard of construction which this off-site method will deliver. Are you saying there is some problem in government about that?
Jamie Ratcliff: In deploying the funding, in London we do not have an automatic share of pots that are announced. We have to negotiate on a case-by-case basis and sometimes it takes a very long time for us to get our share and be able to do something with it. The accelerated construction fund is definitely one of the slower ones, in my experience.
Baroness Neville-Jones: And funding is competitive.
Lord Fox: Are there any other thoughts?
Rosie Toogood: We need a new mindset in the industry and a new approach. I would like to see more collaboration, more long-term contracts, fewer adversarial contracts, more interdependence, less power within the relationships down the supply chain and longer pipelines of secure demand, so we can plan, resource, invest and improve the products, and more investment in innovation and skills. We are building capacity in the industry, bringing in people, multiskilling them and making them able to do a number of different tasks, rather than giving them just one skill or trade, and those things are key. We are also developing new skills and trades, so there is more advanced understanding around architecture and design, and design for manufacture and investment in that space, and more investment around the logistics and manufacturing flows and manufacturing engineering. Investment in innovation and skills in those spaces would be really helpful.
Tim Carey: I agree with all that. With the research and development in technologies there is an ongoing demand for it. The more we push higher standards of construction—higher thermal performance, higher efficiencies of everything else as well—that will, in effect, force us to use more methods of construction as the traditional ways of constructing houses can no longer meet those requirements. There is a useful lever there that some kind of incentivisation for higher levels of thermal performance would be a big thing.
Lord Fox: Environmental frameworks?
Tim Carey: Frameworks is a big thing as well; we need to acknowledge that as a main contractor there is a disparity between the requirements that I need to fulfil for my customers in terms of providing three quotations for a particular trade and my desire to partner and provide a meaningful pipeline to an off-site supplier. That goes back to trust and evidence.
The key thing for me in all this is that effectively we are asking a customer or an end user to make a different decision—to elect to support the use of off-site rather than something that they know and may think is a better option. We do not collect enough output data on projects. We are working with BSRIA on this to try to collect data, because if we are asking someone to make an informed decision, they need to be informed. We need some kind of lever that we can put in place whereby we can capture outturn data from projects so that we can prove that where we use off-site, we have the benefits of fewer defects, more time certainty, lower costs, repeatability and so on.
Lord Mair: This seems to be a marketing issue. Is it a marketing issue that Legal & General is addressing?
Rosie Toogood: I think it is a change curve. As I said earlier, you get early adopters who absolutely get the modular benefits, who are passionate about that and who we are working with. As we gain momentum in that space, I think the market will move.
Tim Carey: We need to bridge the adoption gap and data again. Sorry to reinforce it, but data will help us to get over that. We need to be more explicit about marketing. We still talk in the industry about a “World in Action” report that happened in 1983 backing timber-frame and that was years and years ago. We need to reinforce the positive messages about off-site and the outturn impacts that it can have as well.
Lord Vallance of Tummel: In a way it is not so much construction as manufacturing and assembly. That is the slip gain.
Tim Carey: Absolutely.
Q14 Lord Hunt of Chesterton: This carries on from the previous discussion. What reskilling of the construction workforce is required to facilitate a change to more off-site manufacture for construction? A point we have not discussed very much is the fact that where you put your houses makes a difference. In some areas that I know of in the UK, valleys in Devon and other places, it is much more difficult to put up houses. Is the use of off-site methods going to be appropriate just for nice level areas where you build them, or are we going to be able to use these new techniques in many areas of Britain where people live that are quite demanding, with complicated floods and slopes and so on? Will the new technologies be available for those areas as well?
Jamie Ratcliff: I do not know much about Devon, but if I take the first part of your question, if we had a reskilling challenge, that would be a nice problem to have. We have the opposite which is a dramatically reducing construction workforce. The Farmer review found that due to the age profile of the workforce, huge numbers are retiring and not being replaced and there was what he called a “burning platform”. That was before the referendum on leaving the European Union. In London, according to official statistics, half the workforce is from overseas, and we think the figure could be much higher. There is a massive challenge with the uncertainty of what is going to happen when we leave the European Union, and what that means for our construction workforce. Whatever is left, we are likely to need to keep building in traditional ways. We are looking at building in factories as being more productive and needing fewer workers per home that is built. We hope it will attract many more new people into the industry, who will be attracted to working in different places.
For me, one of the key benefits of moving more homes to being precision manufactured in factories is that you can attract a more diverse range of workforce. Currently, only 12% of the construction workforce in the UK are women, so we are ignoring half the population who could have a safe and dry fixed place of work, where they can have split shifts, it will be more flexible and there can be more oversight. That should be appealing to women and we should be able to get a greater gender balance in the workforce, which is one of the things we need to do.
Q15 Lord Mair: Can I ask about the issue of off-site manufacture potentially hampering architectural ambition? There is a perception that somehow having standardisation of components means standardisation of the end product and the prevention of architectural interest. What are your views about that?
Jamie Ratcliff: I do not buy it at all. I was booed out of the AA School of Architecture a few months ago when I talked about standardisation and having standard elevation and fenestration treatments. I was in their building in Bloomsbury Square which is entirely standard and in one of the most beautiful parts of London. I think some of that is overstated. The other thing that is overstated is, according to the numbers that my team pulled out for me, there are just over a million terraced homes in London. Pretty much all of those are of a standard design—it is two-up, two-down, with an outrigger at the back—yet there is a huge amount of variety you can have within that standard design. Many more have been converted into flats so it is probably more like 1.2 million in terms of that standard building that can be converted.
What we are starting to see—I mentioned the Swan factory earlier—through manufacturing and having standardisation is mass customisation. You see it in car manufacture, which Rosie might want to say something about, as she knows much more about it than me. Swan, through their initial site in Basildon, is offering consumers 288,000 options in terms of things that they can vary. It is very easy for them to offer those options because they are just swapping out different components within the factory. You can have variety and flexibility, but you are not sacrificing how beautiful the building looks. You can finish them externally in what you want and have a range of different interesting things happening.
Rosie Toogood: In many other industries, standardisation is seen as an enabler, a building block for the added extras and the flair. Our intention is to create the standard building blocks in terms of the modular design and be very sympathetic to the needs of the individual housing association, council and local enterprise partnership in terms of creating a different street scene and different orientation of the housing, different fascias and roofing to create nice places to live. That is how we intend to work with our clients.
Lord Renfrew of Kaimsthorn: So there is a role for the architect still in implementing design locally?
Rosie Toogood: And creating great places to live—absolutely.
Lord Fox: We are conflating two things here: off-site construction and standardisation. Are you saying that standardisation, which has all the benefits you have just described, is impossible to do with on-site construction? Or do you have to have the off-site delivery to deliver the full benefit of standardisation? Is there an agenda that says that we should standardise on-site construction as well?
Tim Carey: I think it is both. There are definitely benefits to standardising on-site construction as well.
Lord Fox: But it has not happened.
Tim Carey: It may not have happened in a widespread fashion. There are pockets of good practice where it does and we do not have to keep reinventing the wheel.
Lord Fox: I am suggesting that off-site delivery forces standardisation whereas with on-site delivery it kind of drips in.
Lord Hunt of Chesterton: You have just said there are hundreds of thousands of permutations you can make.
Lord Fox: But it is still standard.
Tim Carey: The thing about a mass customisation platform-based approach is you get the benefits of both. Off-site will drive the standardisation, because, inevitably, if you are going to design a system from the ground up, you are going to design it with standardisation of components in mind. There will always be a role for an architect. Designing standard components does not mean that you do not need an architect to assemble those in an elegant, beautiful manner. It just means that you spend your time on the elements that matter to the end users and the surrounding vernacular rather than worry about how you build a wall or a ceiling time and time again.
Jamie Ratcliff: I think it is about discipline. Standardisation would absolutely deliver a range of benefits through traditional construction, but because there is no massive cost which is immediately apparent of tweaking something or doing something a bit differently, people do. We have been involved in a site with about 700 homes where there are 368 different property layouts. I do not think an architect who has been employed to make a toilet go in a slightly different place or a corridor look a bit different is utilising his or her skills particularly well, whereas getting something right and replicating it would have delivered lots of benefits. In a traditional construction, you probably do not get all the benefits of the quality, the oversight and the precision that you get from building homes in factories, but you can go quite a long way through standardisation.
Lord Mair: To follow up this point, Mr Ratcliff, of the three of you, you are a client: would you be giving preference to off-site manufacture in your design briefs to your architects? In the business of producing houses would you see that as a preference now?
Jamie Ratcliff: We do not directly procure any homes ourselves. We mainly fund third parties such as housing associations or councils, which would be building homes themselves. The point I have made before is the client has to adopt it. I would not want to put rules in our grant that made people go in a certain way, but, certainly, we have been trying to create a strategic environment where it makes sense for them to push people to deliver homes at speed, at scale which drives you towards these types of things.
Lord Mair: Do you think that those organisations that are clients are beginning to get the message about the advantages of off-site manufacture or do you think there is still a long way to go?
Jamie Ratcliff: By nature I am an optimist, but it does feels like we are at a point where we are going to see much more precision manufacturing. The build-to-rent sector is driving that but lots of forward-looking housing associations very much want to do it at scale as well. Some of those with large sites have signed up to ambitious build programmes that need to deliver at pace, because they have committed to that pace they are therefore committed to looking at delivery in a different way.
Q16 Lord Renfrew of Kaimsthorn: I was very struck by the point made earlier about harmonisation of design standards standing in the way of off-site construction in some cases, or resistance to harmonisation of design standards, I suppose. That really surprised me, because I have been trying to understand what has impeded a more rapid adoption of off-site manufacture. That was the strongest argument that I heard and I see that could be an impediment to plans being adopted. Is that a fair comment?
Tim Carey: You have made the point and I would think that is an entirely fair comment. I see that as one of the biggest barriers, because, at the end of the day, you can still do it, but it will not be as efficient as it could be. I would agree.
Jamie Ratcliff: It is a question of how much of that variation is conscious and value-adding to activity. Certainly my hypothesis is that very little is. It is people tweaking things because they can, for example a designer who is asked to produce a new staircase makes up a new staircase each time.
Lord Hunt of Chesterton: I asked this before: what about energy? An extraordinarily important part of the buildings is the energy. In the public sector programmes you are doing, are you ensuring more uniformity of the energy systems in the houses or can people choose different heaters, refrigerators and other devices? Will that be an area where you can have regularisation and more efficiency?
Rosie Toogood: We believe the way in which we are designing and precision manufacturing these homes makes them more airtight and delivers homes of a higher quality and use of the fabric-first approach allows us to deliver homes which are more energy-efficient in the long term. That is driving up standards in the industry across the board. In terms of adopting new energy systems, the factory-manufactured environment allows us to look at innovations in the way in which energy is captured and stored to be able to take homes off grid and deliver new energy solutions.
Lord Hunt of Chesterton: As I understand what you are saying, it still means that you will do all this insulation, but people in different houses in a big block will use their own different energy devices, whereas in Germany there seems to be much greater standardisation of the energy supply in their public housing. Is that important?
Jamie Ratcliff: I am not an expert, but I can certainly get somebody to write with a bit more information on our policies in relation to decentralised energy and how that is supplied. We have adapted the approach in the latest draft of the London Plan and in the right places, with the right demand for energy, we are certainly promoting it a lot. If it is helpful, I can get some more information and provide that.
Lord Hunt of Chesterton: In New York it is well known that you have centralised heating which makes an extraordinary contribution to efficiency. We do not do that in England but rely on a neighbour’s heat or whatever it is.
The Chairman: No comment on that. I think our time is probably up. You have helped us a lot. May I thank all three of you for taking time out to come and help us?
