The modular housing sector will continue to struggle without a “clear strategy” from the government, a House of Lords committee has warned.
The House of Lords Built Environment Committee launched an inquiry into the future of modern methods of construction (MMC) following the collapse and closure of several modular housing companies during 2022 and 2023.
In a letter to secretary of state Michael Gove reporting its findings, the committee said that the government’s approach to MMC was in “disarray”. Millions of pounds of public money had been invested in the sector, it said, but this investment had not been backed by a “coherent strategy and set of measurable objectives”.
The committee said that “with the right approach”, MMC could still play an important role in the building of much needed housing but that barriers such as risk aversion on the part of warranty providers, insurance companies and insufficient clarity for building regulations were hindering progress.
The committee added: “If the government wants the sector to be a success, it needs to take a step back, acquire a better understanding of how it works and the help that it needs, set achievable goals and develop a coherent strategy.”
Lord Moylan, chair of the Built Environment Committee, said: “Modern methods of construction are successfully used to construct homes abroad and build high-rise and non-residential buildings in the UK, but this success has thus far eluded the building of MMC homes in meaningful numbers. In the context of an ageing skilled workforce and the need for greater building sustainability, MMC has shown some promise. We heard evidence that the government couldn’t achieve its housebuilding targets without a sizeable contribution from the MMC sector.
“Our inquiry found that the government has not set out clear objectives for the funding it provided the MMC sector. Homes England has not given any clear metrics as to how success is to be measured and over what timescale. The government needs to change tack. Simply throwing money at the sector hasn’t worked. If it wants to encourage MMC it must acquire a much deeper understanding of how it works, develop a clear strategy, and demonstrate leadership.”
The committee’s findings were welcomed by members of the built environment industry.
Daniel Paterson, director of government affairs at Make UK Modular, said: “This report is heartening and recognises the important role that category one modular is already playing in solving Britain’s homes crisis, with global leading projects currently delivering thousands of homes. The committee is right to point to a need for greater clarity around policy which, if it is got right, will ensure a stimulated market at a critical time for homeowners and renters alike. Unblocking the delivery of the 300,000 homes our country needs every year is key, and category one modular can help deliver affordable homes which are economic to run in an ever-tightening labour market.
“The current Future Homes Standard consultation aims to make sure all new homes are built to a higher standard from 2025. Make UK Modular encourages the government to use this as an opportunity to listen to innovators in the construction sector on the importance of high fabric standards as a critically important method of increasing sustainability in our future homes. By doing so, the government can develop a solid long-term strategy prioritising the most innovative forms of building that are already delivering tangible value for the UK while ensuring that innovators within industry do not face penalties for challenging outdated methods of working.”
Carl Leaver, chairman at modular housebuilder TopHat, added: “The conclusions of the Lord’s inquiry into modular construction are clear: it is a sector of importance and great value which has not had the support it needs. Yes, there have been missteps in policy and some regrettable business failures, but innovation always carries uncertain outcomes and inevitably involves some risk. The UK will never build 300,000 homes a year without volumetric modular and so it is critical that the government supports the sector strategically to allow investment to return and bring the sector to scale.
“That the government is said to have made a limited attempt to understand volumetric modular must change. We have the opportunity to replicate the successful growth of the sector as we‘ve seen abroad. Through cooperation with the government, it is entirely possible to transform the outdated way we build our homes – so long as government shows leadership and offers the sector a seat at the table to shape future policy.”
