MMC report: more questions than answers

A House of Lords committee failed to find a reason for the recent offsite failures

In 2019, Nick Walkley, then chief executive of Homes England, announced a £30m loan for modular builder Ilke Homes.

At the time, he said: “There is huge, untapped potential to unleash by creating more capacity in offsite manufacturing.”

That money, and £34.5m in subsequent Homes England loans, was lost after Ilke collapsed last summer, joining a growing graveyard of housebuilders using modern methods of construction (MMC), including Caledonian Modular and the modular arms of Legal & General and Urban Splash.

The House of Lords’ Built Environment Committee, chaired by Lord Daniel Moylan, set out to find out the reasons behind these failures. But its report, published in January, contained more questions than answers.

Is there a government strategy?

The report criticised Homes England and the Department for Levelling Up, Housing and Communities for being unable to provide any document outlining their approach to MMC. Speaking to Construction News, Lord Moylan said: “We take this as meaning they don’t have a strategy.”

In response, housing secretary Michael Gove told the committee: “Just because it’s spread over several documents doesn’t mean it doesn’t exist.”

Citing the losses from investments into Ilke and House by Urban Splash, the report said it was “still unclear why Homes England chose these two companies”.

It added it was unable to fully assess how well the government was performing against its own unknown objectives.

Is modular more expensive?

Lord Moylan said during an inquiry evidence session that it was “out of line with anything that sounds plausible” that offsite could not provide cost advantages over traditional methods. Yet much of the testimony included claims of higher costs for modular.

Katie Gilmartin, head of business and innovation at housing association Platform Housing Group, told the inquiry that she found MMC prices are 30-50 per cent higher than traditional builds.

After oral evidence closed, volumetric builder TopHat and trade body Make UK Modular wrote to the inquiry, arguing that unit costs would come down over time as manufacturers benefited from economies of scale. 

Will there ever be high demand?

In written evidence, the Chartered Institute of Housing said the “common denominator” in recent modular failures was a lack of pipeline. The committee could not reach a conclusion on why the private sector was not providing that demand, despite the benefits in build times and sustainability.

Homes England’s Affordable Homes Programme requires housing associations to deliver 25 per cent of their homes using MMC. But it does not stipulate that they must use volumetric modules or pre-made structural components.

The report noted that it was hard to tell how successful the initiative had been, given the government had not published data on the type of MMC used in its portfolio, despite a 2019 promise to do so.

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