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Editor, NLQ and New London Weekly

Chancellor Rishi Sunak’s Taskforce on MMC needs to help overcome ‘inhibitors’ like insurance, banking and finance to unlock the potential of modular to provide a big boost to the UK’s housing industry. But the movement to do more modular is at a ‘tipping point’, with a ‘massive danger’ of overheating and failing – and some traditional housebuilders are waiting for innovators to fail.

Those were some of the conclusions of Delivering housing via MMC, a special Think Tank that brought together experts in the field following an initial meeting in October 2019.

Urban Splash’s Tom Bloxham kicked off with a quick-fire run-through of his firm’s experience in the sector, stimulated from his youth and affection for punk as an alternative, disrupting way of looking at things. Urban Splash began with converting old buildings but moved on to experimenting with different technologies, producing its first modular building in 2016 against a background of 70% of the population preferring to buy ‘second-hand houses’ from the mass housebuilders in car-friendly environments and with tiny rooms, small windows and cellular spaces. The company looked at the way phones, computers and other items had changed, for more inspiration.

‘Every time you buy a new television it is half the price of the last one and twice as good’, he said. ‘And yet our new houses, by and large, are getting more and more expensive, and arguably no better, and certainly smaller’.

The company looked for investment, securing some from Homes England and Sekisui House took a 35% equity stake, a company whose scale of operations in the area dwarfs anything in the UK. Now Urban Splash is producing fully configurable modular townhouses in around 14 days in a factory. ‘MMC is a means to the end of leaving a legacy and leaving our towns and cities better than we found them’, said Bloxham. ‘We’re slowly getting better and better, but we still have a long way to go’.

The market is seeing trends like greater collaboration across housing associations, local authorities and elsewhere, said Cast Consultancy’s Jeff Endean, but with challenges around accreditation - even if, said Mark Powell of EDAROTH (Atkins) the sector is more attractive to clients as a consequence of government intervention. But there is ‘an awful lot of noise’ too, said HTA’s Mike De’ath, with much that is cost-driven and very little understanding of the need for programmatic responses, albeit with encouraging approval for MMC from the Treasury. The challenge is about messaging about risk and the insurance question, which ‘bedevils us all’. A group effort and more collaboration amongst providers was perhaps required. ‘I think that we need to focus heavily on that as a group’, he said. ‘Really making sure that people in the insurance sector see MMC and manufactured housing as better, as it is, actually, in terms of quality and long-term sustainability and the cyclical economy, and all of that’.

The sustainability agenda has helped to drive the sector, said BeFirst’s Jacob Wilson, but BeFirst and other authorities need to take a more strategic, longer term view on pipelines to see how MMC can help meet objectives. Sometimes, though, MMC is not appropriate as a solution, said Faithful and Gould’s Stephen Wightman, and there are concerns about capacity in the industry, even if ‘a number of other entrants’ are looking at investing in the UK.

However, retraining an entire business to use a completely different delivery model is needed, said L&Q’s Wayne Hill.

‘Our big word of caution is: you do need to have a program; you do need to pace yourself. And although 10 years sounds crazy and a long time to execute it, we're already in year four. So that's how quickly time flies by.’

Banks, though, remain a large obstacle, especially in their refusal to leverage a decent level of support of funding against MMC.

Pocket is another firm that has worked extensively in MMC, but, said its head of construction Alun Macey, the pandemic intervened just as it was about to invest in a factory to produce its standard modules with more surety of supply. But the technology also, ironically, creates control measures and an environment in which manufacture takes place that makes it more ‘robust’ and faster to return in a pandemic than traditional construction. It needs to become more accessible, with clients given the means to actually procure this, and for MMC to be used at scale, Seya Tansil of Stride Treglown adding that data collection was also key

Ultimately, though, there are vested interests and people ‘waiting in the wings’ for the MMC sector to fail and say: ‘I told you so’, said De’ath. So it is really important for the new taskforce to collate what’s going on, define what good looks like for the country and look hard at procurement, where frameworks are often just an excuse instead of doing things.

Wightman agreed, saying there are a lot of vested interests in the industry, such as traditional contractors who don’t buy the new models or traditional house builders who don’t want the new models. ‘For me, the big one is to try and overcome some of these inhibitors around things like insurance and banking and finance try and convince the banks that they can lend against this’, he said. When Mark Farmer’s report on the industry was published in 2017 this was one of the issues raised – of banks saying they were concerned about their ‘exposure’ to MMC – and that still needs sorting by the new task force. ‘It's probably about things like insurance, mortgage banking, lending and leverage’, said Wightman. ‘They're the key ones because the government can influence those, and the industry can't’.

At an NLA think tank in October 2019, it was suggested that the industry needs an ‘MMC Taskforce’ to bring all the parties working together in this field to make a major contribution to solving the UK’s ongoing housing crisis. With this critical need to build more and better housing the Ministry of Housing, Communities and Local Government (MHCLG) have now established an MMC Taskforce to accelerate offsite construction of housing, backed by £10m of seed funding.

This think tank brings together key voices from across the industry to provide an update on advancements in MMC in the last year and to discuss what extent the pandemic and Brexit has impacted the industry? The panel will examine the opportunities and challenges of the newly established MMC taskforce. How can this collaborative approach be best utilised to increase housing supply? How will the seed funding be best applied to meet demand? How can challenges and barriers be overcome and learnt from in the pursuit to help further the industry? What more can be done to make MMC a more viable option, and what aspirations for the future does MMC hold?