After the collapse of Ilke Homes and House by Urban Splash, coupled with the closure of Legal & General’s prefab housing factory last year, the government should entice foreign companies to move into the UK market to show us how it should be done.

That is one of the conclusions of an inquiry by the House of Lords Built Environment Committee into the future of modern methods of construction.

The inquiry was particularly focused on what is known in the jargon as Category 1 MMC, meaning factory-built houses that are ready to crane into place on arrival on site rather than flat-pack kits (Category 2) or using manufactured structured components  (Category 3).

After taking evidence from manufacturers and their customers the Lords concluded that the government needs to take a whole new approach.

“The government’s approach to modern methods of construction (MMC) is in disarray,” the report says. “Millions of pounds of public money has been invested, but the money has not been backed by a coherent strategy and set of measurable objectives. Category 1 (modular) MMC has been failing financially, though, with the right approach it could still play an important role in the building of much-needed housing.

“There is evidence of real barriers to MMC, such as risk aversion on the part of warranty providers, insurance companies and insufficient clarity for building regulations. However, the government appears to have made limited effort to understand and address these challenges.

“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.”

The report also says: “The government should ensure that its procurement practices do not limit the ability of successful MMC companies from around the world in moving into the UK market.”

When asked by The Construction Index whether this meant that the committee was advocating outsourcing production of prefab houses to overseas factories,  a committee spokesperson replied: “The committee takes no view on the exact form or focus of overseas involvement (it is difficult to do so on any of these policy issues given the lack of clarity and strategy) but consider understanding how the market differs between the UK and other countries may support the government in developing a more coherent strategy. “

Lord Moylan, chair of the Built Environment Committee, said: “Moderns 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.”

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