MMC inquiry: government investment ‘undirected and nonstrategic’

A House of Lords committee has criticised the government for lacking a clear strategy on its investment in modern methods of construction (MMC).

The Lords’ Built Environment Committee said in a report published this morning (26 January) that the government had “too easily accepted” that the way to encourage MMC was through “undirected and nonstrategic investment of public money”.

The report, which summarised the findings of the Lords’ recent MMC inquiry, said the committee had “limited confidence” that the government has a coherent MMC strategy.

In its evidence, the government said Homes England and the Department for Levelling Up, Housing and Communities (DLUHC) employed a ‘Five-S strategy’ – scaling up, standardisation, safety and assurance, soft levers and stimulating the market – but could not provide any further details because it was spread across multiple documents.

The report said it was “disappointing” the government could not provide evidence of a cohesive plan, given its acknowledgement of the importance of MMC in meeting its housebuilding targets.

It called upon the government to publish its full MMC strategy along with data on MMC completions funded through its various programmes, including the Affordable Homes Programme and Local Authority Accelerated Construction programme.

Committee chair Lord Moylan said: “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 inquiry was summoned to scrutinise government investment strategy for MMC after the high-profile failures of modular construction ventures in 2022 and 2023.

Homes England invested £68m into Ilke Homes, which it is unlikely to recover after the housebuilder collapsed last summer. The taxpayer-funded body also lost a further £3m from investment in House by Urban Splash, which collapsed in 2022.

The report noted that Homes England has not disclosed what proportion of its Home Building Fund has been allotted to MMC builders.

It also noted that an MMC taskforce, which was announced in the 2021 Spring Budget and allocated £10m, had never met.

During evidence, participants disagreed on whether MMC homes were cheaper to construct than traditional builds. The report said it was “baffling” that construction methods requiring few workers could not demonstrate lower unit costs.

The report also suggested the government should look into procuring successful MMC companies from other countries, mandate modules on MMC in construction apprenticeships and ensure the Future Homes Standard is published by 2025.

DLUHC and Homes England have been contacted for comment.

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