Mark Oliver, Managing Director at H+H, discusses the Government’s attempts to tell the housing sector how to build more houses.
When it comes to house building it is very rare that we hear about a new idea or initiative that is actually 100 per cent new and innovative. More often it is a case of two or three old ideas being blended together to create a new one; an old initiative being tweaked to reflect the current agenda or in some cases an old idea simply being brought back out of the cupboard, dusted off and re-launched.
So it is with a sense of familiarity that we have listened, in recent months, to Brandon Lewis, Minister of State for Housing and Planning, returning to the subject of offsite construction suggesting that it is the magic bullet that will miraculously solve the current housing crisis the county faces.
It is undeniably positive to see all of the major political parties acknowledging that as a country we have a desperate need for more houses. However, I do take issue when MPs and their various advisors pontificate to house builders and others in the sector about how these new houses should be delivered.
This is not the first time the industry has witnessed a push in offsite construction by a government. During the last house building boom John Prescott, then Deputy Prime Minister, proclaimed an agenda with similarity to the one Brandon Lewis is currently advocating.
During his tenure Prescott was the catalyst behind the development of seven ‘Millennium Villages’ with the aim of highlighting new building techniques. One of these, Oxley Woods estate in Milton Keynes, utilised flat-packed houses of insulated steel panels overlaid with cedar cladding. Designed by Richard Roger, the 122 unit estate won many plaudits for its forward thinking design but times have changed. Now it is the subject of a £5million legal claim brought by the developer against Rogers’ firm as a result of water penetration.
These concerns with performance have no doubt contributed to the decline in the use of pre-fabrication techniques for building homes. NHBC figures suggest that the market share for new timber frame houses in England has now dipped to as low as 7 per cent.
It is not only performance that is a cause for concern, there is also the fact that many companies have already had their fingers burnt as a result of offsite construction.
Throughout the last boom many major players within the industry invested significantly in the practice only to have to change direction and close facilities in the downturn.
Companies, including four of the top ten house builders, vertically integrated into offsite manufacturing in either steel or timber but have since either closed their factories or sold them to other businesses which also eventually closed them. Only two of the top 30 house builders still have their own offsite business.
It was not only the house builders that suffered, product manufacturers also invested in offsite construction plants. Tata Steel set up its Corus Living Solutions modular building plant but subsequently made 180 people redundant in 2010 when it closed along with many independent offsite timber frame businesses.
Even my company, H+H, went down the offsite route in 2002 by opening a plant to manufacture storey high wall elements and floor panels for use in modular construction. That factory has since been converted to produce aircrete blocks.
Given what has happened in the past I find myself asking the question why do politicians think it is right to tell builders how to build homes? Historically government interference in industry has not always had the best outcome.
Advocates of offsite construction frequently make comparisons between the automotive industry and housebuilding, suggesting that increasing automation, factory production and standardisation will inevitably produce the results we are looking for.
This comparison is interesting because the track record of various governments’ involvement in this sector is hardly successful. In the 1970s government intervention preceded the complete collapse and obliteration of motor manufacturing in this country.
Fortunately the industry has recovered and vehicles of all shapes and sizes are once again rolling off production lines across the UK. This happened because the right conditions were created to make the UK an attractive option for overseas investment.
If politicians want to leverage the success of the automotive industry it would make much more sense for them to focus on creating the conditions that will attract investment from the world’s leading building products manufacturers like Holcim, Heidelberg and Saint-Gobain.
As the managing director of a product manufacturer, my principle concern right now is that by encouraging offsite construction the Government is deterring those manufacturers not involved in offsite from investing in the increased production capacity that is very much needed.
Having been through a severe house building recession, the manufacturers that are still supplying the sector are those that had the flexibility to reduce production, mothball plants and survive ready for the market to pick up.
We are now at the stage where existing plants are working hard to fulfil demand. Additional facilities are available but they require investment to bring them back on stream. The last thing we want to do is suggest to the multi-national companies who own those facilities that the UK government is likely to coerce the house building sector to use particular build methods that would jeopardise the market for their products.
My own view is that the Government should focus on encouraging demand for new houses and removing barriers that prevent commercial organisations from capitalising on that demand. The coalition has moved significantly in that direction with its Help to Buy initiative which has stimulated demand within the private sector. However, help is still needed when it comes to funding for SME house builders, the planning process and the availability of land.
Once companies can be confident of a sustained demand then you can be sure they will find the most efficient way to grow their market. My message to our politicians is simple: if you want more homes, then encourage companies to invest either through funding a growth in social housing or creating the right conditions for private developers to thrive. If this happens experimentation and innovation will follow but do not try to force the direction in which this moves.