79.Local authorities play an important role in the housing sector as land owners, administrators of the planning system and as providers of social housing. It is important they are engaged with advancements in MMC and are ready to accommodate it when necessary.
80.Provision of social housing has been falling; between World War II and 1980 an average of 126,000 new social homes were built every year but in 2018 only 6,463 new social homes were delivered. Shelter’s Commission on social housing report published in January 2019, entitled ‘Building for our future: A vision for social housing’ recommends “a historic renewal of social housing with a 20-year programme to deliver 3.1 million more social homes.” This would require an average of 150,000 new social homes to be built each year. To meet those targets local authorities will have to increase the rate at which they are adding homes to the social housing stock rapidly. In response to Shelter’s report, Cllr Martin Tett, Housing spokesman for the Local Government Association, said
The last time we built enough homes councils built 40 per cent of them. We need to get back to those levels if we’re to tackle our housing crisis, building a new generation of at least 100,000 high quality social homes a year.
New social housing will have to add a significant proportion of the total homes built annually for the Government to get close to its target of delivering 300,000 homes each year by the mid-2020s.
81.Witnesses told the Committee that MMC is particularly well suited to sectors that require high volume, repetitive designs that can be built off-site and transported to the building site to be erected. This makes social and affordable housing good candidates for the off-site approach, where there can also be advantages in the speed of delivery. Ordering similar housing units in bulk helps to provide surety in the supply chain for the components used and lowers the cost per unit. Many housing associations are keen for more collaboration between local authorities and housing associations to come together and drive demand for certain MMC products and achieve economies of scale.
82.Several witnesses said that MMC homes are usually more energy efficient than homes built using traditional methods. This helps to reduce heating bills means the whole-life running costs of such buildings could be lower than other homes. For this reason, The Royal Institute of British Architects said that if the whole-life value of residential units were taken into account at the procurement stage, it would increase the demand for MMC homes.
83.In the 2018 Budget, the Government announced plans to abolish the Housing Revenue Account borrowing cap that controls the amount local authorities can borrow for housing. The Government forecasts this will enable councils in England to build an additional 10,000 homes per year. Local authorities could take this opportunity to borrow money to invest in MMC social homes which could help to speed-up the delivery of homes and benefit the manufacturers in the supply chain.
84.If we are to deliver 300,000 homes annually and meet demand for social housing, local authorities need to start building homes in far greater numbers than they have done in recent years. MMC are particularly well suited to this type of tenure because the large volumes of standardised accommodation help to bring down unit costs. Some forms of MMC have also proven to be more energy efficient than traditional construction techniques which helps to reduce fuel bills and running costs for tenants. Housing associations have been among the early adopters of MMC for building homes. Swan Housing Association and Accord Homes have both chosen to integrate the supply chain and build their own factories in which to construct homes off-site.
85.While social housing has a role to play in supporting greater take-up of MMC, it is important that lower cost designs are fully tested to ensure that MMC is delivering sustainable, durable, high quality social homes, so that MMC does not become associated with negative examples. Its use in this context should not be seen as a testing ground for its wider use and steps should be taken to promote MMC in all tenures, as we outline through this Report. Local authorities should increase rapidly the pace at which they build new social homes. They should further engage with housing associations which have already adopted MMC, in order to better understand best practice and explore the potential for more MMC use in the supply of social housing. Local authorities should also factor in whole-life running costs of social homes when tendering for building contracts.
86.This inquiry also looked into whether the planning system presents a significant hurdle for MMC homebuilders. Although some of the written evidence suggested the localised planning system could cause difficulties, most witnesses did not think there needs to be special considerations for MMC homes. The Housing White Paper included a commitment to look in more detail at how the planning system works for developments that use MMC. The Ministry of Housing, Communities and Local Government said it has looked into issues in the planning system and no further action is required:
Earlier this year, MHCLG hosted a MMC planning roundtable with local authorities, developers, manufacturers and others to better understand the issues to establish whether specific intervention, including best practice planning guidance was needed. We found that, while there were some issues that could be addressed in the planning system, all stakeholders agreed these were not specific to MMC. We are not taking forward further action at this time.
Many witnesses agreed; Lord Porter of Spalding CBE said: “Planning should be blind to the type of construction method here.” And Mark Farmer said MMC should not need special treatment. Local planning authorities are beginning to include the use of MMC in their local plans which can help to stimulate demand for MMC products but such decisions should continue to be taken locally. The Local Government Association said:
consideration of MMC developments within local plans is becoming more common. It is crucial, however, that the development of MMC works within the locally-led planning system, rather than be the subject of national targets which ignore override community involvement.
87.The localised planning system causes challenges for all homebuilders but does not present an insurmountable barrier to homebuilders using MMC techniques, so no major changes are required for MMC specifically. Local plans should be neutral to the type of construction method used in new housing developments as long as the homes meet local design standards and need.
109 Shelter’s commission on the future of social housing, , January 2019, p14
110 Shelter’s commission on the future of social housing, , January 2019, p178
111 Keepmoat Homes 
112 National Housing Federation 
113 E.g Association of British Insurers (), Centre for London ()
114 Royal Institute of British Architects ()
115 HM Treasury, , October 2018, p62
116 HM Treasury, , October 2018, p62
117 Department for Communities and Local Government, , February 2017, p54
118 Ministry of Housing, Communities and Local Government ()
121 Local Government Association ()
Published: 3 July 2019