If Prescott really wants to make a difference to the housing market, then the bar for his £60,000 home challenge needs to be set as high as a similar scheme in 1905

When John Prescott launched the design for manufacture competition for homes costing £60,000 (excluding land), he was unintentionally marking the centenary of a similar challenge. In 1905, the Spectator magazine ran a Cheap Cottages Competition for a site in Letchworth. Editor John St Loe Strachey called for dwellings costing £150 (excluding land) that could be rented by labourers paid a pittance. Workers’ cottages, many still standing, were built to varying degrees of success.

One, 158 Wilbury Road, was exceptional. It was built from interlocking concrete panels cast in Liverpool, delivered by train, and erected in a matter of hours. This was the innovation of John Alexander Brodie, the city engineer for Liverpool who became president of the Institution of Civil Engineers, who had already experimented with his “system for housing the poor, patent Number 6115 of 1901”. But critics thought his efforts poor architecture, and Brodie became part of the long architectural history of failing to design for manufacture.

Prescott is right when he says that construction costs are “rising over and above the rate of inflation at a time when we need to build more for our money – not less.” The sum of £150 in 1905 would be worth about £11,500 today. The fact that a cheap home is five times more expensive today cannot be explained entirely by skills shortages, building standards, infrastructure costs, marketing, sales overheads and profit. Rather, construction is the only sector in which living costs for the majority have not been made affordable by a century of manufacturing, which has raised standards of living beyond the wildest dreams of 1905.

Prescott says that 30% of the housing in the competition will be built to a target cost of £60,000, with the remainder being either larger or smaller, but built at equivalent cost efficiencies. But what is the definition of suitable size?

Housebuilders talk about one or two-person “microflats”, ranging between 26 m2 to 33 m2. But talk in Parker Morris terms – the space standards abandoned in the 1980s but never considered generous on introduction in the 1960s – and a two-person flat of 44.5 m2 would cost about £1350/m2. Given that land is excluded, that should be easy for housebuilders.

Ours is the only sector in which the cost of living has not been made affordable by a century of manufacturing

In the healthcare sector, technical sophistication is achieved off site in a factory, but economy of scale is missed by not procuring standard room types across the NHS. In the planning system, Prescott might be better off agreeing a system of Approved House Types, to get some economy of scale into off-site manufacture, and really push the cost down and the size and quality up. Then his soundbite targets would not be hostage to those in the housing sector who are cheating on space by advocating microflats for “key workers” – New Labour speak for the poorly paid.

The deputy prime minister will also find it awkward that in 1905 the aim was cottages. Families rightly want gardens, but the definition of “sustainable communities” precludes outdoor living space through the policy of increasing housing density. Average densities of new development in London and the South-east have increased from 55 and 26 dwellings per ha respectively in 2002 to provisional estimates of 71 and 33 dwellings per ha in 2003. Land use is needlessly restricted in the presumption against greenfield development, pushing up the cost of sites capable of getting planning approval and contradicting efforts to reduce construction costs. The government frustrates itself.

High-specification houses and flats for less than £1000/m2 (excluding land) in excess of Parker Morris space standards across the entire demographic range would be a rational target for both manufacturers and the site-based construction industry to compete over. Then, by releasing large areas of land for development and increasing annual new-build rates several times over, property market speculation might also be sent into decline, so that Approved Types would remain as affordable as possible to first-time buyers. Bring on the 21st-century Brodies!

Ian Abley is a practising architect, runs www.audacity.org, and is the author of Why is construction so backward?