Cure-all concept?

Heard the good news about offsite manufacturing? It's going to solve the skills crisis, improve build quality and slash the undersupply in housing. It's the best thing since, well...since prefabrication came along in the 1960s.

Deputy PM John Prescott keeps banging on about how the private housing sector has to adopt modern construction techniques in order to build more homes. But there are plenty of reasons why offsite is off the radar for most house builders.

A Housing Forum report 'Manufacturing Excellence – UK capacity in offsite manufacturing', published in January this year, highlights the main one: house builders make their money from developing, not from constructing.

House builders buy land years in advance in an area where they think demand will grow. In due course they will apply for planning permission. At the moment this typically takes between 18 months and three years. When that is in place and the market is right, they start building.

Using traditional methods you can start on site the next day, digging the first foundations. If you're using offsite, you need a lead time of months.

The argument goes that the lead time is longer, but the time on site shorter. But why would a house builder want all its properties ready at once? The way it works is that people buy and occupy the first houses while the rest are being developed. This reduces costs and therefore risk. Only with apartment blocks, where it's less feasible for people to move in mid-construction, does offsite's short site life make business sense.

Then there's the issue of labour. Skilled tradesmen can be hard to come by. Offsite can help. Well yes, up to a point. If you've put in your prefabricated wall cassettes, the brickies can move in and do the outer skin as and when. You're not held to ransom waiting for brick and blockwork.

But the Housing Forum's report argues that builders need a more skilled workforce to use offsite successfully, not a less skilled one. On one of Westbury's earlier sites to use its Space4 panellised system, two bases had to be scrapped. The groundworkers weren't used to working to the tolerances required.

Westbury also stopped delivering its panels with inner skins and conduits for wiring. The plasterboard was constantly being damaged due to people wanting plugs in different places, blocked conduits or just the general wear and tear of site life.

Then there's cost. Nicholas Fowler, a consultant at the Centre for Performance Improvement has tried to do the sums.

But, he points out, you are paying towards the overhead of a factory. And for double-handling of materials: from source to factory, from factory to site, often with the transportation of large quantities of air involved. Fowler's solution? Make sites more like factories by getting better at logistics and organsation.

Yet some house builders are trying offsite techniques. Westbury's Space4 business continues to make a loss, albeit a reducing one. Barratt is dipping its toe in the water, working with Terrapin on Advanced Housing. It's early days for the venture, which has a factory in Daventry; just 31 houses so far. And many of the houses will go to the social housing sector. Barratt predicts 500 for the financial year to April 20, and 2000 for 2006.

It seems likely that offsite for housing will be largely limited to the public sector. The government is giving the technique a boost through the Housing Corporation, which allocates funding for social housing. It is aiming to award one quarter to projects using 'Modern Methods of Construction', of which offsite is one.

It makes more commercial sense in this sector too, since contractors hand over a whole development, rather than sell off plot-by-plot as private house builders do.

Offsite might go down well with the ODPM. Even the city thinks its a good thing; a recent note from analysts Corporate Synergy, praises Redrow for its foray into steel framed houses, Framing Solutions. But it doesn't look set to transform the sector.