Piercy Conner

In January 2002, he and Stuart Piercy (pictured left) launched the Microflat – a 32 m² prefabricated accommodation module – in a blaze of publicity. One was installed in the window of Selfridges, and "micronauts" volunteered to live in it under the scrutiny of television cameras and the general public.

It was hailed as the panacea for London's overpriced and overcrowded housing market.

The Microflat concept was an instant hit.

It was an instant hit because its creators succeeded in selling it as a luxury item. In their interviews, Conner and Piercy mentioned yacht interiors, conjuring up a vision of the micronaut as wealthy adventurer – as opposed to, say, foisted-upon council tenant. The yacht analogy was supported by nattily designed units packed full of space-saving gadgets, from a kitchen occupying only one wall to a sitting room that is also office space, dining room and home entertainment centre, complete with television and DVD player.

Charmed by this vision, thousands signed up for the opportunity to buy their own Microflat in central London for prices up to £100,000. But one year on, all those would-be pioneers of urban living are still waiting. "The big frustration is that you know for a fact that if we had built them they'd have been sold in minutes," says Piercy.

Despite their frustration, the pair are not surprised by the lack of developer interest in their Microflats. "Developers would prefer to put their money in a risk-free, safe pair of hands – which tends not to be young architects with new practices," says Piercy. "Developers are careful people; they need to know its right before they part with £4-5m."

So have they found a developer yet? The two interviewees exchange glances. There is an awkward silence. "Yeah …" says Piercy, "but they want to remain a silent partner until the first one's up, because obviously they have a reputation." He pauses. "They're a fairly substantial company." Pause. Conner makes a low groaning noise, and Piercy jumps in: "We couldn't possibly risk losing the money by telling you who they are."

But even with a mystery developer on board, the architect's concept of the urban yacht may yet be sunk by London's soaring land prices. "Land acquisition is the most difficult part of getting the project off the ground," Piercy says. "It certainly would be easier if we had a housing trust who'd say: 'Here's 50% of the site'." This hasn't happened, but it's not for want of contacts. "We've done an awful lot of conceptual work for housing associations and all of them end up on their websites, but they rarely have the guts to go through with anything."

Piercy is equally disappointed with the government's lack of commitment to housing initiatives. "We could work something out if land was purchased with money for an experimental housing scheme – that's what they do in Holland. I find it really frustrating that it doesn't happen here," he says.

Developers prefer to put their money in a risk-free, safe pair of hands – which tends not to be young architects with new practices

It is not just the indifference of national government that disappoints Piercy; they have supporters in local government – London mayor Ken Livingstone is a big fan – but there has been little practical back-up. "Ken said 'Great, go and do that!' but he didn't really help," says Piercy.

To sum up, the pair are disappointed with British policymakers' apathy. "I think the Dutch government is much more in tune with architects and their ideas and how these can make a positive difference," says Piercy. "In the UK, it's not really driven by design in the same way. I really feel it's driven by cost." Here E E Conner, the younger and more reticent of the two, chips in: "Design is often last on the list – a luxury," he adds.

Piercy thinks that the government is not only failing to support architecture now, but also the architects of the future. "I get quite annoyed, really quite worked up about this," he says, and leans forward. "If you're doing a course now for five years, you're going to be about £45,000 in debt and there aren't many jobs. The new fees will be a massive problem for everyone in construction, because engineering's not much better."

If there are recruitment problems ahead for the industry, then surely the way forward is prefabrication, which uses fewer people on site. Piercy hesitates. "The trick is not to jump on the back of prefabrication solving all our problems, because it won't," he says. "It's going to take a long time to get to the level of, say, the Japanese market. As soon as one or two housebuilders seriously consider it, the rest will follow. It's going to take someone very brave."

Bravery is something that the pair know a little bit about. Piercy, along with business partner Conner, founded architect Piercy Conner in 1999 after they turned their backs on gruelling 100-hour weeks at architect Nicholas Grimshaw & Partners.

At first sight, they seem an odd couple. Piercy is well-built and eloquent. Conner is tall, slim and quiet. "I'm a bit fiery," Piercy says, whereas Conner describes himself as "patient to the point of appearing not to concentrate". The contradiction in their characters seems to work; each is relaxed in the other's company.

Perhaps it is because architecture is only one part of their business that the pair appear to be coping with the lack of progress in realising the Microflat. They have had commercial success with Smoothe, a graphics company they founded as a safety net for Piercy Conner. The business has expanded rapidly, edging into PR and now the production of short films as a marketing tool for developers. Clients include the Imperial War Museum, Arup and Balfour Beatty. Smoothe has also gone international, opening an office in Calgary, Canada.

The company has just completed its third office move in four years. The new open-plan, whitewashed premises, off trendy Old Street, hums with powerful computers, and in the background radio station XFM is playing. The pair are sitting in the conference room, which Piercy partitioned off before Christmas with an illuminated perspex barrier. On a side wall, a plasma screen shows images of their projects, and the remainder of the space is occupied with pictures of their work, including the famous photograph of the Selfridges' Microflat.