All parties are promising a new era of council housebuilding - could this be the wake-up call the industry needs to fundamentally change the way it goes about building houses?

Simon Rawlinson

There is more government intervention and support for the UK housing market than for most sectors - ranging from Help to Buy to the Housing Infrastructure Fund. But almost all is focused on promoting demand, which has been great news for the housebuilders, but has done little to promote a genuinely sustainable housing industry with the capacity to meet challenging delivery targets.

Now the focus has turned to social housing. Competing promises from the political parties on how many council houses they will build are unlikely to influence the outcome on 8 June, but could open up real opportunities for a step-change in industry innovation. This is a prize that is worth pursuing, as a lack of diversified housing tenures in the new homes market has had a serious impact on the development of industry supply chains. This explains both sub-par levels of production and the persistence of traditional housebuilding techniques, despite problems with quality and cost of delivery.

There is a clear link between the health of the industry and the way in which its biggest sector operates. However, recent housing policy, particularly the housing white paper on which the Conservative manifesto expands, shows little interest in how demand can be shaped to support the investment in innovation and capacity needed to meet planned levels of delivery. The government is rightly focused on getting the best outcomes for residents, but it is important to consider means of delivery as well. There are plenty of organisations making incremental investments into housing innovation - factories that will deliver 500 units per year, for example - but investment at a far more ambitious scale will be needed if the target of 40,000 or 50,000 additional units each year is to be achieved at an acceptable cost.

Municipal housing programmes are one way enough volume surety could be guaranteed to underpin investment in high-tech housing delivery. Now that the main parties agree publicly-provided housing is a good idea, an important next step is to ensure that demand is shaped so as to drive change into the supply chain - not to sustain its existing models. This is a genuine game-changer if managed in the right way - levering investment in scale in the same way many of the UK’s leading industries have already done.

This requires a partnership approach - perhaps a “housing deal” - enabling a supply chain that might not comprise established housebuilders to invest against a known pipeline of work. Getting this partnership right will be important in ensuring that the right kind of product is delivered at an affordable cost. So, what should such a partnership focus on?

The legacy of poor-quality public sector development that overshadows the municipal sector cannot be repeated

The first area must be quality and ambition, which is a function of client vision and supply chain responsiveness. The legacy of poor-quality public sector development that overshadows the municipal sector cannot be repeated. Delivery of well-constructed homes using traditional building processes is increasingly difficult to resource and off-site solutions continue to struggle with user acceptability. High-quality schemes such as Lewisham council’s Ladywell development in south London (“the UK’s first pop-up village” to house families who are forced to live in B&Bs in other parts of the capital), can make a notable difference in giving clients confidence, but modern municipal housing products must also be adaptable enough to deliver diverse, sustainable communities. The Conservative manifesto includes a vision of high-density housing based on mansion blocks, mews houses and terraced streets - but are the off-site systems our industry wants to develop flexible enough to allow for elements of mass customisation, and will the houses be capable of adaption?

The second issue should be scale and certainty. Municipal housing will inevitably be delivered at a range of scale, from small infill developments to large-scale regeneration. These different elements could be delivered by various parts of a construction supply chain - ranging from local SMEs to the largest product manufacturers. The challenge is that a programme based on “council housing deals”, for example, runs the risk of not providing sufficient scale, certainty or national coverage to underpin a real transformation of capability within the supply chain. If council housing deals emerge in dribs and drabs like the garden towns and villages, then there is a real risk that the programme will be less investable for the industry than it needs to be.

The third theme is that these initiatives will need to be collaborative - with housing solutions not only designed and delivered in ways which deliver the planned outcomes of sustainable, diverse communities, but also that proposals make best use of the innovation that will no doubt be triggered by large-scale housing programmes.

It is almost certain that within a week we will have an elected government with a mandate to deliver a municipal housing programme. Like many manifesto pledges, it is quite possible that these could be abandoned as the challenges of the Brexit settlement weigh on the long-term government agenda. Yet these proposals could really be a sea change and need the industry’s engagement. By introducing new sources of funding and potentially severing the relationship with a cyclical sales-driven market, municipal housing could be the catalyst for much-needed industry investment. Making sure the programme aligns with the industry’s future ways of working - digital, off-site and smart - is essential to secure maximum benefit for industry and consumer.

Simon Rawlinson is head of strategic research and insight at Arcadis and a member of the CLC