King's College London

On Monday 16^th September, The Productivity Institute (TPI) and the Centre for Sustainable Business (CSB) hosted a roundtable to address the challenge of achieving the Future Homes Standard.

Opened by Jonatan Pinkse, Professor of Sustainable Business, and Professor Bart van Ark, Director of TPI, the event brought together a panel of experts with industry representatives from BoKlok, Boutique Modern, Donaldson, Vistry Group and ZED PODS, among others.

The panel featured Jane Goddard (BRE), Edward Jezeph (Homes England), Gaynor Tennant (Offsite Alliance), and Samuel Stafford (Home Builders Federation), and was chaired by Dr Suzanne Peters, Research Fellow at TPI.

Event summary

Each panellist shared their thoughts on the implications of the Future Homes Standard of 2025, a framework many hope will revolutionise the construction landscape. However, significant scepticism remains within the industry.

Many participants expressed concerns over a perceived stagnation in progress, noting that discussions often feel circular and fail to translate into actionable outcomes. Despite a shared vision for a more sustainable future, the path forward remains fraught with obstacles, particularly regarding the energy performance and carbon footprint of new homes.

As the roundtable concluded, the focus shifted to identifying persistent hurdles that inhibit increased productivity and sustainability in new home construction. Participants examined potential strategies for enabling the necessary changes to meet ambitious housing targets while addressing the critical issues of thermal performance and embodied carbon.

Below, we provide an in-depth summary of each speaker's contributions, alongside key takeaways from the roundtable discussion.

The challenge of future homes in the UK

Professor Bart van Ark is Director of TPI, a nationwide research institute that explores what productivity means for business, workers and for communities. In his opening remarks, he highlighted how construction is essential for the economy and its productivity is crucial.

Key takeaways:

• There are challenges with construction productivity, both in the UK and globally.
• Construction impacts the wider economy, particularly infrastructure and housing.
• The sector is important for achieving environmental goals like net-zero emissions.
• This is a timely moment to focus on policy aimed at improving productivity and sustainability in construction.
• Engagement with politicians and the business community is critical to driving progress.

Professor Jonatan Pinkse is the Research Director of the CSB. In his opening remarks, he discussed a joint project between the CSB and TPI aimed at examining productivity and sustainability issues in housebuilding and shed light on the challenges within the construction sector.

Key takeaways:

• Modern Methods of Construction (MMC) are not new but have been tried before, with mixed success.
• Companies like Ilke and Legal & General Modular Homes attempted to innovate, but many faced challenges, raising questions about the sector's resistance to change.
• The research raised key questions about why it's difficult to implement new business models in construction.
• The future of housebuilding is uncertain, especially with upcoming standards like the Future Homes Standard.
• Big players may need to adapt, or new disruptors could emerge to lead change.

Jonatan summarised how he hoped that this panel discussion would be able to explore their questions in more depth.

Questions to the panel

As our host of the panel, Dr Suzanne Peters posed the following questions to the four panellists:

• How can we enable the much-needed change that so many agree on but continues to remain elusive?
• What are we doing well in housebuilding?
• What hurdles remain to increasing productivity and sustainability in the construction of new homes?
• What are you and/or your organisation doing about it?

First panellist: Jane Goddard, BRE

The first panellist was Jane Goddard, Deputy CEO and Chief Marketing Officer of BRE, which is a global leader in the science of building. Since joining BRE in 2019, Jane has played a key role in advancing the organisation’s mission of improving buildings through research.

Jane addressed Suzanne’s questions in her opening comments. Key takeaways:

• The Future Homes Standard aims to build more, but better, homes; however, there is uncertainty about whether its timeline is holding back productivity.
• Certainty in decarbonisation and housing standards is crucial, especially as Europe advances with energy performance regulations.
• The UK needs to keep pace with global standards to attract inward investment.
• BRE has sustainability measurement schemes, like BREEAM, that also account for embodied carbon in buildings.
• There is concern about the complexity of achieving sustainability and safety in construction, especially for smaller builders.
• Innovation and technology are key to improving productivity; projects like VICTOR (a virtual construction site platform) aim to support this.
• Policy and standards must keep up with technological innovation in the construction sector.
• Converting office buildings into homes is a growing trend and should be considered in discussions about new housing development.

Second panellist: Sam Stafford, Home Builders Federation (HBF)

The second panellist was Sam Stafford, Planning Director at HBF. He is a chartered town planner and has spent over 20 years as a housebuilder in South Yorkshire, and a planning and landscaping consultant in Lincolnshire. He joined HBF as a planning director in 2022. HBF is a trade body for industry education, with around 400 members. They are responsible for 80% of the homes that are built in this country.

Key takeaways:

• Many local councils are introducing stricter energy efficiency and carbon neutrality standards beyond national building regulations.
• These standards vary by region, with requirements like space heating targets and total energy consumption limits.
• Despite government statements discouraging higher local standards, some councils are setting ambitious energy targets, including net-zero emissions goals.
• Implementing stricter energy policies can increase construction costs, potentially by up to 15% compared to 2021 building regulations.
• These costs influence land pricing and can deter developers, particularly in areas with marginal site viability.
• The inconsistency of energy standards across regions creates barriers, especially for small and medium-sized enterprises (SMEs), making development more difficult to navigate.
• Corporate social responsibility (CSR) is driving meaningful behavioural changes in larger organisations, but for SMEs, change is triggered by regulations or market shifts.
• The land market is highly competitive and challenging, with builders, regardless of size, operating on a cycle of three-year planning horizons.
• With no ‘land supermarket’ to easily source new sites, SMEs deal with higher risks and more complicated planning processes. This makes their bids less competitive and threatens long-term business stability.

Third panellist: Edward Jezeph

The third panellist was Edward Jezeph, Senior Investments Manager of Homes England. He is a chartered surveyor, with a background in real estate equity investment and finance. Over the past seven years at Homes England, he has been involved with the financing of innovative off-site housing projects and manufacturers.

Homes England supports the UK Government's MMC housing Innovation Strategy, which seeks to improve construction productivity, quality, sustainability and safety through off-site and industrialised construction.

Key takeaways:

• Homes England manages £21.5 billion in public funds and supported the delivery of 32,000 homes last year.
• The organisation plays a significant role in unlocking infrastructure for future housing delivery.
• Homes England manages various housing programs, including the £7.4 billion Affordable Housing Programme which supports housing innovation by encouraging the adoption of off-site construction.
• Recent market instability has led to the closure of 4,371 construction companies. Over 3,700 jobs and 500 years of industry experience has been lost from the closure of just 13 major companies.
• The housing sector faces challenges, losing capacity faster than it can meet growing demand, especially with the government's ambitious housing targets.
• The recent Grenfell report highlighted long-standing cultural and structural issues in the construction industry, similar to concerns raised in past reviews.
• Modular construction, particularly in single-family low-rise housing, has seen innovation but has struggled due to market structures and trading conditions.
• There is a need to develop a value framework for housing that supports innovation beyond just land value and market-driven constraints.
• Homes England is reflecting on past successes and failures to better understand the risks of innovation and guide future efforts in housing delivery.

Suzanne asked Edward to comment on modernising construction and how can we get it done. His response covered:

• Homes England focuses on supporting solutions which achieve better housing outcomes in a cost-competitive way, rather than advocating for a specific construction technique.
• Off-site construction, particularly volumetric modular and closed-panel construction is seen as impactful but challenging for large-scale adoption.
• Volumetric construction has historically been a small part of the residential industry, with past attempts to deliver residential modular solutions fading over time.
• Large house builders are adopting offsite. Persimmon is launching a new 493,000 square foot factory to support offsite panellised construction.
• Advanced closed-panel systems and volumetric modules are similar in regulatory complexity and warranty challenges, despite differences in manufacturing approaches.
• The sector needs to carefully assess why volumetric construction has struggled in residential before making decisions about where we go next with innovation.
• Warranty providers such as NHBC (National House Building Council) play an important role in the market and they need to be involved in managing the risks of innovation.
• Open-panel construction systems are a more established off-site housing delivery approach, it is perceived to be more flexible and responsive to the planning process and easier than other methods like closed-panel or volumetric. While it does not deliver the same transformative impact, it could be an important step-forward.

Fourth panellist: Gaynor Tennant

Gaynor Tennant is the Founder and Chair of Offsite Alliance. She established a presence in the UK as a leader, removing the entry, improve efficiency and productivity of the sector by increasing the uptake of offsite construction.

Previously, Gaynor was Chief Business Development Officer at Modularize. She has a solid grounding in every aspect of turning MMC projects from concept through to successful deployment of homes on-site.

Key takeaways:

• The housing market cannot be fixed without addressing the broader societal issues, such as the 140,000-240,000 children living in unsafe, temporary accommodation.
• Current housing models burden local authorities financially, pushing them toward insolvency.
• To solve this, we need to rethink business models, speed up construction, and better utilise untapped local authority land.
• The definition of value needs to change, focusing not on cost but on fixing societal problems and helping vulnerable communities.
• Offsite manufacturing and modular building provide fast, efficient solutions, but the construction sector has not evolved, unlike other industries.
• Confidence in modular construction is low due to recent failures of manufacturers, but the sector needs to regain trust by simplifying the message and improving collaboration.
• There is a need for bold action to drive the necessary changes in the construction sector.

The Roundtable Discussion

The floor was then opened to those with questions for the panel. Top takeaways from the discussion:

• Housing targets are important to keep the issue on the agenda and push for progress.
• Aggregating demand and encouraging standardisation across the sector could improve efficiency.
• Existing market structures are a barrier to implementing new products and methods in the housing sector.
• Land planning was highlighted as the core issue in the private house building sector.
• Private house builders face no urgency to build quickly or efficiently, leading to slow development.
• There is a need for consistent policies across the board. Housing associations struggle to innovate, especially when they are under financial constraints.
• The private sector has woken up and seen the benefit of offsite manufacturing.
• There are skills shortages and program delivery issues in the industry.
• We need to focus on closed panel systems with pre-insulated and pre-fitted components.
• Difficulty in projecting issues from innovation funds due to constantly changing targets.
• Clients include local authorities and housing associations, each with unique requirements (speed, volume, etc.).
• There is a need for a centralised housing strategy to drive innovation.
• There is a need for continuous innovation to address challenges in the housing sector.
• Emphasis on sustainability requirements and overcoming trade issues related to skills shortages.

Conclusion

Graham Winch, Professor of Project Management at the University of Manchester, gave a closing statement where he outlined the complexities and challenges within the construction industry, particularly regarding the implementation of Modern Methods of Construction (MMC).

Graham emphasised that while everyone in the industry is striving to succeed, there are significant issues that need addressing. To improve the situation, Graham identified several key areas for reform, starting with the regulatory system. Consistency in regulations is essential for the industry to thrive, yet the current governmental approach has been criticised for its conservatism, particularly regarding future home standards.

He also summarised how the discussions around efficiency and sustainability must take precedence, as the current regulatory landscape does not adequately address the urgent need for affordable housing solutions. There is a need to balance efficiency with achieving sustainability goals, and discussions should focus on meeting targets while ensuring affordable housing solutions.

Ultimately, without addressing these fundamental regulatory and economic challenges, the industry will struggle to meet housing demands and improve living conditions for those affected by homelessness.

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This event summary was brought to you by the Centre for Sustainable Business. Find out more about their work here.