Homes England didn’t know what it was doing when it invested in collapsed housebuilders Ilke and House by Urban Splash, Conservative peer Lord Daniel Moylan has suggested in an interview with Construction News.
Moylan was speaking after the House of Lords Built Environment Committee, which he chairs, concluded its inquiry into MMC. He also said the government does not understand why the MMC sector has failed to take on more of the UK’s construction work than it has.
Moylan said he was “unpersuaded that Homes England knew what it was doing” when investing in Ilke Homes and Urban Splash. The government housing agency is unlikely to recover most of a £68m investment into Ilke Homes, which went into administration last summer, while also losing £3m on Urban Splash’s modular arm House by Urban Splash.
He said: “If your job is to invest in the equity of private businesses, you have to accept that sometimes you will lose your money.
“We are not criticising Homes England for making an investment that lost money – [but] that doesn’t excuse you for not doing due diligence and not having a strategy for what you want to achieve.”
He added: “We asked Homes England what its strategy was, it said it was spread across documents and departments. [Which] we take as meaning they don’t have a strategy.”
The report also pointed out that a £10m MMC taskforce announced in 2021 had not yet met. Lord Moylan said: “I’m sure there’s a reason [why it hasn’t met]. The question is whether there’s a good reason.”
Lord Moylan also said his committee had “not necessarily bought into the argument” offered by MMC builders that costs would go down once they could achieve economies of scale. Modular providers had written to the inquiry before its report came out to challenge claims made about the higher cost of MMC compared with traditional builds.
Lord Moylan said: “Ten years ago [MMC] was the way of the future. It should now be cheaper, it should be more durable, it should address demographic factors in the workforce. In essence, it should fly off the shelves without government support.
“We wrote to the government to ask its experts why they think they failed at this. We don’t think the government knows the answer to those questions.”