Item 6 on our agenda this afternoon is a statement by the Minister for Housing and Local Government on the innovative housing programme year 4—modern methods of construction/modular special. I call on the Minister for Housing and Local Government, Julie James.

Thank you, Deputy Presiding Officer. I am very pleased to provide Members with an update on year 4 of the innovative housing programme, which has focused on bringing forward more homes built using modern methods of construction, or MMC homes, as they are known. 

This year, more than ever, IHP will be at the forefront of building hundreds of homes to support our green recovery, investing in Welsh small and medium-sized enterprises, Welsh supply chains and local Welsh jobs. Over the last few years, IHP has been at the vanguard of transforming house-building norms across the UK. This year, the programme is designed to challenge how we traditionally construct homes—in muddy, wet fields—by building them in safe, dry factories instead.  

I’ve therefore coined the phrase ‘MMC/modular special’ to sum up this year’s IHP theme. In practice, it means IHP is a targeted investment fund, testing the manufacture of affordable homes at increased scale and pace. This year, more than any other, we recognise the vital contribution that publicly funded, green house building brings to our communities. To this end, I am pleased to say we have managed to secure additional funding for MMC homes as part of our national post-pandemic recovery plans.

We are determined that IHP-funded homes will strive to maximise the social, economic and well-being gains from every single pound the programme invests. One way of achieving this is to ensure that my MMC special creates order-book certainty for Welsh producers.  This is essential if these businesses are to confidently invest in creating more jobs—more local jobs—more apprenticeships and more training opportunities. Ripples from IHP investment will be felt in local Welsh construction and manufacturing supply chains, supporting the foundational economy of Wales and retaining the positive benefits of our investment within our communities.

Turning to this year’s applications, IHP is once again significantly oversubscribed, demonstrating continuing strong appetite by social landlords to build affordable housing schemes with MMC in all corners of Wales. This year, £35 million of IHP investment will deliver 400 new MMC affordable homes, adding to the 1,400 homes funded by the programme to date. In Wales, we are fortunate to have an experienced and capable construction and MMC supply chain to build the homes we need. So, I am particularly delighted that all of this year’s successful IHP schemes are backing Welsh business by deploying Welsh MMC producers and their local supply chains to deliver IHP homes.

The type of schemes we are funding include £3.5 million for Tai Tarian. They will build 55 new homes and retrofit 72 existing ones in Port Talbot to increase energy efficiency and reduce tenants' fuel bills. The new homes will be built locally in Neath Port Talbot by their local family-run MMC partner. Elsewhere, £3 million of IHP funding has been awarded to Pobl Group to build over 90 social homes in Blaenau Gwent by a Valleys-based MMC producer, using timber-frame design and including measures to ensure the houses will be zero carbon.

I am particularly excited to announce funding for a collaborative bid from a consortium of social landlords to provide over 100 much-needed new social homes across four sites in north Wales. This bid meets our ambition for a green housing-led recovery, using Welsh timber and a Welsh MMC manufacturer, opening up opportunities for local job creation and business expansion. This is a perfect example of how this Government’s desire to build back greener will provide guaranteed work for businesses, create new skilled jobs in parts of rural Wales and contribute to our well-being of future generations ambitions.

In total, social landlords submitted IHP bids comprising over 850 MMC homes. This represents a potentially game-changing level of housing demand for the MMC industry in Wales. So, with a view to capitalising on future funding opportunities, officials will work over the coming months with unsuccessful bidders to develop their schemes and bring more MMC housing to fruition. Working up a healthy pipeline of MMC homes is important. Manufacturing homes in factories means that new affordable homes can continue to be built, regardless of the Welsh weather or the impact of a pandemic, ensuring the delivery of a stable supply of homes in unstable economic times.

We are witnessing a shift away from doing things the way we have always done them and challenging the norm: a mindset IHP has championed over the years. It's my intention to mainstream and normalise MMC as a proven and fundamental part of standard development pipelines. And this is what makes this 'MMC special' really special, because building more MMC improves our ability to capture and retain more of the social and economic benefits of house building within Wales, as well as to help building greener homes, which are better for our people and better for our planet. Diolch.

Thank you for the statement, Minister. With regard to modular construction, whilst nearly 50 per cent of construction industry clients expect the use of off-site construction to increase over the next five years, it is a shame that the take-up of new opportunities has been limited by the lack of house building in general. The UK now lags behind Sweden, Germany and the Netherlands when it comes to the fusion of manufacturing and construction, while in Japan more than 15 per cent of new homes constructed each year are at least partly prefabricated.

Now, there are some excellent, innovative house building projects under way, such as Cartrefi Conwy here in north Wales, but we need to see more tech-driven solutions and an increase in the off-site development of homes. Will you provide further details as to how you are working to assist with the reasonable aim of moving home construction away from muddy, wet fields? This scheme is seeing some significant projects, such as 55, 72 and 90 homes. However, what about smaller schemes or single-unit developments? You have advised that to build 100 new social homes across four sites in north Wales meets your ambition for a green housing-led recovery, using Welsh timber and a Welsh MMC manufacturer, but what about other Welsh materials being included, such as slate and wool? Four hundred new MMC affordable homes should be delivered this year, but I understand that social landlords submitted IHP bids comprising over 850 MMC homes. So, am I correct, Minister, in understanding that you are therefore only supporting less than half of those homes, and if so, why is the successful application rate not higher? 

It is good that you are investing in different house building methods. I think that is the way forward also, but we still need to actually build more homes. The Q3 stats show that, here in Wales, there was a 17 per cent drop in new home registrations compared to the same period last year, and that for new home completions there has been a 5 per cent drop when comparing year on year. So, how are you going to address this? Could it be the ambition, perhaps, that you could support all 850 MMC homes? As you know, the IHP grant is available to buildings, subject to a change of use, that have not previously been used as residential properties. In the third quarter of 2020, the Welsh vacancy rate increased to 18 per cent from 15.9 per cent in Q2. Whilst appreciating that the grant could not be used by shopping centres, which have been worst hit, what consideration have you given to allowing private landlords to access the IHP, so as to assist with pursuing change of use and maybe creating some local jobs? We all know that the pandemic has caused serious difficulties in accessing tradesmen. Therefore, will you introduce some flexibility to the requirement that all applications must stick to the start-on-site date of no later than 30 April 2021?

Finally, the pandemic is hitting our young adults and our apprentices very hard. You spoke of supporting businesses to create more apprenticeships. The Chartered Institute of Housing Cymru have called for a workforce strategy to futureproof the housing sector—will you deliver on this? Thank you. Diolch.

Thank you, Janet. I think we were broadly agreeing with each other that it's a really good innovation to have factory-built housing that's carbon neutral or carbon passive onsite, and we were certainly both convinced of the idea that building houses in a wet, muddy field was not optimal. 

We will be publishing the recommendations of the independent assessment panel on the IHP bids once all applicants have been informed of the decisions and we've been able to go through with them. And as I said in the statement, we will then be working with all the unsuccessful bids to make sure that we are able to bring them up to the standard that we expect in order for them to be successful. So, it isn't a question of us not wanting to build the other houses, it's a question of making sure that the bids, as submitted, are actually deliverable and built to the right standard and so on, and actually are in the right places as well, because it's not just about building housing anywhere. I think you were agreeing with me that it is about building the right house in the right place for the right person.

You specifically asked as well about Welsh supply chains for other materials, and of course we're looking at that. I'm very keen on using Welsh slate and Welsh wool and a number of other products, actually. Quite a lot of recyclates that are produced in Wales can also be refashioned into insulation materials or substitutes for cement and so on. So, we're very, very keen on ensuring that all of the findings from the IHP programmes from previous years as well as for this one utilise all of those local supply chains in order for us to be able to maximise that foundational economy type of work that we're looking at. So, I can assure you that we're working very hard to do that. We've also been doing a supply chain analysis for the whole of the IHP programme to ensure that, where there are things that are coming from outside the Welsh supply chain, we understand where that is and we understand whether we can get a start-up or a small business to step into that space. So, this is all about making sure that these lovely, carbon neutral, carbon passive houses are also built using local labour and local supply chains as far as is humanly possible. So, I think we share all of those ambitions—absolutely.

So, we are working very hard with a range of different RSLs and councils across Wales to make sure that they understand what the findings of the original IHP schemes were and what the feedback is so that we can help them to submit the new bids so that we roll out the learning of the earlier years of the programme. One of the lovely things about this programme is that we're able to build this at scale now. And this is of a serious scale, compared to the two or three that were being built elsewhere, because we've got the data coming back from those houses from those first years and we know that they do what they said they would do—well, almost all of them have done what they said they would do. So, that's great as well. It's a really big success story and I absolutely want to make sure that we work with as many people across the piece as we can to ensure the survival of that industry and the growth of the industry. 

And then, in terms of the skills, you're absolutely right. You accurately assessed that what we will need to do is make sure that we work with all of our training providers and Community Housing Cymru and all the rest of it to make sure that we roll those skills out as necessary so that we get the next generation of tradespeople skilled up as we go, so that we can roll this out into the private sector market as well. At the moment, it's largely social build and very wealthy people. One of the other things we're doing is making sure that we de-risk this to the point where the lenders and insurers are happy to give you a mortgage or insure your house, even though it's built with this very new construction technique, and that's very important as well, so that average Mr and Mrs Jones can also use this technique to build their house going forward. So, that's where we're aiming to go with it.

So, I think, broadly, we're on the same page and I'm more than happy, once we've had the right conversation with all the applicants who were successful and unsuccessful, to publish the report so that you can see where we are and who we're working with as we go forward.

Thank you, Minister, for the statement.

We obviously welcome the building of more social housing and more innovative methods of doing this. There's a lot in the statement that we do welcome. I'm also pleased to see that this has been used in retrofitting, as that's also a really important area to go at. Perhaps, Minister, you could outline whether a similar approach could be used in bringing empty homes back into use and made suitable for people to live in. That remains an untapped source of housing supply and I'm sure that you'll agree with me on that.

Now, there continue to be some promising local schemes, but surely what we need now is a plan to scale up production to ensure higher levels of social housing, which may require a stronger role for the Welsh Government. Can you outline whether the Welsh Government has such a plan, in addition to what you've said already, and indicate the numbers that you could expect from that? But, of course, numbers are important, but the quality of the housing is also very important, and I know that's something that we've already been hearing. You've agreed that some of the estates constructed in recent years may well become ghettos of the future, and you'll be aware of our own views on the planning system—it's come up a lot in recent exchanges. Could you give us an assurance that funding is only being allocated to projects where there's a likelihood that the quality and environmental standards are going to be of the highest possible level and that there isn't going to be any compromise on that?

And finally, Minister, it's linked with that point: I think it's important that, in the rush to rightly increase social housing, we also adopt more innovative methods of construction—again in addition to what's been said—and we don't want to make the same mistakes of the past. How are you ensuring that these new estates are within the context of mixed communities of all tenures and are well supported by public services?

Thank you, Delyth. Absolutely, you're right, there are a number of things that we want to debunk for a start. So, first of all, we want to debunk all the myths around the quality and capability of Welsh timber in construction. So, there's a lot of nonsense talked about how Welsh timber isn't okay for house building and so on, and what this programme has demonstrated is that that's simply not so. So, these are houses that are built with Welsh timber frames and Welsh timber panels and Welsh timber shredded up as insulation, and any amount of Welsh timber that you could possibly imagine. So, you can see pretty much every use of timber that you can imagine in the construction of the various sorts of home.

We're absolutely obsessed, really, with these houses being of the absolute highest quality. So, I absolutely delight in telling the people who move into them, as social tenants in Wales, that they are living in the best housing in Europe and possibly the world. This is by no means experimental second-best and so on. I mean, having said that, some of the homes are more experimental than others—they have very unique heating systems and so on—and so you do have to make sure that the right tenant goes into them, a tenant that's prepared to have a look at how to live their lives with those kinds of heating and so on, because it's not the same as just turning on your radiator—you do have to get used to it. But we work hard with RSLs and councils to make sure that we do have tenants who are very happy to do that. Indeed, I've spoken to many of them who are absolutely delighted with what they've got. Very recently in Rebecca Evans's constituency, I spoke to a number of people who are in retrofitted bungalows that had gone from being some of the poorest housing stock we had to some of the best housing stock, which had been insulated, fitted with solar panels, fitted with ground source heat pumps and Tesla batteries, and who now had bills that were less in a year than they had previously been paying in a month. Those people were absolutely delighted. I mean, it makes me smile just thinking of the conversation that I had with them about how delighted they were with that. So, we absolutely are using it for retrofit as well, and we're learning from the programme all the time—what works, what doesn't, how we can build both the new houses and the retrofits.

And, of course, we're also making sure that, as I was saying in response to Janet Finch-Saunders, the houses are in the right place. So, absolutely we're learning from the mistakes of the past. We do want to get social housing built at scale and pace, but we also know that we need good mixed-tenure estates with active travel links to them, good green infrastructure, close proximity to schools, work and health, and so on. So, we've got a number of exemplar sites across Wales where we're showing what can be done by de-risking some of that with Government money, because that's necessary to do as well, and encouraging SME builders to come onto those sites and learn with us what can be done and actually learn the premium that you get in the private sector for building some of those homes as well. I've been to some places where I genuinely would give my right arm to be on the list of people who are going to live there afterwards, because they really are very beautiful and built with Welsh supply chains. So, there's a lot to be said for that.

And then in terms of the scale, as you said, of course we want to do scale and pace as well, but we also have to be sure that the houses are of the right quality. And what's lovely, if you look at the IHP programme over the four years of its existence, is we're watching it do exactly that. So, we're building on each wave. Every time we've got a technology that's proven that it can do what was claimed for it, we scale that up in the next year and so on. So, we're rapidly scaling up. So, this fourth year is the biggest scale of that and the roll-out has been really great, and, as I was saying earlier, it's been oversubscribed. We're going to work with all of the people who put in bids that have not been successful to make sure that we can understand what they need to do to get those to be successful so we can scale it up one more time. So, we're absolutely in that space as well.

The last thing I wanted to say was something I know is close to your heart as well, which is, when you go to see the factories that are building these, you'll see that the mix of employment there is very different. So, there are more women there, there are people with disabilities in supported employment and so on, because it's easier to do that in a safe, clean factory, than it is to do at height or in an inaccessible muddy field. So, there's a lot more opportunity for a larger range of people to get involved, and we've got our skills providers involved in making sure we've got the training too.

Thank you. Finally, Mike Hedges.

Thank you, Deputy Presiding Officer. Can I first of all thank the Minister for her statement? Can I start with two long-standing views of mine? We need more housing, especially council housing, to meet the need, and, secondly, we need to return to the Parker Morris standard or a standard very similar to it, which is based on the premise that a good house or flat can never be made out of premises that are too small. Also, their home, for many people, is now becoming their workplace as well.

I welcome the Government's view that gone are the days of MMC's association with poor-quality, temporary, prefabricated housing. MMC now produces high-quality, desirable, energy-efficient, affordable homes that tenants can be proud of.

I'm sure the Minister remembers, because it's affected her constituents as well as mine, steel houses and other non-traditional builds such as high alumina cement in schools such as Olchfa that either had to be knocked down or fully refurbished because of problems with construction.

I have two questions: what is the life expectancy of these buildings and how has it been calculated? And, secondly, how do you calculate the energy efficiency of modular construction houses?

Thank you, Mike. So, I absolutely do remember the steel houses. You'll know, of course, that I spent a very large amount of my childhood in one, in Gendros estate, and I well remember my grandmother's sheer delight on moving into that house, because it had big, spacious rooms and a lovely garden, a nice kitchen and an upstairs inside bathroom. I can still remember her unbounded delight, really, at being given such a house. Of course, those houses, although the steel part of them didn't last, have lasted, and you'll know that they've been retrofitted with good insulation and so on, and they are still lovely, spacious houses in nice, big green-spaced estates there, so still a lovely place to live, actually, in the Gendros housing estate, where I spent a fair amount of my young years.

You are absolutely right about the space standards, so we're absolutely existing on good DQL as it's now called, good space standards, so that people have the room to live and breathe. I had a great site visit with our colleague Huw Irranca-Davies in his constituency to look at what was called a house for life there, where you're looking at a modular build that's got big wide doors—you can get a pram through it when you've got your young family; you can get a wheelchair in it in later life. You could add modules to it, so you could add bedrooms and more living space when you needed to, and then, indeed, you could take it away again when you no longer needed it and you wanted to downsize. So, you literally had a house for life on a single site, very flexible and able to be adapted for people to stay in the communities that they love, where they've got all of their contacts and so on. That is absolutely the aim of the programme, that we build houses for life that people can have a growing family in, live a life that they want to live, work, live, play in an area with all of those things. What we're doing with the programme is proving that that can be done, and I'm very happy to accompany any Member you like, because we've got them all over Wales now, to go and have a look at the ones in your constituencies, and you'll be able to see the sheer delight of the people who are living there as well. Huw and I had a good poke around in the house that we were in, didn't we, Huw, with the big wide stairs. I particularly remember all the closet space and so on, so it was a really nice place to live.

So, absolutely, Mike, I completely agree with you—we've got to make sure that they're good, high-quality, nice places to live and that they live a long time. Most of them are forecasting lifespans of 100 years as a minimum, but it's hard to tell, isn't it? You'll all remember some of the prefabs in the war that were supposed to last 10 years and they're actually fought over in my constituency, as people really want to live in them still. So, we think they'll be longer than that, but that's the forecast for most of them, and everybody in Wales now—councils, registered social landlords and so on—are embracing them as the way forward. So, we will be able to see that scale and pace going forward, alongside the real knowledge that these are the best houses in the world.

Thank you very much.