Esther McVey announces 'housing green revolution' for the North - but £38m to build homes will mostly go to town halls in South

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A £40 billion post-Brexit "construction corridor" across the North's major cities could be waiting if the region embraces prefab house building, according to Housing Minister Esther McVey.

As the Conservative frontbencher made a speech in Sheffield today, government agency Homes England announced £38 million for six councils to help speed up the building of more than 2,000 new homes.

But despite pushing for a "housing green revolution in the north of England" - mentioning start-ups in Leeds and Manchester, as well as factories in Liverpool and Sheffield - only two of the councils benefiting from the extra cash are situated above the Watford Gap.

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Hull City Council and Cheshire West and Chester Council will take a slice of the funding, along with North Somerset Council and Bristol City Council in the south-west and Bournemouth, Christchurch and Poole Council and Hastings Borough Council on the south coast.

Housing Minister Esther McVey

Housing Minister Esther McVey

Ms McVey said the push to modernise the construction industry would help the "next generation realise the dream of home ownership", with demand continuing to outstrip supply by 80,000 homes per year.

Addressing an audience at Factory 2050, the University of Sheffield's advanced manufacturing research centre, she said: "The benefits are clear. Some modular homes can be built in a factory over a week and assembled on site in a day."

Modular housing involves building the majority of a property in a factory beforehand, allowing for mass production and for the main structure to be transported in one go to the site and fitted into place.

Backers of prefab construction point to the need for less construction traffic and the need to address the sector's ageing core workforce which is currently being topped up by migrant workers.

Critics, however, say smaller suppliers are overlooked in the process and imported materials are favoured.

Speaking previously, Mike Leonard, chief executive of Building Alliance, said the majority of steel and raw timber materials were "almost all imported" during the modular housing process.

But Ms McVey said the modular building industry had the potential to create "skilled, high-quality jobs for life".

The former Cabinet minister said the burgeoning construction sector had to be the potential to be the next "Silicon Valley" - a reference to San Francisco's technology home where Google and Facebook are based.

"With our emphasis on safety, quality and beauty, we could be the global leaders in housing standards," she said.

"And if we get it right, once the industry matures it could be worth an estimated £40 billion to this country. A new post-Brexit industry."

She said there would need to be a "brand-new workforce" to make homes offsite and pushed for the North of England to "embrace" the technology.

"The North of England has the potential to be the construction capital of the country for this new technology, and we need to fully embrace this," said the former broadcaster, who was giving the speech on her birthday.

"This could be a new hub. Think Silicon Valley - the 'construction corridor'."

Huge names in the construction industry, such as Laing O'Rourke and Manchester-based Urban Splash, have already started investing in the technology in a bid to cut costs and speed up delivery.

As well as the £38 million announced yesterday, the Government has already issued £2.5 billion in funding to support small-to-medium sized businesses and innovators through its Home Building Fund.

Nick Walkley, chief executive of Homes England, said he saw "enormous benefits" to using modern methods of construction (MMC).

He said it would allow for "high-quality homes to be built more quickly to addressing labour and skills shortages and improving energy efficiency".

Mark Farmer, chair of the MMC working group, said the UK had a "fantastic opportunity" to become a "true world leader" in using advanced prefab methods.

Modular construction proponents say some homes built using modern methods can have 80% fewer defects and lead slash heating bills by more than two-thirds.