David Kirby looks at the issues surrounding demolition in Wales and what sustainable alternatives can be explored.
The Chartered Institute of Building (CIOB) is the world’s largest and most influential professional body for construction management and leadership. We have a royal charter to promote the science and practice of building and construction for the benefit of society. This practise has been maintained since 1834. We have over 1,500 Welsh members that work in the development, conservation, and improvement of the built environment, and tens of thousands more worldwide.
Our Welsh Manifesto outlines our policy goals for the construction sector in Wales, and we have a significant programme of work that covers an array of policy areas. These include climate change and sustainability; equality, diversity, and inclusion (EDI), and mental health. Much of our policy work supports the aims of The Wellbeing of Future Generations Act.
A Welsh demolition levy: a way to protect heritage?
The issue of demolition has again raised its head in Cardiff, with the long-awaited plans to demolish Cardiff’s outdoor velodrome despite public outcry edging closer. Campaigners, including cyclist Geraint Thomas, have voiced concerns about the plan and the potential loss of public space in the area. No solution to stop the demolition has been forthcoming, however, so the question of other avenues to stop these kinds of demolitions is on the docket once again.
Developers may be incentivised to preserve and improve buildings through reuse or retrofit routes, both of which have less negative impact on the environment than the replacement of buildings.
Across the UK, 20% VAT is applied to repair, maintenance, and improvement (RMI) works, while most demolition and new build projects are exempt from VAT. This creates a perverse environment where the replacement, rather than the repair and restoration of the built environment, is financially incentivised.
A recent Senedd research article outlined concerns across Wales that buildings and built assets of important community value are not afforded the same protection as buildings of historical significance. Across Wales in recent years, we have seen the complete – or proposed – demolitions of key community assets, including historic local pubs, cinemas, and Victorian crescents that housed local businesses. Attempts by local campaigners and activists failed to stop these demolitions by respective local authorities, and their demolitions were authorised.
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The Chartered Institute of Building (CIOB) research suggests that a demolition levy could deter developers from demolishing built assets such as these. Developers may be incentivised to preserve and improve buildings through reuse or retrofit routes, both of which have less negative impact on the environment than the replacement of buildings.
In 2010, the Petitions Committee in the Senedd agreed that new rules were needed “to protect buildings which are important for social and cultural reasons”. Asolution has yet to be agreed by policymakers and the problem is ongoing. Could a demolition levy strike the right balance between protecting these buildings now, while incentivising development by prioritising retrofit until VAT reform – or a national retrofit scheme – is in place?
How much funding could this levy provide?
CIOB’s report Levelling the playing field, which was first published in Scotland in 2022, proposes a demolition levy of 20%, enforced on the estimated number and cost of demolitions (993 and £7,837 for a small home, respectively) could raise a conservative estimate of £1,556,482.20 per annum. This revenue could fund initiatives that support energy-efficient upgrades to housing, help vulnerable households through the current cost of living crisis, and preserve historical buildings.
With official data lacking for other kinds of demolitions, it is likely that the actual number of demolitions and subsequent funds raised could be higher.
Statistics show that there are fewer total demolitions in Wales than Scotland: Welsh Government say that there were 141 dwellings demolished in 2020/21, which – using the same calculations as above – would have only raised an estimated £221,003.40.
This figure increases slightly when taking into account data between 2016 – 2021, during which period a total of 345 dwellings were demolished across Wales, which could have raised an estimated £540,753. This calculation does, however, include the zero demolitions carried out in 2019/20 due to the Covid-19 pandemic.
Needless to say, either calculation is a fraction of the potential income for Wales when compared to the estimates outlined for Scotland in Levelling the playing field. It is worth noting that data in Wales is only available for domestic demolitions, which obviously does not encompass non-residential buildings. With official data lacking for other kinds of demolitions, it is likely that the actual number of demolitions and subsequent funds raised could be higher.
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We know that demolitions are likely to increase in the next few years. Welsh Government figures show that demolitions carried out in Wales increased by 88% between 2018/19 and 2020/21, . Further increases in the number of demolitions are likely to be driven by the need to replace some of Wales’s housing stock – which is the oldest in the UK – to achieve net zero and improve Energy Performance Certificate (EPC) ratings, especially in rural areas.
This continued increase in the not-too-distant future could make the levy a more viable and attractive funding option for the Senedd and Welsh Government. Paradoxically, if the number of demolitions increases as much as it is forecasted to – which is not unlikely for reasons outlined above – implementing this levy could also act as a deterrent for developers and provide a viable funding stream in the coming years. Introducing a levy during this Senedd term would mean that a levy is already in place when it is most needed, and that no funding is missed out on when national decarbonisation deadlines are looming.
Addressing the sustainability of the built environment will require coordinated, long-term action
A levy could also be a deterrent to developers, incentivising them to look at the reuse or retrofit of properties across Wales, in lieu of wider VAT reform from UK Government.
Levelling the playing field outlines the challenges of moving away from the practice of demolition and rebuild, namely that demolition is not compatible with wider sustainability aims due to the high amount of emissions and the risk of silica dust exposure caused by the process. Making demolition a less attractive proposal than repurposing an asset could therefore be a key driver of wider Welsh Government sustainability aims, including those outlined in Wales Innovates to move to a more circular economy and end the practice of unsustainable consumption of resources through waste avoidance. Given that more than half of the UK’s Construction and Development Waste (CDW) goes directly to landfills, the negative effects of levelling buildings in Wales – and the need to discourage the increasing number of demolitions – cannot be overstated.
Addressing the sustainability of the built environment will require coordinated, long-term action; various mechanisms will be needed to bring about the culture shift to drive a greener built environment. Considering the unequal playing field created by today’s VAT structure, we urge the Welsh Government to engage its devolved powers creatively, considering the value a demolition levy could bring to the construction sector, the economy and Wales’s built environment.
All articles published on the welsh agenda are subject to IWA’s disclaimer.
This article was edited by Kaja Brown thanks to the Books Council of Wales’ New Audiences Fund.