For a Socialist Architecture 3. Part 1: Economic Principles

New Economics Foundation, The Financialisation of UK Homes (2016)

‘Where did this entire financial phantasmagoria come from? Quite simply, from the way people who could just not afford them were forced into buying nice new houses because they were seduced into taking out miraculous loans. Their promises to repay the loans were then sold on, after having been mixed up with securitisations whose composition had been made as clever as it was opaque thanks to the work of battalions of mathematicians. But then the property market collapsed, and that was all it took to ensure the buyers were less and less able to pay their debts, because their houses were worth less while their creditors were demanding more. It looked like a draw: the speculators lost their stake money and the buyers lost their homes when they were gently evicted. But, as always, it was the collective dimension and ordinary life that lost out. Ultimately, all this came about because tens of millions of people are on such low incomes — or non-incomes — that they cannot afford anywhere to live. The real essence of the financial crisis is a housing crisis.’

— Alain Badiou, This Crisis is the Spectacle: Where is the Real? (2008)

This is the third presentation of four ASH is delivering on the principles and practices for a socialist architecture. In the first presentation we looked at the social dimension of a socialist architecture, the context for which is:

  1. The Social. To situate architecture within the totality of relations of its production, distribution, exchange and consumption, and propose new practices for a socialist architecture under capitalism.

In the second presentation we looked at the environmental dimension, one of the contexts for which — or perhaps better challenges — is:

  1. The Environmental. To understand and reduce the totality of consumption within the finitude of global resources.

And today we’re going to be looking at the economic dimension of a socialist architecture, perhaps the overwhelming challenge of which is:

  1. The Economic. To design for and implement economic de-growth within the context of global housing demand.

The current estimate is that we need to build around 2 billion homes globally in which people can afford to live by the end of the century, most of them in the southern hemisphere. This seems to me to be the key challenge facing architecture, housing policy and a lot of other things, including our economy.

1. Opposed Economies of Architecture

We showed this diagram (below) for the first time last week, and I want to return to it today, as we will in our final presentation on the political dimension of architecture.  On the left is a familiar diagram within our capitalist economy: it’s a pie chart in which one would, for instance, break down how funds are allocated to an individual project or large scheme. And within that breakdown, a certain amount of funds would be allocated to ameliorating, for example, the environmental costs of building a particular structure or scheme, for instance with the kind of ‘green architecture’ whose failings we looked at in our previous presentation; and the social costs, equally, would be understood as a certain amount of funding for homes for the equally inadequate provision of so-called ‘affordable housing’ that very few people can actually afford. Within this financial pie chart, both these dimensions of architecture are understood as a financial loss conceded to the total profit that could otherwise have been extracted from the project. And as I said last week, within a capitalist economy the political sphere is seen as extrinsic to these financial considerations, because under capitalism the capitalist model of the economy is taken as given.

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In contrast, under what we understand to be a socialist economy of architecture, these four spheres of practice are one and the same. We can separate one discursively to talk about its specificity, but what we do in one sphere, whether the economic, the social, the environmental or the political, influences all the others. And, crucially — which is what we’re going to discuss next week in our concluding presentation — the political sphere is very much a part of this totality.

The other thing to emphasise in the differences between these two opposed economies of architecture is that, under a socialist economy, the economic is not the same as the financial. Under capitalism, the financial is about how you fund a project, the return you make on it, the profit you extract from it. In contrast, within a socialist economy of architecture the economic sphere describes the totality of exchange — and not just the financial costs — consequent upon a scheme.

Environmentalists have a tendency to talk about the environment as if it were outside the relations of production, and to argue that what we need to do is change what is characterised within Western liberalism as ‘man’s’ exploitative relationship to the environment; but I don’t think that is the case. We’re not, as a species, trying to save the planet for the planet — which will get along just fine without us once we’re gone. We’re trying to save the planet so that we can continue to live on it — for our survival, which means the sustaining of its eco-system sufficient to sustain us. Saving ‘the environment’ means engaging with the total economy of exchanges, which includes, as I have said, housing another 3 billion people by the end of the century should we reach it. An environmental model of change, therefore, must at the same time be a model of economic change, therefore also a change of our social and political models — of which gestures towards funding ‘green architecture’ fall desperately short in both vision and effectivity.

The last thing to emphasis about this diagram here is that, no matter how much we try to separate these spheres — to argue, as our politicians and economists do, that the political sphere is outside of our economy and ‘there is no alternative’ to capitalism; or, as our developers and architects do, that the social and environmental requirements of a housing development are discharged with a portion of its funding — our political policies, our economic models, our architectural practices and their environmental consequences, are all inseparable. One of the key ideas we want to convey in this presentation is that the economic dimension of architecture — as it is of housing provision — is not reducible to its financing, but cuts across the total costs of a given scheme.

2. Neo-liberal Housing Policy

So let’s start with what we are doing now and have been doing for a long time: Neo-liberal housing policy. I imagine there are more than these, but in my understanding of it — gained from working over the past four years as a member of Architects for Social Housing, in which my role involves reading a lot of UK housing policy — Neo-liberal housing policy is based on the following three basic principles:

  1. That attracting investment in UK residential property from the private sector, including foreign investors, overseas buyers and offshore financial jurisdictions, should be the primary source of revenue for house building, rather than state investment.
  2. That according to the law of supply and demand, massively increasing the number of residential properties for market sale will reduce house prices in general;
  3. That the sale of prime and super-prime residential properties for the highest possible market price will cross-subsidise the provision of so-called ‘affordable housing’ the rest of the population can afford to rent or buy.

So, private investment, increased supply, and cross subsidisation: these are the three primary principles of Neo-liberal housing policy, and they are all three fallacies. This is why:

  1. Because private investment in the property market has qualitatively transformed housing into a global commodity to which traditional notions of property ownership no longer apply. As an example of which, anonymous investors represented by companies registered in offshore financial jurisdictions are now speculating on shares — not on material properties — in the value uplift consequent upon planning permission for housing being granted on a piece of land they will never see and which may never even be developed. Property — residential or otherwise — has always been a product in which the buyer invests; but it is now a commodity. This means it’s no longer simply being exchanged on the property market. Property has always been bought and sold, and in London today most high-cost residential properties are purchased off-plan years before they are built, with a deregulated banking system offering loans far in excess of incomes. But for some time now UK housing has been additionally subject to speculation by global financiers, who use mortgages on property to leverage additional finance, which is what led to the sub-prime mortgage crisis that cost 6 million Americans their homes. This marks a qualitative change in the housing market to which not only our policies but also our economy must respond;
  2. Because the law of supply and demand doesn’t describe this property market, whose financialisation by global capital has driven prices up — at it is intended to — not down. It shouldn’t be necessary to point out the obvious: that investors don’t invest in a commodity in the expectation that its price will fall; they do so because they think it will rise — which is exactly what has happened to UK residential property, and in particular since the financial crisis;
  3. Because far from cross-subsidising affordable housing, let alone homes for social rent, private investment is instead funding the demolition of public housing and the sale of public land for the development of primarily market-sale properties. This is particularly the case in London where land values are so high, and so much of the inner-city is built on by council housing.

3. The Neo-liberalisation of Housing

So what are the costs of this? I said before that social, environmental and economic costs are indivisible. As evidence of what these are I’m going to give here just a few statistics, to try to convey some of the costs of the Neo-liberalisation of housing.

  • Between 2006 and 2014, at least £170 billion worth of UK property was acquired by companies registered to offshore financial jurisdictions protected by secrecy laws and with extremely low tax regimes.
  • The real owners of more than half of the 44,000 UK land titles registered to oversees companies are unidentified, but 9 out of 10 of the properties were purchased through tax havens.
  • In the second half of 2018, overseas investors purchased 57 per cent of all homes in Central London.
  • As of October 2019, £10.7 billion-worth of residential property in London is sitting empty.
  • Only a quarter of the residential properties with planning permission in London between 2017 and 2021 will meet current housing tenure and price demand, which is for homes for social rent and lower mainstream housing at lower prices than almost anything currently on the market in London.
  • Of the 169,770 residential properties completed in England between April 2018 and March 2019, only 6,287 homes, or 3.7 per cent, were for social rent.
  • Between 2011 and 2018, only 6 per cent of residential dwellings built on government land sold to developers for housing were for social rent; and only 23 per cent will be even ‘affordable housing’; while 56 per cent of all developments on sold sites have no social-rented housing at all.
  • The total number of unsold new-build properties in London on sale for more than £1 million has hit a record high of 3,000 units, with half of all new-build residential properties in Central London currently standing empty.

There’s many more such statistics where these came from. So, despite the justifications of politicians, lobbyists for the building industry and ideologues of the free market, Neo-liberal housing policy is quite clearly not working. Or rather, while it is certainly working to the benefit of some people, it’s not doing what it is claiming to do.

4. The UK Property Market

Unsurprisingly, the imposition of these policies has had considerable effects on the accumulation of capital in the UK property market, some of which I’ve collected here:

  • The total value of the UK housing stock in 2018 was £7.29 trillion, having risen by a third over the last decade alone. This is equivalent to 3.45 times the gross domestic product of the UK, and more than 62 per cent of the UK’s entire net wealth of £11.63 trillion.
  • 72 per cent of the increase in the value of UK housing stock in 2018, some £137.7 billion, was due to house prices going up, with only 28 per cent of that increase coming from new properties being built. Property wealth, in other words, is not coming from an increase in housing production but from an inflation in house prices caused by market speculation and government subsidies such as Help to Buy equity loans.
  • In 2016 the 10 largest house builders in the UK were sitting on land with planning permission sufficient to build 404,000 new residential properties, as well as holding option agreements with landowners on enough land to build another 480,000. Yet between them they built less than 30,000 new dwellings that year.
  • Despite this — or rather because of it — the pre-tax profits of the four largest UK builders rose from just under £419 million in 2011 to over £2.6 billion in 2016. That’s a more than six-fold increase in just five years. The largest builder, Persimmon, cleared £1 billion profit in 2018. There is a direct correlation, therefore, between housing supply and the profits being made from it, but it is not based on flooding the market with low-cost housing.

5. The UK Homelessness Market

Again, what are the costs of this, and the social costs in particular? Here are some statistics from the UK market in homelessness — and we should never be mistaken that homelessness is not big business:

  • London house prices have risen from an average of £245,000 in April 2009 to £618,432 this month. That’s nearly eighteen times the average London salary of £35,000, and many times more than the roughly £20,000 the vast majority of Londoners earn.
  • Rents on London’s private market, in which 30 per cent of London households now have to find a home, have risen to an average of £1,694 per month, compared to the UK average of £967.
  • The total rent paid by UK tenants in 2018 was £51.6 billion, more than double the £22.6 billion paid in 2007. Though we’re constantly told by UK housing policy that we should aspire to live in a home-owning democracy, fewer and fewer owners actually live in the properties that are being built. Instead, we’re moving toward a rentier society of buy-to-let landlords.
  • One of the consequences of this is that the UK Housing Benefit bill for 2018-19 is expected to be £23.4 billion, almost all of which is going straight into the pockets of private landlords. This represents 2.9 per cent of total public expenditure and 1.1 per cent of national income that could otherwise be spent on building homes for social rent that meet the housing needs of the UK population.
  • Since 1980, nearly 2 million council homes have been sold to tenants at a state-funded discount, a quarter of which are now owned by private landlords who more or less promptly bought them off the leaseholders and now rent them out —often back to the councils that sold them — at private rent levels. Further capitalising on this scheme, investors represented by estate agents are now fronting the money for tenants to enact the Right to Buy their council home, then sell the reduced-price property to the investor in return for a cut of the profits. Meanwhile, 1.6 million households in England alone are waiting for a council home.
  • Of the 31,851 residential units completed in London in 2017-18, 27,148 were for market sale or rent; 2,839 were intermediate, meaning shared ownership or equity; 1,431 were for affordable rent, meaning up to 80 per cent of market rate; and a mere 433, 1.36 per cent of the total, were for social rent.
  • As of March 2019, 84,740 households in England, including 126,020 children, were living in temporary accommodation, a 77 per cent increase since December 2010. Of these, 56,280 (66 per cent of the total) were placed in temporary accommodation by London local authorities.
  • The number of long-term vacant properties in London increased from 20,237 in October 2017 to 22,481 in October 2018.
  • At the end of 2018, there were an estimated 165,000 people homeless in London, or 1 in 52 of the capital’s population, and roughly double that in Inner London, with over 300,000 homeless across the UK.
  • 8,855 people slept on the streets of London last year, with 12,300 sleeping rough across the UK, and a further 12,000 sleeping in tents, cars, sheds, bins or night buses.

6. The Capitalist Housing Crisis

So, what can and must we learn from all this? After our previous presentation someone asked us an interesting question about our use of the word ‘socialism’, and whether we were worried about putting people off. We had several answers. First, that for the first time in decades it’s possible to use the word socialism without being dismissed as a dreamer or arrested as a criminal, and it’s incumbent upon us not to fear using the word ‘socialism’ to describe our social, environmental, economic and political principles, rather than fall back on euphemisms. Second, at the same time — and as capitalism has shown itself throughout history to be so successful at doing — the term ‘socialism’ is being appropriated to a liberal programme of identity politics and minor adjustments to capitalism, neither of which have anything to do with socialism; and after forty years of Neo-liberal ideology it’s important that we clarify what socialism means in practice. And third, it’s about time we came up with an alternative to capitalism, because everything tells us that it isn’t working, and that socialism is, quite literally, the unsurpassable horizon of our time. So let’s start with a few home truths about capitalism:

  • Capitalism doesn’t create competition, but the monopoly in housing provision we currently have. The so-called ‘free market’ has never existed in anything more than the imagination of Adam Smith and his followers, who in the face of the monopoly exerted over the world’s economy by multinational corporations continue to babble on about competitive markets and the democracy of the customer.
  • Capitalism is not restricted by government regulation, as the ideologues of a deregulated free market argue; but is the author of the legislation that is accommodating and promoting its financial interests, with UK housing policy written by professionals who work for the developers, housing associations and estate agents.
  • Capitalism is not restrained by the state but in collaboration with its legal and municipal authorities to implement the social cleansing of working-class communities from the inner cities of global finance. This is happening across the world, from Melbourne to Berlin, from Barcelona to Sao Paulo, from Vancouver to London.
  • Capitalism has no interest, financial or otherwise, in meeting the housing needs of its customers. Its exclusive interest is in increasing the profits of its shareholders. We may deplore this as immoral, but handing over a basic social need such as housing to the indifference of the market is fundamentally flawed. The building industry, accordingly, has no financial motivation to flood the property market with low-cost housing that would lower house prices and with it the vast profits it is making from that market. This is not speculation but an irrefutable truth, whose proofs have been there to see all around us for some time now.
  • The housing crisis – which is the lack of affordable housing provision, the escalation in housing costs, the diminution of space standards, the reduction in build quality from what we built in the past, the worsening of housing conditions with more people living in slums, and the increase in housing poverty and homelessness – is not a residue of the failure of capitalism but a product of the successful functioning of its markets. If the 21st Century should have taught us anything by now, it is that capitalism creates crises, and then it capitalises on them.

7. Economic Principles for a Socialist Architecture

What, then, are the economic principles of a socialist architecture we oppose to capitalism? So that it’s clear, by a socialist architecture we’re not talking about the architecture of the Soviet Union, or of the German Democratic Republic, or of the Republic of Yugoslavia. We’re not talking about the past. We’re talking about the socialist architecture we need for the future, whose principles and practices begin in the present. To describe what a socialist architecture is, therefore, we must articulate and engage the relationship between principles and practices. Having proposed the principles of a socialist architecture is not enough. That’s what declarations of human rights stop at, and why they consistently fail to impose their principles in defence of those who have redress to them. We need to address how to put the principles of a socialist architecture into practice under existing economic, political and social conditions. But let’s start with what the economic principles of a socialist architecture might be. Let’s speculate a bit on our future:

  • All new housing should be social housing. Every time a new development goes up in London there’s an earnest debate about whether 15 per cent, or 30 per cent, or 45 per cent is an acceptable or sufficient share of affordable housing — without asking what exactly composes that share. And the debate always falls back on the claim that, as a city, a state, a nation, we can’t afford to build homes for social rent. Economically, this is rubbish. In the UK after the Second World War, when our national debt was 245 per cent of GDP, we initiated a programme of council housing that built 4.355 million council homes in England and Wales between 1945 and 1980. That’s an average of 121,000 new homes per year, all of them for council rent. These homes weren’t ‘subsidised’ by the state, as we are told nowadays: the state invested in them. So how did the UK of 1945-79 afford to do what we supposedly can’t afford today, when our GDP, adjusted for inflation, is more than 4.6 times what it was in 1955 when records began? First, local authorities with in-house architectural departments directly employed building contractors, and in doing so cut out the hugely exaggerated profits developers take from housing today. Second, the return the state received on its investment was not a quick profit shared with private companies but long-term, with the revenue from what’s left of our council housing continuing to make a profit for local authorities today. Third, and most importantly, the calculation of that return was not purely financial but economic, in the proper sense of the term: meaning it included the social return that took millions of UK citizens out of housing poverty, unsanitary living conditions and exploitation by slum landlords.
  • All land should be socialised. By socialised we don’t mean just nationalised, which means owned and run by the state — as the Labour Party is promising to do when and if it forms a UK government — but run for the benefit and needs of society. There are plenty of examples across the world of state ownership of land and infrastructure that are anything but run for the benefit of its citizens — China’s state capitalism being the prime example today. Ownership by the nation is not enough. Socialisation prescribes how the land is used — beginning, in the UK, where two-thirds of the land is owned by just 0.36 per cent of the population, with its radical redistribution.
  • The state should invest sufficiently in housing as it should in all essential infrastructure — such as public transport, water and energy supply, waste disposal, health, education and emergency services — thereby removing new housing provision from the market altogether. This is the basis to the claim — which the UK has yet to include in its legislation — that housing is a human right.
  • A socialist architecture must never be for profit, which must be subordinated to the total social, environmental and economic costs of a scheme, rather than the opposite — as is standard practice under capitalism — in which the social, environmental and economic costs of the scheme are subordinated to the profit margins of developer and investors.
  • A socialist architecture must prioritise the use-value of its products as homes over their exchange-value as commodities on the property market. We can’t afford, economically, socially or environmentally, to continue to build residential properties that stand empty, in which we cannot afford to live, or which living in forces us into housing poverty and precarity.
  • Maintenance, refurbishment, re-use, improvement of and addition to existing housing and amenities — the costs of which are far lower socially, environmentally and economically than demolition, disposal and redevelopment — must be the default option for a socialist architecture.
  • A socialist architecture must demonstrate a socialist economic model that disrupts the hegemony of capitalism as our economic, political and social orthodoxy — encapsulated in the truism coined by Margaret Thatcher that ‘There Is No Alternative’. The political sphere, and not just of architecture, is part of the totality it composes; and to change our economy we have to change our politics from this orthodoxy. From the perspective of architectural practice, it is not enough to come up with a model that benefits a particular community, whether that’s a housing co-operative, a community land trust or a squat. A socialist architecture must be based on a generalised economic model that is available and applicable to all.
  • A socialist architecture must include a degree of excess, whether in its design, construction, materials, amenities or space. In the same way that we have come to recognise that the austerity measures imposed on the poorest members of society are a political choice and not an economic necessity, so too we must reject the ingrained idea that public housing, whether council or social, must always be built to the minimum standards and for the lowest possible cost. As a comrade of ours always reminds us: There’s nothing too good for the working class!

8. . . . Under Capitalism

How do we do this? In the absence of a socialist revolution — or anything like it — on the horizon of UK politics, how do we turn these economic principles into architectural practice under the following conditions:

  • When housing provision under capitalism is primarily for market-sale properties, with a diminishing percentage of affordable housing and social housing becoming a thing of the past?
  • When the Neo-liberal state is disinvesting in housing, as it is in all essential infrastructure — all of which are being privatised by Neo-liberal capitalism — thereby submitting new housing provision to market forces?
  • When architecture in a capitalist economy is primarily built for profit, which takes precedence over the total social, environmental and economic costs of a scheme?
  • When Neo-liberal architecture prioritises the exchange-value of its commodities over their use-value as products? As an example of which, the projects nominated for the 2019 Stirling Prize, awarded to the ‘most important contribution to UK architecture’, include a private house, a train station, a distillery, an opera house and a sculpture park; and the winners over the past three years have been the headquarters of a US financial media company; a pleasure pier built with £8.75 million of lottery money that the following year was sold to a private company; and an art gallery for the private collection of the UK’s wealthiest artist.
  • When the current orthodoxy in Neo-liberal housing policy is for demolition and redevelopment, with no funding currently available for refurbishment, and the added disincentive of VAT on refurbishment schemes set at 20 per cent compared to between 0 and 5 per cent on new-build?
  • When the Neo-liberalisation of housing provision is embedding the hegemony of capitalism within our economic, political and social systems? The financialisation of housing across the globe is embedding Neo-liberalism into the economies of countries, and in particular rapidly developing economies producing the greatest inequality, such as India, Brazil and Indonesia.

As we said in our first presentation, it is far too late to sit around waiting for the promises of political parties calling themselves social democratic to introduce socialist policies that are impossible under the capitalism to which they are committed in political philosophy. While proposing socialist principles, a socialist architecture must be rigorously honest about how these can be put into practice under the current economic circumstances, which are as bad in the UK as they have been in three-quarters of a century, and politically far worse. Against the protestations of a profession that mistakes its collusion with the implementation of capitalist housing provision for an apolitical attitude, there is far more space for agency than we are led to believe by apologists for Neo-liberal orthodoxy.

9. Financial Costs of Housing Development

To demonstrate this, let’s look at the relative costs of demolition and redevelopment versus refurbishment. These are figures from a report ASH published last year titled The Costs of Estate Regeneration, whose findings I want to summarise here as briefly as possible. This diagram (below) breaks down the costs of new-build dwellings, which with materials and production, professional fees and community levy, marketing and letting fees, finance (here based on a viability report for the redevelopment of the Aylesbury estate, but which can and most likely will be far higher), and developer profit (here based on Notting Hill Genesis housing association demanding 21 per cent, but which can go up to 25 per cent), come to around £305,000 per unit.

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However, when a housing development is built — as so many of them are in London — on land cleared of an existing council estate, there are additional costs (below). These include the cost of decanting and compensating existing residents, both tenants and leaseholders; the cost of demolishing not only the existing homes but the accompanying infrastructure, and transporting and disposing of the waste; the cost of external works and services to the new development; as well as the contingency fees, typically set at around 10 per cent of works. All of which drives the total cost of new build dwellings up to something closer to £425,000 per unit. And, finally, to this enormous figure must be added the cost of residential land, which in London in 2015 varied between £730 and £9,330 per square metre. This makes it impossible to arrive at an estimated financial cost per unit of redevelopment, but it does allow us to say without fear of contradiction that it is enormously expensive. In short, we’re looking at huge financial costs for any new residential development. There is no way we can circumvent these figures, which are the financial givens of the UK property market.

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10. Refurbishment versus Redevelopment

Unless, instead of demolishing and redeveloping, we refurbish and extend. This next  diagram (below) shows the relative costs of refurbishment and infill development versus demolition and rebuild on the Central Hill estate. From the existing housing provision of 340 homes for social rent and 136 leasehold properties purchased under the Right to Buy, ASH was able to extend the housing capacity on the estate by an additional 242 dwellings. This mixture of infill housing and roof extensions brought the housing capacity of the estate up to 718 dwellings, an increase of 64 per cent without demolishing a single home. Not only that, but in the absence of the enormous costs of compensation, demolition and replacing the existing homes, we were able not only to refurbish all those homes up to the Decent Homes Standard, but also to make around half the new dwellings for social rent, thereby meeting the housing needs of the borough.

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In contrast, in order to cover the costs I’ve just quoted of compensation, demolition, replacement and redevelopment, Lambeth council were proposing to increase the housing capacity on the estate to — in one scenario — 1,530 dwellings. However, this required replacing the 340 homes for social rent with 320 for the increased London Affordable Rent, and making nearly three-quarters of the new properties for market rent and sale, with the latter making up 50 per cent of the total new builds. Not only would this not meet anything like housing need in the borough, but the increase rental levels and housing costs would preclude many of the tenants and most likely all the leaseholders from returning to the new development.

Not only that, but to fund this project, the council are proposing to privatise the entire scheme through a commercial housing development, management and letting company. Again, let’s break down the costs of ASH’s proposal compared to that of Lambeth council. Last week we looked at the huge environmental benefits of refurbishment compared to demolition and redevelopment; but the financial costs of the latter relative to the former are even more extraordinary.

We asked a quantity surveyor, Robert Martell and Partners, to estimate the cost of ASH’s proposal to refurbish all 476 homes on the Central Hill estate up to the Decent Homes Standard and build 242 new dwellings, and adding up the costs of refurbishment, of construction, of external works and services, of professional fees and with a 10 per cent contingency sum, they came up with an estimate of £84 million. On top of that — even though half the new builds are for social rent and would therefore be allocated by the council, and being built by the council would remove developer profit — we’ve added marketing and letting fees, finance and developer profit to arrive at a total of around £97 million. Why have we been so generous with our estimates, rather than trying to reduce them as much as possible to support our argument for the financial benefits of refurbishment and infill? Quite simply, because we don’t have to, since the costs of demolition and redevelopment are so enormously higher. Let’s break these down.

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Just to decant and compensate the existing residents costs £25.65 million. To demolish the estate costs £22.8 million. Just to replace the 456 homes the council plans to demolish will cost £156 million. This means that simply to redevelop the estate to its current housing capacity will cost a total of £204.5 million, more than double the cost of the ASH proposal. To build 718 dwellings provided by the ASH proposal will cost £245.5 million, which with decant and demolition costs comes to £294 million, more than three times the cost of the ASH proposal for the same number of dwellings. However, to cover the cost of this scheme over a repayment period of 60 years, it will be necessary to increase the housing capacity of the estate to something like 1,530 dwellings. Not only, as we have seen, will half of these have to be for market sale and a sixth for market rent, with the remainder a mix of shared ownership and affordable rents, but the total cost of this scheme is in excess of an astronomical £570 million, nearly 6 times as much as the ASH proposal.

Not only that, but even with the lack of state funding for, and increased VAT on, refurbishment schemes, under the current funding guidelines and UK house prices and rental market, a financial viability assessment of our proposal (above) shows that it would be possible to repay the costs of the ASH proposal over 25 years, rather than the 60 the council is proposing. That’s on a scheme that increases the housing capacity of the estate by 62 per cent and the proportion of homes for social rent by over a third, with none of the environmental costs of its demolition, or the social costs consequent upon its redevelopment.

What this demonstrates, and which can be verified by this and other ASH reports, is that refurbishment and infill is by far the most socially beneficial, environmentally sustainable, and economically viable option for estate regeneration. But what it also demonstrates is that, even under the current conditions of Neo-liberal capitalism, it is still possible to put into practice the economic principles of a socialist architecture.

11. Alternative Economies of Housing Provision

I want to end with this final diagram (below), which we showed last week to compare cycles of production, consumption and waste within capitalist and socialist architecture. Today we’ve altered its terms to show alternative economies of housing provision. From capitalism’s environmentally unsustainable cycle of extraction, manufacture, construction, demolition and disposal, we now have its equally economically unsustainable cycle of production, distribution, exchange and consumption, with the cycle beginning all over again only with a diminished source of natural resources. Equally damaging to the sustainability of this cycle, at the point of exchange public funding is extracted from the economy as private profit, not re-invested in housing and other infrastructure.

What a socialist architecture must do is interrupt this cycle. Where socialist architecture, from an environmental perspective, begins with the same cycle of extraction, manufacture and construction, instead of demolishing and disposing it refurbishes, improves, maintains and re-uses. In the same way, at the point of exchange in the economic cycle of capitalist architecture, a socialist architecture re-uses, refurbishes, improves and maintains. Refurbishment, as a principle, is not only a method for extending the life of a building, or just a new cycle of production; it is also a different economic model that disrupts, challenges and proposes an alternative to capitalist accumulation. As we have shown, the cycle initiated by refurbishment is far more sustainable environmentally, and it’s infinitely more beneficial socially; but it is also many times more economically viable.

In Part 2 of this presentation we will look at how these economic principles can be put into practices for a socialist architecture.

Architects for Social Housing

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