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Submission by the UK Co-operative Council to the Co-operative Commission on the development of the housing co-operative sector

Presented by the UK Co-operative Council and The Policy Group of the Confederation of Co-operative Housing

May 2000

1. The UKCC and the Confederation of Co-operative Housing (CCH) welcomes the establishment of the Co-operative Commission with its broad remit to look at the future shape of the Co-operative Movement. Housing co-operatives are a newer part of the Co-operative Movement. The recognition, in the terms of reference of the Co-operative Commission, of "a growing need and desire for that sector (Consumer Co-operatives) to give active support and encouragement to the newer, innovative co-operative developments in the economy which are assuming a new importance for job creation and social inclusion" is a most welcome and timely initiative.

2. The co-operative housing movement has, during the past twenty-five years, conclusively demonstrated that the application of the Co-operative Principles to the provision and management of housing delivers quality cost effective housing services and creates sustainable communities. However despite their proven benefits the housing co-operative sector remains small and disadvantaged. Housing co-operatives own or manage less than 0.1% of our nation's housing stock. This contrasts with other European countries in which housing co-operatives make a major contribution to the provision of quality affordable housing. A leading example is Norway where housing co-operatives provide 14% of all housing and have a highly developed co-operative housing system. The UK co-operative housing sector will not grow without positive support from the wider Co-operative Movement. With such support, co-operative housing has the capacity to contribute, in a unique and significant way, to the realisation of the Government's economic and social inclusion policy objectives.

3. The development and expansion of the co-operative housing sector is also of mutual importance to the wider Co-operative Movement. Housing co-operatives are concerned to ensure that members are educated and informed about the principles and practice of co-operation. This practical understanding of the Co-operative Principles is vital to the success of a housing co-operative. Members of housing co-operatives are therefore, potentially, an importance source of new members for established retail co-operatives. Because of the lack of a direct link between the development of housing co-operatives and the retail co-operative sector this cross-fertilisation of membership and co-operative ideals rarely happens. This is detrimental to both parts of the Co-operative Movement.

4. This paper is written on the assumption that it is not necessary for the co-operative housing sector to prove the benefits of co-operative housing to the Co-operative Commission. The benefits of housing co-operatives and tenant control of housing have been well documented by independent academic research and are now widely recognised. The case studies in the UKCC publication "Co-operative Housing: Realising the Potential", a copy of which is enclosed with this submission, show the benefits in a concrete way. The April 2000 issue of the Journal for Co-operative Studies also contains a study of the success of the Speirs Tenant Management Co-operative in Glasgow which dramatically illustrates the benefits of housing co-operatives. Speirs TMC has successfully managed its council-owned housing for twenty years at one end of a street and is a vibrant community contributing to the wider regeneration of the neighbourhood. At the other end of the street council managed housing, which had the same capital invested in it as that managed by Speirs, has been vandalised, abandoned and ultimately demolished. It is a classic demonstration of Best Value being delivered by a housing co-operative.

5. This paper also assumes that it is not necessary to restate the positive actions needed from the Government and its agents to level the playing-field between housing co-operatives and traditional social housing landlords. Again these are well documented in the CCH publication "tenants taking control", a copy of which is also included with this submission and in "Co-operative Housing; Realising the Potential". Also enclosed is a copy of "New Mutualism: The Third Estate" published by the Co-operative Party which makes the case for the recognition of co-operative tenure in housing and property law as distinct from that of landlord and tenant.

6. This submission concentrates on what the wider Co-operative Movement can do to encourage the development of housing co-operatives. The kernel of this submission is that the Co-operative Movement has the capacity to contribute significantly to the development of the co-operative housing movement in the following ways:

A - by Consumer Co-operatives supporting the development of housing co-operatives by establishing, resourcing and participating in local co-operative housing development groups.

B - by Consumer Co-operatives and other co-operative organisations supporting the representative role and work of the Confederation of Co-operative Housing.

C - by the Regional Co-operative Councils taking a proactive role to ensure that housing co-operatives are a positive feature of local and regional housing and regeneration strategies.

D - by the Co-operative Party and its MPs lobbying for the legislative and administrative changes needed to enable the co-operative housing sector to flourish.

The body of this submission deals with each of these issues in turn.

7. Support from Consumer Co-operatives for the development of housing co-operatives by establishing and resourcing local co-operative housing development groups

Experience shows that housing co-operatives develop where positive opportunities to establish them are created and publicised to tenants and those in need of housing who may wish to choose the co-operative option. Tenants who have no knowledge of the possibility and practicalities of forming a housing co-operative will not choose to establish one. Choice is, in effect, denied by lack of information, education and training opportunities.

Experience also shows that housing co-operatives develop where there are competent service agencies capable of assisting their development and providing the training and support services they need. The network of co-operative service agencies is now very limited, having declined from twelve specialist agencies in the early 1980s. Today there are only two service agencies in London, one in Birmingham and three community based housing associations with co-operative housing experience, one each in Liverpool, Leicester and Sunderland. In the absence of secure sources of finance for promotion and education work, the existing service agencies have limited capacity to promote the co-operative option to tenants or to stimulate demand for the formation of new housing co-operatives.

CCH and the UKCC have been pressing the Government to re-direct resources to fund initial promotional and education work through local co-operative housing development groups . Consumer Co-operatives could make a major contribution to the development of housing co-operatives by creating the opportunity for local people interested in them to do so by establishing a local co-operative housing development group. This would be a means of bringing together co-operators interested in housing issues, tenants and housing consumers interested in the co-operative option and local politicians willing to support them. Such groups would be a source of information, training and support for new co-operative housing initiatives. They could agree and promote strategies for the development of housing co-operatives in their local area and facilitate the access to grants and support from service agencies. By demonstrating the effectiveness of such local development groups they would encourage the Government to re-direct resources to fund co-operative housing promotion and development.

Consumer societies would need to resource such groups by providing meeting facilities, publicity and educational materials and administrative support and actively participate in them. CCH is in the process of producing a guide to setting up local co-operative housing development groups. The guide will include model terms of reference, model action plans and lists of educational resources that may be used for training and promotion.

Recommendations:

It is recommended that the Co-operative Commission:

1. Supports the establishment of local co-operative housing development groups to promote and encourage the development of housing co-operatives.

2. Encourages Consumer Co-operatives to support and resource local co-operative housing development groups

3. Supports the call by the UKCC for the Government to re-direct resources, particularly from the Housing Corporation's Innovation and Good Practice Grant programme, to enable local co-operative housing development groups to be established and funded to promote the development of new housing co-operatives.

8. Support from Consumer Co-operatives and other co-operative organisations for the representative role and work of the Confederation of Co-operative Housing

The resolution passed at this year's Co-operative Congress urging the wider Co-operative Movement to support CCH was a welcome acknowledgement of the importance of ensuring that CCH develops its role as the national representative organisation for the co-operative housing sector in England and Wales.

CCH is a run by hard working volunteers. It employs one worker, but is only able to afford to do so because it has secured lottery grant funding for specific projects. That funding runs out in March 2001. CCH's predecessor organisation, The National Federation of Housing Co-operatives, was forced into liquidation in 1992. It would be disastrous for the development of the co-operative housing sector if CCH also failed because of inadequate finances. The co-operative housing movement is not yet large enough or sufficiently well established to resource the much-needed representative work of CCH without short-term additional financial and other support resources from the wider Co-operative family. The simplest way of achieving this is for CCH to amend its constitution to create the capacity to admit Consumer Co-operatives as associate members with an associate membership fee structure that will generate the income it needs in the short-term to support its work.

CCH is not looking for long-term funding from more established co-operatives. It recognises that, if it is to take its proper place within the Co-operative Movement, it must pursue strategies which, in the medium to longer term, enable it to carry out its representative role and provide member services as a self-sufficient entity. CCH is committed to pursuing a business strategy that will enable it to generate the income it needs from affiliation fees and other services it provides for its members.

CCH also does not expect support without generating a return for the resources established Co-operatives might be willing to invest in it. CCH has the capacity to promote the benefits of its members using the services of other trading co-operatives. Subject to the consent of individual member co-operatives, details of individual housing co-op members may be provided to trading co-operatives to enable them to market their goods and services to housing co-op members. CCH can also use its newsletters, meetings and conferences to promote the importance of co-operation among co-operators and to encourage housing co-op members to become active members of retail and other co-operative enterprises and active buyers of the goods and services offered by trading co-operatives.

The type of support that the wider Co-operative Movement might provide to CCH in addition to financial support through affiliation fees is the secondment of staff to work on specific projects or to carry out specific tasks, advertising in newsletters, and sponsoring conferences, events or publications.

CCH considers that it is important to grasp the opportunity the Co-operative Commission and the 2000 Congress resolution presents to agree a formal strategy for development of support from the Co-operative Movement. It intends to present and seek to agree this strategy with the Co-operative Union. An endorsement by the Co-operative Commission of the importance of such strategic support for CCH from the Co-operative Movement would significantly improve the prospects of such support being forthcoming.

Recommendations:

It is recommended that the Co-operative Commission:

4. Encourages Consumer Co-operatives and other co-operatives that are members of the Co-operative Union to support the development and work of the Confederation of Co-operative Housing by affiliating to CCH as associate members, sponsoring events, advertising and secondment of staff.

5. To commend to CCH and the Co-operative Union that they negotiate and agree a formal strategy for the development of support for CCH from the wider Co-operative Movement.

9. Regional Co-operative Councils taking a proactive role to ensure that housing co-operatives are a positive feature of local and regional housing and regeneration strategies

In Wales and Scotland, the strategic responsibility for housing and regeneration is a devolved power. The Scottish Parliament and the Welsh Assembly have elected Labour/Co-operative Party members that may be lobbied through normal democratic channels, to include the development of housing co-operatives in housing and regeneration strategies.

In England, Regional Development Agencies (RDAs) are set to play a pivotal role in regional economic, housing and regeneration strategies. Regional Development Agencies in England, being appointed bodies, are not open to normal democratic lobbying. There is therefore a need to ensure that the potential of housing co-operatives to contribute to regional housing and regeneration strategies is not ignored because of lack of knowledge or understanding of the benefits they can bring to developing sustainable communities and tackling social exclusion.

The risk of the co-operative option in housing being ignored is evidenced by the consultation draft Regional Housing Statement for the South East recently published jointly by the Housing Corporation and Government Office for the South East. It is intended to be consistent with the regional economic strategy published by the South East England Development Agency. While stating that key objectives of the strategy are to "encourage the development of sustainable communities" and "tackling social exclusion by involving local communities ... and ... building community capacity" the proven potential of housing co-operatives is not referred to, not even as an option that tenants who wish might choose. The only possible explanations for this are either bureaucratic prejudice or ignorance.

The only way of overcoming such prejudice or ignorance is for Government to do two things. Firstly, to ensure that there is a co-operative housing representative in every regional chamber advising RDAs and on all strategic regional planning committees and that there is an RDA staff member in each region with specific responsibility for supporting the development of housing co-operatives in regeneration schemes. Secondly, to require that all regional housing and regeneration strategies specifically address the contribution that co-operative and community ownership of housing may make to regional and local housing and regeneration strategies.

Recommendations:

It is recommended that the Co-operative Commission:

6. Recommends that the Government ensures that there is a co-operative housing representative in every regional chamber advising RDAs and on all strategic regional planning committees and that there is an RDA staff member in each region with specific responsibility for supporting the development of housing co-operatives in regeneration schemes.

7. person with knowledge of and expertise in co-operative housing is appointed to the board of each regional development agency and strategic planning committee.

8. Recommends that the Government requires that all regional and local housing and regeneration strategies address the potential of housing co-operatives to help achieve the Government's twin objectives of creating sustainable communities and tackling social exclusion.

10. Support from the Co-operative Party and its MP's for the legislative and administrative changes needed to enable the co-operative housing sector to flourish

There is no legal framework in UK housing law in which rights of occupancy of residential property can arise from membership of a democratic mutual co-operative housing provider. In UK property law there are only two estates, freehold of the Crown or tenant of a superior landlord. This contrasts with other countries, such as Norway, Sweden, Austria and Australia, which have well-developed systems of mutual tenure.

The lack of a proper legal and administrative framework for co-operative housing creates numerous practical difficulties for the administration of housing co-operatives. It also denies members legal protection of their rights. Details of the changes needed to housing law and the social housing system are well documented in the CCH's publication "tenants taking control" and the UKCC's publication "Co-operative Housing: Realising the Potential", copies of which are enclosed with this submission. The policy case for creating a Third Estate of co-operative ownership of housing in UK law has been made in "The Third Estate" a pamphlet in the Co-operative Party's New Mutualism series also enclosed with this submission.

Despite intense lobbying efforts ably supported by the UKCC, in particular its Chairman Lord Graham of Edmonton PC, progress towards the removal of the disadvantages housing co-operatives experience has been painfully slow.

The Co-operative Party has a key role to play in helping to create the legal and administrative framework within which housing co-operatives may develop and flourish. The publication of the Housing Green Paper, and the housing legislation that is likely to flow from it, presents a unique opportunity for the Co-operative Party to campaign for positive legislative and administrative change.

Recommendations:

It is recommended that the Co-operative Commission:

9. Endorses the need for an appropriate legislative and administrative framework for co-operative housing.

10. Recommends that the Co-operative Party lobbies the Government to create an appropriate legal and administrative framework for housing co-operatives and makes such lobbying a key political objective of its Parliamentary Group of MPs.

11. Recommends that Co-operative Party branches and Labour/Co-operative councillors be encouraged to ensure that positive strategies for the promotion and development of housing co-operatives are incorporated into the housing strategy of their local housing authority.