Response to The Housing Green Paper
"Quality & Choice: A Decent Home for All"
by the Confederation of Co-operative Housing and the United Kingdom Co-operative Council
July 2000
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- Introduction
- What are the key lessons to be learnt from the housing co-op sector?
- The tenant / landlord relationship
- Transferring power in the local authority sector
- Transferring power in the RSL sector
- Home ownership
- Other issues
- Conclusions
- Notes
1. Introduction
1.1 Whilst the Housing Green Paper's key aim that there should be a "decent home for all" has to be a primary objective, it is vital that the provision of those homes is sustainable in the long term. Since the 1970s, we have seen repeated attempts made to regenerate public sector housing and most of them have failed. They have failed because no regeneration approach has yet been based on giving power, resources and responsibility to the communities themselves. The Prime Minister, in his foreword to the Social Exclusion Unit's "Bringing Britain Together: a national strategy for neighbourhood renewal", clearly recognised this saying 'too much has been imposed from above, when experience shows that success depends on communities themselves having the power and taking the responsibility to make things better.' We agree that the way forward is to find ways to transfer power and responsibility to communities. Passing power and democracy to tenants at a local neighbourhood level has been the hallmark of other western democratic societies, such as in Canada, Norway, Denmark and closer to home, in Scotland, with extremely successful results. Unfortunately England and Wales lag far behind in this area.
1.2 There may be a variety of methods to transferring power, but research and experience has shown us that the housing co-operative model is a very effective way of devolving power. Since the mid 1980s, there has been very limited government support for housing co-operatives and consequently only a tiny fraction of social housing in England and Wales is co-operatively controlled. In Scotland however, with significant support for tenant control, over half of the Housing Association sector is tenant controlled, and half of that is co-operative.
1.3 There is significant interest in the housing co-operative model from many local authorities, from a range of housing practitioners, from politicians of all persuasions, and most importantly from growing numbers of people who want to live in them. It is difficult to argue against the obvious wide-ranging benefits that spring from them. However, the reason why there has been little government support is because consideration of the role that they could potentially play in government housing policy has been left to Housing Corporation staff who have very little understanding of community empowerment, let alone housing co-operatives, and the Corporation's approach has always been to consider them in a framework that they have created for much larger organisations.
1.4 Nonetheless, the unique benefits and potential of the housing co-operative movement merits special consideration, and we propose that the next government should develop a strategy for the development of housing co-operatives as part of a wider strategy that is about developing options for the transfer of power and assets to communities. This strategy should be developed in partnership with those tenants who are already exercising control and active at a grass roots community level.
Proposal 1: that the next government should develop a strategy for community ownership and control through the DETR, that includes enabling tenants and prospective tenants to set up housing co-ops
1.5 This strategy should take on board the key lessons learnt from the housing co-operative sector. Housing Co-ops have been one of the most successful and undervalued forms of transferring power. They have been sustainable community organisations, promoting social inclusion and capacity building for as long as 25 years in some cases. Their message of self-help and people taking pride in and responsibility for their homes and environment is precisely what is needed to transform society. All the available research indicates the effectiveness of housing co-ops by comparison to other forms of housing provision. The most notable piece of research in this area has been the DOE-commissioned report "Tenants In Control: an evaluation of tenant-led housing management solutions", carried out by Price Waterhouse in 1996. It concluded that:
- "Most co-ops outperformed their Local Authority and Housing Association counterparts and provided more efficient housing management services with usually better value for money"
- "Tenant Management Organisations delivered wider non-quantifiable social and community benefits".
- "The most effective organisations were those whose members had greatest control over their housing management, finances and environment."
1.6 The clear message of this report, that tenant controlled organisations are better value for money at the same time as providing social and community benefits, and that the organisations that had the most control - ownership housing co-ops - were the most successful, should have had a major effect on housing policy. It has not, and it is regrettable that under the current government, fewer housing co-ops have been established even than under the previous 3 government terms of office and it remains next to impossible for tenants to establish co-ops. Housing policy should not only be lifting the barriers to enable people to establish housing co-ops if that is what they want, but also the lessons learnt from the housing co-op movement should inform other methods of transferring power to local communities.
2. What are the key lessons to be learnt from the housing co-op sector?
2.1 There are some key points that can be learnt from the housing co-operative sector, and these points need to impact on housing policy:
- most successful housing co-operatives are small-scale neighbourhood based organisations. Genuine decision-making must be devolved to a number of properties that ordinary people relate to (perhaps to as few as 50 properties).
- the ringfenced budgets of housing co-ops means that co-op members see a direct relation between the rent that they pay and the services that they receive, and this relationship builds self-dependency and community responsibility
- simply getting residents on boards is not enough, even if that board is then tenant controlled. If we are to really get the benefits of resident control, empowerment must be at 'grass roots' level and the resident control structure built bottom up from that.
- the housing co-operative model is a unique way of involving people in real decision-making, while they build their capacity to deal with a potentially wide range of other issues.
- communities achieve more and come up with imaginative and common sense approaches about their neighbourhoods where they are given the freedom to come up with solutions on their own. However, checks and balances need to be in place, and communities need to have access to professional support as necessary. The relationship between communities and staff is not the "partnership" relationship that many would have us believe, because it is only members of communities that can make their communities sustainable. Professional support workers should be available to provide guidance, advice and support where needed, but decision-making in local neighbourhoods should rest with communities, who should be free to make and learn from their mistakes. Many of the successful housing co-operatives have bought services from the dedicated housing co-op service agencies. The way in which these services are provided should become a blueprint for staff and other organisations to provide support to tenants and communities.
- the reason for setting up neighbourhood control may not be about providing better housing management. The better housing management that springs from housing co-ops and resident control is a by-product of the success of the organisation. The reason for encouraging resident control is about accountability, community empowerment, about encouraging self-help and self-responsibility, about tackling social exclusion, about re-enfranchising ordinary people who will have often felt that they have no real stake in society
2.2 Our proposals in this response are based on these elements that we have learnt in the housing co-operative sector and we would argue that these points must be replicated if we are to have any hope of turning around the cycle of the ineffective regeneration industry that has been with us since the 1970s.
3. The tenant / landlord relationship
3.1 We welcome the Green Paper's desire to see a social housing sector where tenants "can take responsibility for their homes in the same way that owner-occupiers can; where tenants are empowered in the decision-making processes that affect their homes". Owner occupation is about people taking responsibility for their own homes, and the same is necessary for the public-sector housing sector. Housing Co-ops encourage this responsibility and we would like to see a tenure introduced that recognised this unique relationship, where the landlord and the tenant are one and the same and where tenants gain their tenancy rights by virtue of their being members of a democratic organisation.
Proposal 2: That the government should introduce a form of tenure where tenant's rights are based on their membership of a mutual democratic organisation.
4. Transferring power in the local authority sector
The "Right to Manage"
4.1 The £19 billion that the Green Paper estimates is needed to modernise and regenerate local authority stock is clearly the most pressing problem facing the local authority sector. However, it is vital that whatever methods are used to raise this level of finance lead to sustainable redevelopment. The consequences of raising large amounts of finance, only to see it wasted and required again in 20 years time, do not bear thinking about. We would argue that the only way to ensure that local authority housing becomes sustainable, whoever ends up owning it, is to ensure that the local community becomes the guardians and trustees of its regeneration. Where this does not happen, it is unlikely that the cycle of the same neighbourhoods permanently seeking taxpayers money to redevelop estates will not be broken.
4.2 Therefore, tenants and residents should be clearly supported in taking control of their homes and environments. A key method for doing this has been the "Right to Manage", which has had a fundamental effect in building the capacity of ordinary people in many local authority neighbourhoods [1]. We would consider that there has been no other government funding that has had such a significant effect towards community empowerment. In many cases, staggering sums of money have been saved from what had previously been spent by the local authority, at the same time as delivering a much-improved service and real vibrant communities.
4.3 There are now over 200 tenant management organisations in local authority properties, and their success indicates that the "Right to Manage" should remain an option that is clearly supported by government. The best value and tenant participation compact programmes should ensure that all tenants are aware of their "Right to Manage". We would also suggest that tenant management organisations should be considered in the same light as arms length management companies with regards borrowing powers, and that local authorities should be given permission to raise loans for neighbourhoods where tenants have taken over significant parts of the service, and have demonstrated successful performance.
Proposal 3: that local authorities be given permission to borrow money for neighbourhoods where tenants have established tenant management organisations to run a significant part of the service and where their performance is exemplary, in a similar way to proposals relating to arms length management companies
4.4 It is obviously the case that, in moves towards creating a form of tenure, that the "Right to Manage" must be maintained. If there are to be changes to tenure arrangements, then the "Right to Manage" will have to be extended to RSL tenants. We would go further than this and would suggest that the government should consider how a legal "Right to Community Ownership" might be established.
Proposal 4: In considering forms of tenure, the "Right to Manage" must be maintained, and should be extended to RSL tenants. The government should consider how a "Right to Community Ownership" might be established for all public sector housing.
Stock Transfer
4.5 It is regrettable that stock transfer may form the basis of raising the finance necessary to modernise local authority stock. The CCH, as a democratic organisation that increasingly represents tenant management organisations in local authority properties, has to report that there are deep levels of dissatisfaction in tenant management organisations, in both the principle of stock transfer, and in the ways in which stock transfers are currently being done. Many local authority tenant management organisations feel that the extraordinary efforts that they have put into saving and developing their communities have been completely ignored in consideration of methods of stock transfer. Most tenant management organisations are deeply suspicious of assurances given by the Housing Corporation and others that their organisations will be protected in the RSL sector.
4.6 The original vision of public sector housing was that it would provide decent homes for all, but would do so through democratic accountability and the housing would be run in the interests of the community. The principle of democratic accountability of local authority housing, even where it has not worked well in practice, is a principle that is worth saving and strengthening wherever possible.
4.7 Unfortunately, local authority housing was built on the understanding that there would be a permanent government subsidy for it, and that subsidy is now in jeopardy.
4.8 Local democratic control, regardless of whether the stock remains owned by local authorities or not, preserves the originally intended democratic accountability of local authority housing. A transfer of stock to a large and external housing association does not. We welcome the Green Paper's recognition of this - "Transfer presents an opportunity to move away from large monopoly providers of social housing to a greater number of smaller bodies that are based in or closer to the communities where the homes are transferred." However, if a stock transfer is necessary, having tenant representation on governing bodies will not go far enough if we are to safeguard expenditure for future generations. The greatest possible number of residents must become genuinely engaged and lead the process of regeneration, so that they will take on the responsibility of stewardship in the future. Even full tenant control may not be enough to achieve this, if it means that the only tenants engaged are those that are on a board governing some 4000 properties. There need to be full democratic structures that relate to tenants at a local neighbourhood basis, at a level at which all tenants can relate to.
4.9 Unfortunately current regeneration models have a low definition of success in the area of community empowerment. One Housing Action Trust that is portrayed as a model of regeneration claims that there are 600 out of their 11,000 residents involved in the regeneration process and that this is a measure of its success. Even if there were 600 residents involved, this would only represent 5% of the local population, and there is a need for significantly more residents to become actively engaged if problems of alienation and social exclusion are to be combatted.
4.10 Despite this example being touted as a flagship regeneration process, it will not be sustainable without the active involvement of the community. When the regeneration project leaves, the neighbourhood will not have overcome the stigma and alienation that characterised it before and more money will be required in 10, 15 or 20 years time. What a tragic waste of public resources!
4.11 If stock transfer is deemed to be necessary, there should be other key elements brought into the process:
- ensuring that residents are brought into the process at the start of the process
- ensure that residents are engaged at a neighbourhood level which they can relate to. This might be as low as 50 properties in some cases
- funding needs to be available to enable residents to engage at a neighbourhood level. This option will not be cheap in the short term, but it will be far more cost effective in the long term.
4.12 We should therefore be investigating models for stock transfer that will enable residents to establish locally based community controlled organisations, and in particular housing co-ops. We welcome the indication in the Green Paper that "the Housing Corporation is working up proposals to support and develop different types of resident control, including full ownership models, such as housing co-ops", but early indications suggest that the Corporation is very reluctant to develop models that will enable the development of housing co-ops.
Proposal 5: All successful transfers of local authority stock should include an option that groups of tenants, on a neighbourhood basis, are in a position to choose to set up a (leasehold) housing co-operative, and that option should be clearly disseminated to them.
4.12 A particular difficulty relating to tenants establishing tenant controlled organisations through stock transfer is that there is no independent funding available for them to investigate methods of doing this, to develop business plans and carry out stock condition surveys. Section 16 funding does not enable this, and the 1996 Housing Act prevents the Housing Corporation from funding the establishment of an RSL, whether it be tenant controlled or not.
4.13 A possible way around this problem would be to require local authorities to "loan" prospective tenant controlled RSLs finance under certain conditions to develop business plans, to carry out stock condition surveys and to carry out ballots, to be repaid through the subsequent RSL.
4.14 This is particularly required for tenant management organisations, many of whom will want to transfer ownership to themselves, and the lack of any funding for them to investigate and develop options is a severe problem which is likely to waste significant potential
Proposal 6: There should be consideration of how funding will be made available for local authority tenants to consider options for how they can transfer stock to themselves
Models for stock transfer that will enable the development of housing co-ops and tenant control
4.15 Models for stock transfer have recently been developed where ownership of the freehold of the properties lies with an overall land trust, and the properties are then leased to tenant controlled organisations [2]. This is an interesting development, but even these developments will produce organisations running 4000 or more properties. This is still a number of properties that will make it difficult to create the kind of participatory structures that will engage a significant number of the resident population.
4.16 Nonetheless, the principle of transferring the freehold to larger holding companies and leasing to smaller neighbourhood tenant controlled organisations is the right way forward, but we would like to see models that enable tenants at a very local level making decisions about how they want their housing to be run, and they should be in a position to establish a housing co-op, if that is what they want to do.
4.17 This principle is the one that has been adopted by the Redditch Co-operative Homes development, where it was intended that a holding company would lease to a number of housing co-ops with about 50 properties each. However, in this example the Housing Corporation has decided that RSLs cannot lease to non-RSLs. The Housing Minister has already indicated that he "can see the attractions in allowing RSLs to grant short leases to non-RSLs as a means of establishing new co-operatives which might subsequently register as RSLs". We would like the Housing Corporation investigating the possibility of leasing to tenant-controlled non-RSLs, and as yet it would appear that there has been no progress on this proposal.
Proposal 7: Tenants should be in a position to establish unregistered housing co-ops through leasehold from RSLs, which could subsequently register as RSLs in their own right.
4.18 As well as this, we can see advantages in separating the freehold ownership of stock-transferred properties from the provision of services, just as the Green Paper makes the case for the separation of ownership and management in local authority properties. If neighbourhood tenant controlled vehicles are forced to buy services from central borough-wide holding companies, then real control of the services may continue to rest with the central organisation.
4.19 The model that has been adopted by many housing co-ops, where they are free to choose to buy services from service providers, or to run their organisations in a different way, is a model that should be replicated in stock transfers. Service providers (registered as RSLs) could be established in stock transfers where they are set up solely to provide services and not to own properties themselves.
Proposal 8: The way in which services are provided to housing co-ops should be investigated and methods built that ensure that neighbourhood tenant-controlled stock transfer organisations can buy services from service providers of their choice.
5. Transferring power in the RSL sector
5.1 The existing RSL sector is far behind the local authority sector in terms of community empowerment and in the majority of RSLs the culture of paternalism creates massive barriers to ordinary people taking power. RSLs have a long history of developing paternalistic "top-down" solutions, and despite the adoption of the language of "bottom-up" solutions, most approaches remain paternalistic in substance.
5.2 This cannot be allowed to continue. Public money has funded the development of the RSL sector and poor levels of service and community infrastructure are storing up problems in the RSL sector for future generations that will dwarf the problems being currently faced in the local authority sector.
5.3 The Housing Corporation has done little to deal with these problems. It is paralysed by its lack of understanding of community empowerment, by its inability to exercise control over the Housing Associations it has set up, and by its fear that money lenders will not lend to tenant controlled organisations. With the clear evidence that exists of the greater effectiveness and better value for money in tenant controlled housing, it should not have been difficult to convince money lenders that their money would actually be safer in tenant controlled housing than in traditional housing associations, but the Housing Corporation appears unwilling to make this case.
5.4 In fact, we would suggest that recent history has shown that loans may be more at risk in traditionally run housing associations. Many RSLs have had no raison d'etre save the maintenance of their organisations, and they have therefore been motivated by the funding (particularly public sector grant funding) that they can raise. This has led to the development of homes where no one wants to live, or where rent levels have been so high that only people on housing benefit can live there. This irresponsibility has had the consequence of the transformation of RSL housing into welfare housing with the significant social problems that that has created. We would suggest that such activity is hardly the stuff of responsible management.
Proposal 9: The government, in partnership with tenants from tenant controlled organisations and housing co-ops, should ensure that the case for lending to tenant controlled organisations is made to money lenders.
5.5 The Green Paper makes a case for the separation of ownership and management of public sector housing in the Local Authority sector. We see no reason why this argument should not also apply to the RSL sector. We should aim that properties in the RSL sector should be owned by the communities they serve and that Housing Associations should be there to provide accountable services to them.
5.6 This structure is clearly an aspiration, and steps taken toward such a structure would be slow and developmental. In particular the paternalistic culture and vested interests in the majority of the RSL sector would resist such change. However, the predicted growth of stock transfers provides a key platform on which to build community ownership, and the few RSLs that have vision and are willing to look towards building real empowered communities will be keen to provide support to neighbourhood controlled stock transfer vehicles.
5.7 The minority of Housing Associations that are prepared to support community empowerment should be encouraged to do so, and we would suggest four key steps that need to be taken to encourage resident control:
Proposal 10: The government needs to take a clear and unambiguous position that a paternalistic approach will no longer be tolerated and that those organisations that take such an approach will receive no further public funding. Therefore ADP bids for Social Housing Grant should be heavily weighted in favour of schemes that will be resident controlled.
Proposal 11: Continued consideration should be given to introducing grant levels that will enable small community based organisations, such as housing co-ops, to develop. Government will be concerned to maximise the number of housing units developed with the social housing grant available. However, if large housing associations are capable of subsidising smaller ones, it follows that they should use their spare resources to produce more housing for rent. If this were required of them, it would cancel out any risk of loss of units that might arise from setting a grant rate that enables rent affordability to be achieved by co-operatives and other small or minority ethnic RSLs.
Proposal 12: With suggestions that a single tenure may be introduced, the government will have to start considering the introduction of a "Right to Manage" for RSL tenants. In the meantime, an equivalent of the Section 16 Grant Programme should be made available to tenants in the RSL sector, that includes independent funding to enable tenants to establish resident controlled organisations. What the Housing Corporation is proposing in terms of its Community Training " Enabling Grant falls far short of this. It would appear that no funding will be made available for tenants to establish tenant controlled organisations, and the funding that is to be made available through Community Training & Enabling Grant is entirely discretionary and lacks any clear definition as to what it can be used for.
Proposal 13: There needs to be a government funded extensive tenant-led programme in the RSL sector to disseminate information on the options available to RSL tenants, including the housing co-op option. There have been suggestions that tenants would not be interested in setting up housing co-ops, but unless the model is available to them and the information about the model is actively disseminated, no one is in a position to determine how much demand there might be for it.
6. Home ownership
6.1 The Green Paper points out that "most people want to own their own homes at some stage in their lives". That may be right, but we would want to examine this aspiration in terms of the public policies during the 80s and 90s that made alternative forms of tenure unattractive or inaccessible to the majority of the population. The consequence of those public policies is that a greater percentage of people in the UK own their own homes than in other European countries.
6.2 The Green Paper suggests that there are "wider benefits" to the community from home ownership. We are not convinced that there are only benefits to the community from extensive home ownership. There are also significant drawbacks that include the following:
- The knock-on effect of a higher percentage of home ownership is that housing is seen as less of a universal election issue, and consequently it is a sector that enjoys less public resources than it used to. This will continue to put a growing squeeze on public sector housing. More importantly, it will continue to be difficult to tackle social exclusion if the future of public sector housing is as welfare housing.
- Realistically, home ownership as a part of public housing policy to deliver good quality homes for people on low, or even middle, incomes, would require state support. Most freehold owners cannot afford to make plans for future maintenance, and hope to be able to deal with problems as they arise. Similarly, the freehold owners of most leasehold properties have made no provision for future maintenance. 'Right to buy' leaseholders on some regeneration schemes, many of them pensioners, can testify to the large increase in their annual service charges to cover the costs of future maintenance, with no access to state benefit to help with the costs.
- While 'Right to Buy' policies and other home ownership schemes have responded to individual aspirations, this has not been achieved without some detrimental effects to fabric of the community. Increasing social polarisation has been devastating to so many estates and neighbourhoods, where those that have the ability to do so, have left. Even where homeowners remain, it is difficult to build sustainable communities where the interests of tenants and homeowners diverge.
- If, for example, works are needed to improve a whole street of housing, it would make more economic sense if the works could be carried out on a planned maintenance basis to all the properties. Similarly, there are environmental gains that could be made by joint use of energy sources across many properties. Such gains are difficult to achieve where there are no mechanisms which bring homeowners together on a mutual basis.
6.3 We would not wish to argue against the individualist aspirations to improve one's own circumstances that characterises homeownership. Indeed, housing co-ops are set up to harness that individual aspiration and to unite these individual aspirations with the community's wider aspirations.
6.4 Nonetheless, we would argue that there need to be models that enable collective homeownership and which bring homeowners and tenants together as one community. The Green Paper's indication that it wishes to develop a commonhold tenancy will be one method of achieving this, and we fully support such moves, provided it results in democratic ownership of freehold.
6.5 The Confederation of Co-operative Housing is also investigating the development of Community Land Trusts as a mechanism for community ownership of land, to both ensure affordable methods of home ownership and to develop community housing. Pilots for such an idea are currently being investigated.
Proposal 14: That the Government works in partnership with the Confederation of Co-operative Housing and others to develop mutual forms of home ownership.
7. Other issues
7.1 We have not discussed issues relating to changes in the allocations and housing benefit systems, because there will be other people who will be better qualified to comment on these issues. The suggestions in the Green Paper in these areas look interesting and we await their development.
7.2 We also consider that the need for an allocations and a housing benefit system that is related to the building of sustainable and balanced communities as long overdue.
7.3 With regards the issue of rent convergence, we can see why the government is keen to see it happening, but it is not going to be easy. It would be preferable that a rent system is established where rents are ring-fenced to particular neighbourhoods, so that tenants in that neighbourhood recognise that if they choose better services, they will have to pay more rent for those services.
8. Conclusions
8.1 The message and potential of the housing co-operative movement has remained broadly consistent since the 1970s, and we have watched many other failed regeneration programmes come and go alongside us. During that time, housing co-operatives have been tackling social exclusion, have been building the capacity of ordinary people, have been building sustainable balanced communities and have remained the most successful and sustainable method of community empowerment in existence in public sector housing, despite very low levels of government support for them since the 1980s.
8.2 It is disappointing to us that the government has still not addressed the potential of the housing co-operative model, despite its obvious success. The democratic membership and accountability of housing co-ops, and the methods of genuinely engaging with local communities is precisely what is needed to meet the agenda that the present government has set itself and we look forward to participating with the next government in a thorough examination of the future potential and role of the housing co-operative movement.
Nic Bliss
Notes
[1] The Minister for Housing and Planning, Nick Raynsford, highlighted the success of the "Right to Manage" at the 1999 National Housing Federation conference, following his visit to Burrowes Street Co-operative in Walsall. [Back to text]
[2] The Green Paper specifically refers to the proposed stock transfer in Birmingham as being imaginative. We would agree that the proposals for the Birmingham stock transfer did look innovative when they were first announced, but with the originally proposed 46 neighbourhood tenant controlled vehicles (a proposal that might have enabled tenants to establish housing co-ops) now reduced to 11 non-tenant controlled RSLs across 90,000 properties, we are not convinced that the transfer will offer the significant community empowerment that might have resulted under the original proposals.
Similarly the stock transfer proposed in Walsall envisages transfer to a holding company, with leases to 5 tenant-controlled organisations. However, again this will mean that the neighbourhood tenant-controlled organisations will lease around 4000 properties and we are concerned that this will not devolve power to a local enough level. A significant factor in Walsall is that there are already 8 tenant management organisations managing 20% of the housing stock, with further tenant management organisations in development, and how the tenant management organisations relate to the transfer will prove illuminating. [Back to text]
