Co-operative Housing

Debate between Lord Stunell and Jonathan Reynolds

Wednesday 11th July 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is a pleasure to speak under your chairmanship, Mr Weir. I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on bringing this matter to the attention of the House today. I want to establish my own credentials in two ways—first, by geography in saying that he and I have adjacent constituencies, which have some common problems and issues. I also want to establish my credentials in relation to the co-operative movement. My first paid job was with the co-operative movement in Manchester, and it seems to have stood me in good stead as a foundation for my career, such as it is.

The hon. Gentleman has been a very assiduous supporter of the co-operative movement. This debate, coming in the international year of the co-operative and following his private Member’s Bill, is relevant and timely.

The hon. Gentleman also referred to the fact that after the demise of his Bill—at least at its first attempt—he met my right hon. Friend the Minister for Housing and Local Government to discuss in some detail his proposals and how they might move ahead. The Government have no hesitation in agreeing with the hon. Gentleman about the importance of the co-operative principle. It is certainly in tune with the Government’s thinking about decentralisation and democratic engagement and with our view that powers should be returned to local communities, local neighbourhoods and local tenants’ associations. Tenant empowerment is a notable feature of the Localism Act 2011, which came into law earlier this year.

Overall, we aim to rebalance power from central Government to local authorities and local people and to deliver the housing that communities want and need and that, as the hon. Gentleman made clear, is certainly urgently required. We are doing a lot to achieve that and to create new models to deliver additional housing. I am sure that he recognises that co-operative models of delivery and development would be welcome in that pattern; I do not think that they could ever be an exclusive, or probably even a substantial part of the sector. It is important to distinguish some of the fundamental differences between the history of the housing market in Scandinavia and in this country. We are all prisoners of our own history and models of development. Nevertheless, co-operative models can make an important contribution.

I am sure that the hon. Gentleman will also recognise that this Government, in investing £4.5 billion in developing social and affordable homes, are responding strongly and positively to the need for low-cost housing. We will deliver 170,000 new social and affordable homes by 2015. I must say for the record that that is somewhat in contrast to the outgoing Administration, which in 13 years reduced the stock of social rented homes by more than 400,000. We are turning back that figure.

[Jonathan Reynolds]

Just for the record, the Minister mentioned our neighbouring constituencies. I know that he knows my area well, as I know his. When the Government give statistics like that, it does not reflect schemes such as one that he will be aware of that was pursued in Hattersley in my constituency. It fundamentally turned around the housing market in that area. Yes, it reduced some of the stock, but it resurrected the market and invested a great deal. That must be reflected. It is not just about housing; it is about homes and quality of life for the people who live in those homes.

[Andrew Stunell]

Indeed. I can look over my constituency boundary at Hattersley. I fully understand the work being done on regeneration there. We have continued it with investment that will deliver 150,000 additional decent social homes in this spending review period. The hon. Gentleman and I have some shared objectives, but I thought that it was important to put on record what has been achieved so far and what our aims are.

I turn to some of the hon. Gentleman’s specific points. The Government believe that getting people involved is the key to making healthy, strong communities and places to live. That is encapsulated in the empowerment White Paper, which the Government recently published. We recognise that members of housing co-operatives are more likely to be active members of the community and engage in other areas of governance in the community. For instance, they are school governors, and so on. In other words, people in co-operatives and with co-operative tenancies are often the joiners and doers of a lively community.

[Andrew Stunell]

Indeed, I shall come to that shortly.

The Government, working with the Homes and Communities Agency, is engaged with the Confederation of Co-operative Housing as the lead member of the Mutual Housing Group, which is considering how we can develop an investment fund to support the co-operative sector. I understand that a meeting this autumn will take that forward. I hope that that shows the Government’s earnest intent to ensure that the sector is not left out of the investment and development that we have in mind.

I recognise the uncertainty that the judgment may have created for housing co-operatives and welcome the Confederation of Co-operative Housing’s issuing guidance to its members. I am sure that Opposition Members will know that that guidance makes it clear that co-operatives need to think carefully about how they word their tenancy agreements in future. However, if they get that right, co-operatives should still be able to end tenancies in a straightforward way, through service of a notice to quit. Even if a lifetime tenancy is deemed to subsist, a co-operative landlord can still rely on a breach of a term of the tenancy, for example, failure to pay rent, to obtain possession. That is broadly the same position pertaining to most other social tenants.

It is important to recognise—I am sure that co-operatives do—that there is no standard model tenancy. Therefore the Mexfield judgment has to be taken as a case relating to a particular form of tenancy. I believe that the co-operative movement has received advice about different tenancy agreements in different areas, saying either that they are subject to the Mexfield judgment or, alternatively, that a particular version is not. It is certainly a fine legal point and I would not set myself up to judge that. In short, we do not need a new form of co-operative housing tenure. We need existing tenancy agreements to be in accordance with best practice—Mexfield avoidance compliant, if I can put it that way—to avoid any of the consequences that the hon. Member for Stalybridge and Hyde mentioned.

I am sure that the hon. Gentleman will have received the message from my right hon. Friend the Minister for Housing and Local Government about his proposed Bill. We are not clear what a new co-operative housing tenure would look like or what benefit it would bring in practice. His Bill might have the perverse effect of giving occupiers of co-operative housing fewer rights than tenants in social housing, local authority or housing association properties. I am sure that he would not want that to be the outcome.

[Jonathan Reynolds]

I understand how the advice that the Minister received may have come to that, but will he acknowledge, for the record, that the rights and obligations of the members of a co-operative are democratically determined by its membership? The Minister’s argument could be based on the fact that some tenants in social housing have statutory rights to defend them, but the whole point of a co-op is that decisions are made democratically by a co-op’s membership, so in practice they would not have fewer rights. They would probably have many more rights than people in equivalent forms of social housing.

[Andrew Stunell]

I would certainly hope that that is right. One would expect a high level of mutual respect between tenants who form the co-operative. However, as the current example shows, that is not always the case. The Mexfield case went to court because that fundamental appeal to common sense and common rights broke down and the individuals saw fit to challenge the basis on which the contract had been formed.

That makes a point that is highly relevant to the work that the House does when it considers legislation. Legislation is not primarily for the use of people who have common sense; it is to regulate people who have not got a great deal of common sense. In developing a new tenure system, one has to be very aware of any perverse consequences that might be brought to light. It is also quite—in fact, very—important to make it clear that, even if the hon. Gentleman’s Bill were suitably amended and then passed, it would not apply retrospectively. The measure cannot unilaterally and retrospectively change the terms of tenancy agreements already in force. It is therefore still important for co-operative associations that believe that they may have a kind of tenancy agreement that falls foul of the Mexfield judgment to take appropriate steps at their level to amend it and to seek to get their tenants and members of that co-operative to sign up to that.

There were perhaps a couple of other points that it is worth my mentioning to try to deal with the issues raised—although I want to make it clear that both I and the Department are more than ready to enter into a continued discussion with the hon. Gentleman and his supporting colleagues if they feel that more work still needs to be done.

The outstanding point related to the applicability—or eligibility—of a tenant who had been affected by the Mexfield judgment to apply for housing benefit. First, sensible and workable solutions are certainly available locally through the tenant and the co-operative agreeing to a suitable amendment to the tenancy to ensure that there is no room for doubt. As far as I can see—if I can make an appeal to common sense—that would overcome any difficulties that might theoretically arise in that circumstance. I take it for granted—as I hope Opposition Members do—that, from more or less the day of the Mexfield judgment onwards, all future tenancies let by co-operatives will avoid this rather strange detour in contract law as established by the High Court.

Co-operatives are keen to work with the community sector to attract private sector funding, which was a point made by the hon. Gentleman. I have already mentioned that the Homes and Communities Agency, which acts as the mediator of the Government’s social and affordable housing programme, is in discussion with the co-operative housing societies and I very much hope that a fruitful outcome will be produced in the months ahead. Again, I am more than happy to share with him the progress made, although he might well have his own sources of information on the other side of that discussion.

I hope that my response was full, but I know that the hon. Gentleman will be assiduous in telling me if it was not. The Department is more than happy to engage in further discussion, if appropriate.

Question put and agreed to.