Housing: Co-operative Housing

Lord McKenzie of Luton Excerpts

Thursday 10th October 2013 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, like other noble Lords I start by welcoming the noble Baroness, Lady Stowell, to her new role, and offering our congratulations on a promotion thoroughly deserved. Like other noble Lords, I also say that we on these Benches will miss the good humour and engagement of the noble Baroness, Lady Hanham, on the Front Bench, but I have no doubt that she will continue to play a role and deploy her expertise—born of many years of local government service—in the cause of her party. Let me also thank my noble friend Lord Kennedy for initiating this debate, which has been short but excellent. It is wonderful to hear from my noble friend Lord Graham of Edmonton, a lifelong supporter of the co-operative movement, and somebody who has been an integral part of its rich history.

All families deserve a safe, secure and affordable home. Debate around any aspect of housing is important given the undoubted crisis we face at the present time. It is timely to focus on co-operative housing, to examine its current contribution and what further contribution it might make to alleviate that crisis. We know that the number of households in England is projected to increase to 5.8 million by 2033, an increase of 232,000 each year. Yet in the year to 31 March 2013, this Government’s policies led to only 108,000 completions, just matching a similar dismal output in 2010-11. This is significantly below the 170,000 completions achieved by the previous Government in 2007-08, which was still too low, as I think was intimated by the noble Lord, Lord Shipley. Moreover, a report last year identified that English local authorities are planning some 270,000 fewer homes than were provided for under the 2010 regional spatial strategies; a worrying prospect indeed.

The lack of new houses being built combined with the biggest squeeze on living standards in a generation have meant that home ownership has moved out of the reach of many families. It is difficult to see the Help to Buy scheme—details of the second phase of which were announced earlier this week and greeted with underwhelming enthusiasm—doing much to help, other than to push up prices in the housing bubble referred to by the noble Lord, Lord Shipley, so we have the rise of generation rent, with more and more people living in the private rented sector, which is now bigger than the social sector, where too many lack security, have to pay ever increasing rents and suffer poor-quality accommodation.

The inevitable consequence is that homelessness is on the rise, as are rough sleeping and the number of families living in temporary accommodation. Nearly a third of privately renting households are families with children, almost half are over 35 and for many of them the sector does not provide the stability they need. It is inevitable that for the foreseeable future the private rental sector will grow and will play an important part in meeting housing need. However, there must be a system of a national register of landlords, with powers provided to local councils to drive up standards.

Of course, on coming to office the Government cut the budget for new affordable homes by 60%, leading to the collapse in affordable housing starts. They fell to under 16,000 in 2010-11. Funding from an 80% of market rent programme has exacerbated housing benefit numbers, but is a formulation which is simply not affordable in many parts of the country. As the Co-operative Party points out, the housing crisis is particularly acute in London, with the added dimension of overseas buyers pushing up the cost of buying and renting. It says that the majority of Londoners are being squeezed out because house prices and rents are increasing faster than incomes, and not enough houses are being built. With high rents in the private sector and so-called affordable rents for new homes and re-lets in the social housing sector, a growing number of working households depend on housing benefit to meet their rent. This is of course at a time when such benefits are being cut, and the horrors of the bedroom tax are played out on a daily basis.

It did not have to be like this. We have set out how an enhanced affordable homes programme could be funded, and Labour councils are now leading the way in building new council houses for rent, providing not only homes but jobs. The crisis in the supply of and access to affordable housing is a major political and social issue facing our country. I think the noble Lord, Lord Shipley, referred specifically to it moving up to number five on the list of public concerns. The reality is that it will require action on a number of fronts, and we are strongly supportive of the approach which embraces co-operative housing models. As my noble friend Lord Kennedy explained, we are of course instinctively supportive of co-operative principles. The Co-operative Party is our sister party, and we share its values and its commitment to social justice as well as its history.

We have been greatly helped for this debate by information from the Co-operative Party itself and by the House of Lords briefing material. The latter in particular contains key extracts from the independent Commission on Co-operative and Mutual Housing, which was launched in 2008 to research the English co-operative and mutual housing sector and to draw conclusions about its relevance to national housing strategy. This research showed that the sector in England is tiny—less than 1% of housing supply—in stark contrast to a number of other European countries. This is attributed, among other things, to the dearth of information and support for those who would be minded to adopt a co-operative model.

There are of course different models of co-operative and mutual housing, about which my noble friend Lord Kennedy and others, including the noble Baroness, Lady Eaton, have spoken knowledgeably. However, the common factor is that they are democratically and legally owned and controlled by a service-user membership. This has a fundamental benefit: by taking responsibility, people develop a sense of belonging and identity, as well as ownership, and this leads to high levels of satisfaction. The co-operative model gives residents democratic control of the property in which they live and a greater say over its management and maintenance. The noble Baroness, Lady Eaton, spoke strongly about the benefit of that ethos. It is acknowledged that the Government see this approach as in tune with their localism agenda, with powers being returned to communities and local neighbourhoods. However, like so much of that agenda, we need to see it working in practice.

Like the commission, we do not consider that co-operation and mutuality are the only routes to a community-based approach, but we acknowledge the powerful opportunity that they present. Other benefits which it brings include stimulating individual and community resilience through active and democratic citizenship, and enabling collective influence over what happens beyond the immediate boundary of an individual while supporting the individual household interest in housing.

What seems clear is that the proposition that housing policy can develop only along one of three routes—ownership, social rented housing or private sector renting—is too restrictive in the current environment. Where people are priced out of ownership and cannot afford escalating private rents, and where the wait for social rented housing can be interminable, there needs to be another way.

What has to happen to enable a co-operative and mutual housing sector to play a greater role? It certainly needs the co-operative movement itself to be more focused on housing possibilities. The commission refers to housing remaining the poor relation of the co-operative family, and it looks that way. There is a strong English co-operative and mutual sector, with nearly 5,000 businesses democratically controlled and owned by some 11 million people, but this strength has not yet manifested itself in the housing sector. Perhaps more can be done by the movement to use its financial, organisational and political strength to encourage the development of co-operative housing.

That should obviously entail embracing new developments, be they community gateway associations developed in response to the large-scale voluntary transfer of local authority housing stock, community land trusts or mutual home ownership, as well as the existing models of rental housing co-ops and co-ownership associations. As well as support from the co-operative movement itself, it requires national and local government to develop supportive frameworks. It is particularly suggested that it requires legislative change to create a co-operative housing tenure as a distinct form of tenure in UK property and housing law. Several noble Lords referred to this.

The Minister will be aware of the debate initiated in the other place by Jonathan Reynolds MP following his unsuccessful introduction of a 10-minute rule Bill. That debate, in July last year, focused on the consequences of the Berrisford decision, which, it was suggested, undermined the type of tenancies commonly available in housing co-operatives. The problem arises because co-operatives cannot grant secure or assured tenancies, and the Supreme Court determined that the periodic tenancies could in fact be treated as tenancies for life. In responding to that debate, the Minister in another place put forward the view that legislative change was unnecessary and advised that, if the guidance of the Confederation of Co-operative Housing were followed, tenancies could be structured in such a way that they could be brought to an end. Can the Minister give us an update and say whether this is still the Government’s view?

Can the Minister also confirm the position with regard to housing benefit? Is this in principle available, assuming of course that other criteria are satisfied, for what were assumed to be periodic tenancies pre the Berrisford decision?

Funding will always be an issue, and we acknowledge that funding opportunities remain available from the HCA through various funding streams, including the affordable homes guarantee. Perhaps the Minister can say something about the emphasis that the HCA currently places on inculcating co-operative housing strategies in its support for affordable housing and whether the Government would wish to see more done in this regard.

More generally, if it is the Government’s declared aim to support the spread of strong, financially robust and democratically accountable housing co-operatives—an aim that we would share—can the Minister spell out for us the details of that support?

Given the huge challenges that we face in tackling the country’s housing crisis, it is more important than ever that we grasp the opportunities for a greater contribution from co-operative housing. My noble friend Lord Kennedy is right to focus our attention on this and we give him our thanks.