HC Deb 14 January 1975 vol 884 cc379-93

Amendment made: No. 18, in page 14, line 3, leave out 'direct' and insert 'determine'.—[Mr. Freeson.]

12.30 a.m.

Mr. Freeson

I beg to move Amendment No. 19, in page 14, line 42, leave out 'The' and insert 'Subject to paragraph 8A below, the'.

Mr. Deputy Speaker

With this Amendment it may be convenient to take Government Amendments Nos. 20, 35 and 36.

Mr. Freeson

If I may, I shall delay the House on this matter for a few minutes as it is the introduction of a new policy.

On 11th December 1974 I told the House that I had set up a working party under the chairmanship of Mr. Harold Campbell to report to me on ways in which the Government, local government, housing associations and other bodies could sponsor housing co-operatives and co-operative management schemes, enabling tenants to participate collectively in decisions affecting them and to have a financial stake in the ownership of their own homes. The working party includes members from the Housing Corporation, the local authority associations and the housing association movement and has undertaken to provide a first report early this year.

I am anxious to do everything possible to encourage the development of co-operative housing and in the light of the report will make a further statement of policy. Meanwhile, Circular 70/74—"Local Authority Housing Programmes"—issued in April 1974 has asked local authorities to consider co-operative housing schemes in appropriate circumstances and the recent circular on the Housing Corporation and housing associations refers to the opportunities open to housing associations in the field of co-operative housing. I see this initiative as an essential part of a Socialist housing policy for the future.

Thus these amendments are but a new starting point in housing policy. They introduce co-operative housing into housing legislation for the first time in this country—a means by which the people who live in what would normally be rented dwellings may have a recognised and legal share in the ownership and/or the management of the property, with the financial backing of Government.

The proposed provision achieves this end by a simple device. It has been the well-understood practice for many years that housing subsidies may be paid only on dwellings that remain in the ownership and full control of local authorities or a housing association. If a local authority disposed of houses other than to a conventional housing association, subsidy should be promptly cut off.

These amendments will change this so far as co-operative housing is concerned on the principle that such housing should be an essential part of any policy of social ownership. But under present law it is made quite unviable financially for such a policy to be pursued. The amendments proved that where the disposal is an approved lease to a co-operative, that cut-off of subsidy should not happen.

I hope that local authorities will use their new powers vigorously. In the early days much will no doubt be exploratory. This will be a new avenue for exploration by local authorities, tenants' organisations and the Government. We shall improve arrangements as we go. I can think already of several situations and problems where this device may be helpful early on.

First, there is the old-established local authority estate, inhabited by families who have lived there for many years, who intend to go on living there, and for whom it is fully their home as much as any owner-occupier's house is his. Yet they have no say as to how the houses shall be managed, not even about the colour of the paintwork. I allow at once that many local authorities have a good practice of consulting their tenants' associations on such points, but a courteous habit is not the same as a legal right and responsibility.

This lack of rights and responsibilities strikes very deeply at the attitude people hold towards the houses and neighbourhoods in which they live—the level of identity they have with home and community. There can be something cold and impersonal about even very good, well-run estates. What is done tends to be done only when management does it. What is not done is sometimes simply the cause of complaints that "They" in the town hall ought to "do something about it."

But if the residents as a body, on a street or block or neighbourhood scale, were directly involved in the sense that, "We decide what should be done, because we pay for it and it is our families' and friends' environment", we should receive more prompt action before little defects and problems grew into big ones. Where there were choices as to what should be done, the course followed would be the one selected by the residents, and the decisions they took would determine how the neighbourhood would develop. The very action of doing things together in this way would help to fight some of the alienation that characterises so much of modern urban society.

Alternatively, there may be a block of old property in private ownership where the tenants want, would value and could pay for, better things, but where the landlord either could not or would not provide them and would simply want to sell the property. In such a case, the tenants could ask the local authority to buy the property. The local authority would receive the new capital costs element of subsidy, which is 66 per cent. of its loan charges. It could then let or lease it to a co-operative formed by the tenants at a rent that reflected the fact that subsidy was payable. The co-operative could then have a lease for a period of years, perhaps for a period determined by the expected life of the property, perhaps shorter in the first instance.

The co-operative would enter into an agreement with the council, to be approved by the Secretary of State, as set out in the amendment. I am arranging for my Department to draft a model agreement to be used as a general framework. This could cover arrangements that were either more or less wide in their terms. It could, for example, provide for co-operative management schemes, to deal only with pure management questions, and if the agreement were confined to this, the powers of such a co-operative would be much the same as those of agents managing property for a landlord, except that here it would be a joint arrangement by a public authority and its tenants.

Alternatively the agreement could go much wider and make the co-operative substantively the landlord—a full tenants' co-operative, subject to a procedure set out in the agreement, fixing rents in the same way and deciding how the property should be run. With such a wider agreement, and a reasonably long interest in the property, we have the prospect of exploring means of giving the tenants a form of equity stake.

Such a prospect requires further study, but it is a means of offering a new form of home ownership as an alternative to conventional owner-occupation or renting—not just a half-way house or cut-price owner-occupation but, one with its own possibilities, its own individual and community values.

This is something which could evolve in the future; but meanwhile, the amendments do not envisage any startling change in the immediate circumstances of tenants who move to co-operation from renting direct from the authority. They would not become Rent Act tenants, so their rents would not be subject to rent officers. They would remain in the local authority rent régime. Where they qualified for a rent rebate, they would still get the same assistance. What would happen would be that they would have a right and duty, together with their neighbours, to consider and settle questions now left to management at the town hall and elsewhere.

The legislative provision proposed does not establish any formal connection between co-operatives and the housing association movement. But I hope that the housing association movement will take an interest in the possibility of co-operatives, and will see its way to fostering them. They will have to be run rather separately, and there would be an interest of a supervisory kind by the local authority, by the Secretary of State, and sometimes by the Registrar of Friendly Societies.

The consequential amendments are designed to achieve two ends. First, the co-operators will remain primarily associated with the local authority housing sector. Second, the amendments achieve the purely mechanical change from the rent rebate scheme to the rent allowance scheme to which I have already referred. The effective result would be the same.

We have, of course, the Campbell Working Party on co-operatives to which I have already referred, which will want to consider how this provision can be used. It is intended to open the way for at least some of the possibilities which that working party may wish to recommend, and I do not doubt that in time there will be further legislative reform which this Government will wish to introduce to enfranchise tenants and expand co-operative housing as part of our democratic socialist policies.

This is the start of the process and I commend the amendments to the House and the policy to the community at large.

Mr. Michael Morris

May I say how much many of us welcome this initiative. Indeed, those of us who have been associated with large groups of council tenants know that there are many of them who look forward to the day when they can be part of a co-operative. However, it is fair to say that where co-operatives are successful—one has in mind Sweden where about a quarter of the housing stock is in co-operatives—their success depends upon two things—that members of the co-operatives have a financial stake, and that they operate as a unit.

For these co-operatives to be successful, the financial stake must be real. If, as I understood the Minister to say, it will be on the basis of a long or medium-term lease situation, I am not sure that many tenants will jump for joy at the prospect of being medium-term leaseholders of the local authority. The Minister should ask the working party to face the true facts and strong evidence from Sweden and elsewhere and consider whether it would not be better to release such people altogether and make them true owners of their property.

Another point which arises is the point the Minister made about housing associations and the voluntary movement. This concerns the housing co-ownership scheme, which is in its death throes. It is perfectly possible for the option mortgage scheme to be reviewed in relation to current interest rates and current building costs. It is still a viable concept. I greatly hope that the working party will be asked to make a quick examination of this scheme, for if there is not quick action in this area there will be a quick end to co-ownership.

Mr. Sydney Irving (Dartford)

These are very important amendments. In reply to a question I put to him on Amendment No. 11 the Minister said that he was anxious to do everything possible to encourage the development of co-operative housing. I welcome these amendments, which are evidence of his determination and of the work of the working party. I am sure that Mr. Harold Campbell will take every advantage of the powers which are being given to make proposals which are viable and which will be acceptable.

As the Minister said, Amendment No. 20 will enable local authorities to undertake experimental schemes without losing the subsidy. This was the impediment to experiment in the past. This will give local authorities the chance which I hope that they will take to give to tenants by the formation of co-operatives an interest in their homes and control over their environment. The other amendments deal with the control of rents and the important matter of rent allowance. I congratulate the Minister on what he has been able to do in such a short time.

Mr. Stephen Ross

I congratulate the Minister on an imaginative and welcome addition to the Bill. The Campbell committee which is looking into the whole co-operative idea of housing should be prepared to consider suggestions emanating from any quarter. I think of my own party which has debated this subject on numerous occasions and which has made recommendations which the committee may find helpful. I greatly welcome this first step and look forward to reading the Minister's remarks in Hansard.

Mr. Douglas-Mann

I, too, congratulate the Minister on this proposal. In 25 years' time we shall probably be looking back at this proposal and regarding it as an historic amendment introducing a substantially new element into the housing sector.

I look forward to a change in the structure of local authority housing estates. This is a valuable development with possibilities for co-operative management of local authority housing schemes and also for the taking over by associations and tenants' co-operatives of parts of the private sector. With the private landlord inevitably dying, I do not wish to see the local authority becoming the only landlord in any locality.

12.45 a.m.

I raise one strong note of dissent on Amendment No. 35, which will exclude tenancies under co-operative schemes from the protection of the Rent Act. I appreciate that it would be complicated for the tenants of co-operatives to have their rents fixed by the rent officer rather than in accordance with the local authority rent pattern. But it is highly undesirable that tenants of co-operatives should not have the security of tenure protection of the Rent Acts. The Minister is anxious to introduce security of tenure for housing association tenants, but if the housing co-operative scheme is to work the tenants must have protection against an arrogant and arbitrary majority.

It is possible to have a majority of controllers of co-operative organisations who become arrogant and arbitrary in their management of estates. It is possible to imagine a situation in which a group in a locality decides that it does not wish to have any Protestants, or white people, or black people, and so on, in their estate. That could wholly destroy the objective proposed in the main amendments.

I therefore urge the Government—I appreciate the difficulties involved in dealing with the matter simply by opposition—to introduce as rapidly as possible a scheme for the granting of security of tenure to tenants of such co-operatives, even if it has to be introduced in advance of provisions for the security of tenure for council tenants and tenants of housing associations.

Subject to that strong reservation, I join other hon. Members in the praise they have given the amendments.

Mr. Freeson

I take the last point first, because it is an important and serious one—the question of security of tenure and related matters, given that the amendments are accepted in their present form. The model agreement which we shall be drafting in the Department, as I indicated earlier, and which will be circulated following the enactment of the Bill and possibly following the receipt of the first report of the Campbell Working Party, will ensure that there is as much security of tenure for people moving into this field from the conventional local authority tenancy and as much security with regard to rent fixing and rent allowances, and so on, as would be the case if those people had remained as conventional local authority tenants.

I have this in mind to cover the period until such time as we can consider the question of security of tenure for tenants in the public sector generally, which, as my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) will know, is something which members of our party have been looking at and to which we are generally committed.

Although there is no immediate plan to introduce!such legislation, in due course we shall look at the question of security of tenure and of tenants' rights in many respects in the local authority and housing association field. Although they are now partly covered by the Rent Acts, under the fair rents régime, in this context it will be my intention to cover the fears and anxieties which could arise in extending into the field of housing co-operatives. In other words, I accept the anxiety that has been referred to. I experienced it myself in the past, when I was involved in sponsoring one of the few housing co-operatives that we have—there are only about half a dozen altogether. This was a point that I was seized of some years ago, when I was involved.

This is no disagreement with my hon. Friend. It is a matter of procedure. We shall cover it by the agreements, and hon. Members should bear in mind that without such agreements being approved by the Secretary of State, as the amendments require, the co-operative schemes cannot proceed. I hope it will not be long before we can come back to this question of security of tenure generally in the social ownership area to see what further action can be taken on this question of tenants' rights and to look at other aspects of what I call, broadly, tenants' enfranchisement.

The hon. Member for Isle of Wight (Mr. Ross) asked whether the working party would be able to receive submissions from party sources. The answer is "Yes—from any source." This is a working party, mainly concerned with the nuts and bolts of proposals for co-operative housing and it is not a working party to consider resolutions and philosophy. Before I appointed him I had a long consultation with the chairman of the working party, Harold Campbell, making it clear that we did not want general statements. That is the line he wants to take. The working party will not discuss philosophy except in so far as it is relevant to looking at options for action. Any evidence or other material submitted should be practical, rather than consisting of the generalities which we could all find time to set down on paper.

Dealing with the points raised by the hon. Member for Northampton, South (Mr. Morris), while I accept that it is desirable to work out, as one of the ways of developing co-operative housing, some kind of ownership stake in a collective, it is not factually correct to say that in countries where the co-operative housing movement has grown considerably over the years such growth has been due wholly or primarily to a financial stake. It is not true in Sweden. This is a complex area to examine at this time of night, particularly against the background of a country which has a different legislative and housing history from ours. It is oversimplifying things, to put it mildly, to say that the success of the Swedish movement, and the movement in one or two other countries, has depended on what we loosely refer to as a large financial stake. This is one method but there are others.

Similarly, it is not true to say that in such situations movements are dependent upon full freeholding being a part of any scheme. The amendments make it clear that I will not be a party to encouraging the establishment of housing co-operatives with full freehold of the land. They must be seen as a form of social ownership, as being closely linked to the community at large. One of the key ways of ensuring this is to retain the land ownership in the hands of the community at large. It will be no weakness for co-operative housing. On the contrary—and this will be a matter for future discussion—it will be a good way of ensuring the strength of a growing movement, which I hope will result following these amendments and further initiatives which I hope to take.

Question put and agreed to.

Amendments made:

No. 20 in page 15, line 10, at end insert:

'Subsidy where local authority housing functions are exercised by co-operatives

8A.—(1) Where a local authority have made an agreement to which this paragraph applies with a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this paragraph (in this paragraph referred to as a "co-operative"), neither the fact that they have made the agreement nor any letting of land in pursuance of it shall be treated as a ground for the reduction or discontinuance of their housing subsidy under paragraph 8 above.

(2) The agreements to which this paragraph applies are agreements between a local authority and a co-operative—

  1. (a) for the exercise by the co-operative, in such terms as may be provided in the agreement, of any of the local authority's powers relating to land in which they have a legal estate and which the authority for the time being hold for the purposes of Part V of the 389 Housing Act 1957 and the performance by the co-operative of any of the local authority's duties relating to such land; or
  2. (b) for the exercise by the co-operative, in connection with any such land as is referred to in paragraph (a) above, of any of the local authority's powers under section 94 or 95 of the Housing Act 1957 (powers to provide furniture, board and laundry facilities).

(3) An agreement to which this section applies may only be made with the approval of the Secretary of State and the terms of any such agreement shall be approved by him.

(4) The Secretary of State's approval, both to the making and to the terms of any such agreement, may be given either generally to local authorities or to any local authority or description of local authority or in any particular case and may be given unconditionally or subject to any conditions.

(5) Without prejudice to any power to let land conferred on a local authority by any enactment, the terms of an agreement to which this paragraph applies may include terms providing for the letting of land to the co-operative by the local authority.

(6) A housing association which is registered under Part II of the Housing Act 1974 shall not be entitled to a grant under Part III of that Act in respect of land for the time being comprised in an agreement to which this paragraph applies.'

No. 21, in line 23, leave out 'direct' and insert 'determine'.

No. 22, in line 36, leave out 'direction' and insert 'determination'.

No. 23, in page 16, line 6, at end insert: '(1A) It is hereby declared that the power of giving directions conferred on the Treasury by sub-paragraph (1) above includes power to vary or revoke directions given under that subparagraph'.—[Mr. Freeson.]

Mr. Freeson

I beg to move Amendment No. 24, in page 16, line 22, at end insert—

'Amendment of section 105 of Housing Finance Act 1972

11A.—(1) For section 105(3) of the Housing Finance Act 1972 (power to direct that Part I of that Act shall apply to a housing authority's dwellings subject to modifications) there shall be substituted the following subsection:— (3) The Secretary of State may direct that Part I of this Act shall apply to a housing authority subject to such modifications as are specified in the direction, being modifications which do not increase all or any of the sums payable by the Secretary of State to the authority under the said Part I.".

(2) The substitution of the subsection set out in sub-paragraph (1) above for section 105(3) of the Housing Finance Act 1972, as originally enacted, shall not affect the validity of any direction under that subsection, and any such direction shall continue in force and have effect as if made under the substituted section'.

This amendment is necessary in consequence of the repeal of Parts V and VI of the Housing Finance Act 1972. It has a simple purpose—namely, to enable the Barbican development to remain outside the City's housing revenue account, as is the case at present. For various reasons concerned with the history and nature of the scheme it would be undesirable for the City's housing finance for general housing needs to be distorted by this special development.

Mr. Douglas-Mann

I do not think we should allow this amendment to pass without expressing disappointment at what amounts to a drafting amendment relating to Section 105 of the Housing Finance Act 1972 in its application to the Barbican.

In Committee on 17th December the Minister—I appreciate that he has had very little time to do anything about the matter—expressed the intention of taking certain action after looking further into the Barbican in particular. Problems arising from cases in which directions have been made under Section 105 of the 1972 Act are by no means confined to the Barbican, but in the Barbican rents are rising at such a rate that the rents of St. Mary's Mansions look quite moderate.

The provisions that we have introduced into the Bill by virtue of new Clause 2 will not give any protection to the tenants of the Barbican. We shall have housing committees making their determinations on local authority rents, we shall have rent officers to assess the level of rents in the private sector, and we shall have the rents disregarding the improvements being carried out by local authorities in their capacity as landlords.

In the Barbican—this point was made by the City Remembrancer—improvements being made in the locality are put forward as one of the justifications for the further rise in rents which is now taking place. New Clause 2, if my understanding is correct, will not give protection to tenants in the Barbican because their rents do not go to the rent officer and local authority improvements will be disregarded when assessing the level of rents there.

I hoped that the Minister would introduce a further change which would protect and improve the situation of tenants in the Barbican. As Section 105 of the Housing Finance Act stands, or even as amended, there seems to be no provision for a direction once given to be later revoked or varied, because subsection (4) is not affected. Unless the direction originally given was a radical one or for a limited time, under the legislation now proposed, even with this amendment, there will be no opportunity for the Minister to make any change without yet further legislation. There will be no opportunity in future for the Minister to take the action that he indicated in Committee he was contemplating.

Mr. Freeson

It would be unwise and it is unnecessary for me to go over the ground that was covered in Committee on this matter. Section 105 of the 1972 Act enabled the Secretary of State to exclude from certain of the Act's provisions special categories of dwellings. It was specifically intended to be used for the City of London's Barbican development, although other properties could be covered by it. The Barbican scheme was built to a very high standard for letting to tenants who could afford high rents and for which there was never any intention to pay Exchequer subsidy.

The whole purpose of the amendment is to continue the position whereby this estate and others like it may be excluded from the housing revenue account and from coverage by Exchequer subsidy. It does not alter the position of the City of London in using its discretion as to how it would fix rents for the Barbican Indeed since the Committee stage, when my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) raised the matter, I had arrangements made for the Barbican to be visited by representatives of the Department. The flats there, quite apart from their location, are built and equipped to a far higher standard than houses for general needs, which themselves are built to adequate standards well in excess of those which obtained in the past.

1.0 a.m.

I do not deny that the rents are high, but they have to be viewed in the light of the standard and location of the dwellings. I understand that they are by no means more than the market rent for comparable dwellings and I have certainly satisfied myself that rent income covers, and in the immediate future is likely to cover, only about one-third of the cost to the City of London of Barbican housing. I have also satisfied myself that the costings do not include any burden for non-housing development, for example the arts centre, which was a matter of concern and anxiety to some people in the Barbican. They are based on loan charges which include interest at a lower rate than that prevailing in most areas.

There is nothing in what I propose to prevent further consideration and consultation on matters of concern with regard to the Barbican, but I must stick to the specific intention of the amendment.

Amendment agreed to.

Amendment made: No. 25, in page 16, leave out lines 23 to 45.—[Mr. Freeson.]

Mr. Freeson

I beg to move Amendment No. 26, in page 17, line 11, leave out 'rental period which ended on or after 1st October 1971 and insert 'relevant rental period'.

Mr. Deputy Speaker

Perhaps it would be convenient to take at the same time Government Amendments Nos. 27 to 30.

Mr. Freeson

The amendments are designed to clarify the rental periods for which refunds of rent may be made under Part II of Schedule 1.

Amendment agreed to.

Amendments made: No. 27, in page 17, line 16, at end insert— '(2) In sub-paragraph (1) above "relevant rental period" means—

  1. (a) where sub-paragraph (1)(a) applies, a rental period which ended on or after 1st October 1971 but began before the determination of a rent under section 56 of the Housing Finance Act 1972, and
  2. (b) where sub-paragraph (1)(b) above applies, a rental period which ended on or after 1st October 1971 but began before the coming into force of this Part of this Schedule'.

No. 28, in page 17, line 18, after 'rent', insert 'paid for any relevant rental period'.

No. 29, in page 17, line 20, at end insert— '(1A) En sub-paragraph (1) above "relevant rental period" means a rental period which ended on or after 1st October 1971 but began before the coming into force of this Part of this Schedule'.

No. 30, in page 17, leave out line 29.

No. 31, in page 18, leave out lines 9 to 12 and insert 'amount arrived at under paragraph 13 (and, where relevant, paragraph 16) above; and where this paragraph requires the deduction of one amount from another, but the amount to be deducted is the greater, the two amounts shall be taken to cancel each other out.'

No. 32, in page 18, line 27, at end insert—

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