Management agreements with housing co-operatives. (Hansard, 9 February 1993)

§ The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton)
I beg to move, That the Clause be read a Second time.

§ Madam Speaker
I understand that with this it will be convenient to discuss also Government amendments Nos. 110 to 112.

§ Lord James Douglas-Hamilton
New clause 16 gives tenants who form themselves into a housing co-operative the right to manage their homes. It is an important part of our proposal under the tenants charter to strengthen the powers of individual tenants and involve them in the management of their homes. We believe that it will fundamentally improve the control which tenants have over their houses if they are given the right to manage.
There are a number of requirements in the new clause which offer important protection for existing tenants.
933 First, the way in which the houses are managed is very important to the tenants of those houses, and we need to be certain that a co-operative taking over the housing management function is competent to do the task that it sets out to do. There is no point in handing over management to a group of tenants whose interests will have moved on to other matters in six months' time.
Secondly, the co-operative needs to be efficient. While it is our desire to give more control to tenants, if their costs are twice the normal management costs, tenants will suffer. Consequently, there is a need to maintain efficiency.
Finally—this is particularly important in view of the fact that the hon. Member for Dundee, East (Mr. McAllion) gave me notice of his concern—the local authority needs to be satisfied that the co-operative is representative of the tenants in that area and of that group. Again, such protection for tenants is common sense.
Amendment No. 110 seeks to amend section 17(1) of the Housing (Scotland) Act 1987, which provides that the general management of houses held for housing purposes by local authorities shall be vested in and exercised by the authorities. This removes any possible impediment to the powers of a local authority to contract out its housing functions under section 17.
Amendment No. 111 is consequential and amendment No. 112 is the formal repeal in schedule 21.

§ Mr. John McAllion (Dundee, East)
I am grateful to the Minister for answering my concerns, of which I gave him notice. I am not sure that what he said relates to what is on the face of the new clause. He said that this clause was about giving tenants the right to form themselves into housing co-ops with the right to manage their own homes. What the new clause says is that, if the housing co-op applies to take over the management, regulation and control of local authority housing stock, the local authority shall then make an agreement with that housing co-op, with certain protection being built in, in terms of the ability of the housing co-op to carry out the functions which it has taken over and the fact that that housing co-op should be representative of the tenants of the houses.
As I understand it, if an agreement on this issue cannot be reached between the housing co-op and the local authority, the Secretary of State has powers to intervene and to force an agreement on terms which he thinks fit. In other words, the Secretary of State will be the ultimate arbiter of the terms of the agreement.
My main concern relates to the expression "housing co-operative" as it is used in the new clause. It says: 'housing co-operative' has the meaning given in subsection (1) of section 22 of the Housing (Scotland) Act 1987. In that section the housing co-op is described as a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this section". That definition leaves open the interpretation that the housing co-operative could exist already and may not have been formed for the tenants in that area. It leaves open the possibility that where there is a housing co-operative in one area, under the new clause it would be entitled to try to take over houses in an adjoining area which at that time belonged to the local authority.
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When the new clause says that the local authority must satisfy itself that the housing co-operative is representative of the tenants of the houses", does that mean the tenants of the houses which the housing co-operative already has, or the tenants of the houses which it may wish to take over in an adjoining area? I hope that it is the latter. Even if it is, how is the local authority to satisfy itself that the housing co-operative isrespresentative of those tenants whom it has taken over? As is made clear in the new clause, it is the housing co-operative which initiates the takeover process, not the tenants themselves.
The Minister should give us the assurance that when the process is set in train there will be consultation with the tenants individually and collectively and that before any takeover is allowed by a housing co-operative from an adjoining area or from within the area, there will have to be a ballot of the tenants affected, with a clear majority in favour of such a change. As I read it, there is nothing in new clause 16 which allows for consultation with tenants individually or collectively or for a ballot to ensure that a majority of tenants are in favour of such a change.
On the basis that it should be for the tenants to decide, not for the Secretary of State for Scotland, for a local authority or for a putative housing co-operative, the new clause would be a retrograde step for people in Scotland.
Given the serious position of homeless people, particularly in Scotland where the homeless figures are rising alarmingly, for the Scottish Office Minister to table new clauses which would take more houses away from local authorities, the only group in Scotland with a statutory requirement to house the homeless, does not seem to be a wise step. Rather than trying to weaken further the housing activities of local authorities, the Secretary of State should be presenting proposals for investment in local authority housing and for the provision of more finance to local authorities to enable them to meet the statutory requirements which he places upon them.
I should be grateful if the Minister would clarify the loose wording of new clause 16 and make it clear that only tenants living within a local authority area will have the right to form a housing co-operative such as is referred to. Equally, he should make it clear that before that happens, tenants will be consulted individually and collectively and that tenants will have the right to a ballot whose result will be binding.

§ Lord James Douglas-Hamilton
I can give the assurance which the hon. Gentleman seeks. In this context we are discussing management co-operatives. The concern of the hon. Gentleman seems to relate to completely different legislation about voluntary disposals. He will recall debating that across the Floor of the House in bygone years. Very strict safeguards are written in for voluntary disposals. The new clause has nothing to do with that.
As to the wording, I am reassured by the Scottish Office lawyers that the statement that the local authority shall satisfy themselves that the housing co-operative … are representative of the tenants of the houses means that it must be the tenants in the area concerned; it cannot be an outside body coming in. I am informed that it is clear on the face of the Bill and there is no room for dubiety on that point. If the hon. Member wishes, I shall be glad to send him the safeguards about voluntary disposals from other legislation.