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Agreements For Exercise By Housing Co-Operatives Of Local Authority Housing Functions

Volume 890: debated on Monday 21 April 1975

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Lords Amendment: No. 3, after Clause 4, in page 3, line 4, at end insert New Clause A—

"A.—(1) A local authority may make an agreement with a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this section (in this section called a housing cooperative")—
  • (a) for the exercise by the co-operative, on such terms as may be provided in the agreement, of any of the local authority's powers relating to land or any interest in land held by them for the purposes of Part VII of the Housing (Scotland) Act 1966, and the performance by the co-operative of any of the local authority's duties relating to such land or interest; or
  • (b) for the exercise by the co-operative, in connection with any such land or interest, of any of the local authority's powers under section 140 or 141 of the said Act of 1966 (powers to provide furniture, board and laundry facilities).
  • (2) 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.
    (3) The Secretary of State's approval to the making and to the terms of such an agreement may be given either generally 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.
    (4) Without prejudice to any power to let land conferred on a local authority by any enactment, the terms of an agreement to which this section applies may include terms providing for the letting of land to the housing cooperative by the local authority for a period not exceeding 20 years.
    (5) Houses on land included in an agreement to which this section applies shall continue to be included in the local authority's housing revenue account; and neither the fact that the authority have made the agreement nor any letting of land in pursuance of it shall be treated as a ground for the reduction, suspension or discontinuance of any Exchequer contribution or subsidy under section 58 of the Housing (Financial Provisions) (Scotland) Act 1968.
    (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 section applies."

    I beg to move, That this House doth agree with the Lords in the said amendment.

    This is a new provision enabling local authorities, subject to the approval of the Secretary of State, to make agreements with housing co-operatives. We shall come later to another new clause dealing with housing co-operatives which are also housing associations. In the present case we have in mind, basically, the question of co-operative management schemes as a means of enabling tenants to be involved in the management of their own properties, in this case local authority housing.

    11.15 p.m.

    One matter on which there will be agreement on both sides of the House is the necessity to involve tenants much more than in the past in the management of their own properties. This matter was drawn attention to by the Morris Committee which recently reported on the links between housing and social work. If we are to maintain and improve the quality, atmosphere and environment of housing schemes, it is important to involve tenants as much as possible in the management of their property. It has not been possible to do this so far by means of agreements between local authorities and housing co-operatives or co-operative management schemes because there has been no legislative provision for it.

    The clause makes provision for experiments to be conducted in this matter. A working party, chaired by Mr. Harold Campbell, was set up in the summer of last year to consider the growth of tenants' co-operatives and how they could be fostered in England and Wales, and the report will be published fairly soon. In Scotland work is beginning on a research project under Edinburgh University which will run over the next three years and examine the scope for developing various schemes of tenant co-operation in Scotland.

    The clause facilitates agreements between tenant co-operatives and local authorities. Subsection (5) removes the financial obstacle to initiatives of this sort by providing that houses maintained by a co-operative under an agreement with a local authority will remain on the local authority's housing revenue account and thus continue to attract the normal Exchequer subsidies, but it will be possible for local authorities to enter into agreements with tenants' co-operatives involving the co-operatives to a greater or lesser extent in the management of the properties. How this will work in a particular case will be a matter in the first instance for the co-operative along with the local authority. There will have to be a certain stimulus to this movement. Once the agreement has been reached it will be subject to approval by the Secretary of State, because we are in an experimental stage.

    I hope that the House will feel that this is an interesting experiment which should be proceeded with in Scotland. The clause allows the experiment to take place.

    This is an interesting initiative which we support. We have a definition of other bodies to which the Minister referred, such as housing associations. Is it not appropriate that in a new venture there should be a legislative definition of a housing co-operative? What powers of management is the Minister thinking of? I have read Part VII of the 1966 Act, but the extent of the powers is not clear. To give an example, would a tenants' co-operative have the right to carry out the maintenance of its own property? That would be an important power.

    According to subsection (1)(b) a co-operative will be able to operate the powers under Section 140 or Section 141 of the 1966 Act. The Minister will recall that Section 140 contains rather controversial provisions. The Housing (Scotland) Act 1966 gave local authorities power to sell furniture on hire purchase to tenants. The only restriction—and this caused some concern at the time—was that any such hire-purchase powers were to be subject to the full restraints of the Hire Purchase (Scotland) Act 1965.

    Will the Minister answer two questions? First, if the co-operative is to engage in powers to sell furniture on hire purchase to its own tenants, would such a co-operative be subject to registration and tax under the Hire Purchase (Scotland) Act 1965? If so, would it be as a housing association, a co-operative society —under which they would have to pay corporation tax at 40 per cent.—or as a friendly society, a company or what?

    It is important that we should know whether co-operatives under Section 140 of the 1966 Act will use the power if, for tax purposes, they were regarded as one of the bodies I have mentioned. This would make an enormous difference as regard to fair competition with hire-purchase companies, co-operative societies and the like. We should like to know the legal position of co-operatives.

    Secondly. under Section 5 of the Hire Purchase (Scotland) Act 1965 agreements were not enforceable at all unless an agreement was signed by all the parties involved. In the event of the finance for such hire-purchase arrangements being provided by the local authority, is the local authority to be regarded as a party to such an agreement? We should like to have answers to these questions before we agree to what I regard as an interesting experiment.

    I welcome this initiative since it is important when tackling Scotland's housing problem to consider new methods and take new initiatives. It is also important to allow for as much participation as possible in the managements of tenants. This is a more democratic set-up and such involvement should lead to a healthier atmosphere and allow us to tackle apathy and also perhaps vandalism.

    I am glad to see that research and initiatives are being pursued in Scotland instead of our hanging on England's coat tails.

    I wish the move well, but should like to ask a few questions of the Minister of State. What will be the relationship of such co-operatives to local authorities, what will be the terms of any funding, and will such co-operatives have rent-fixing powers? Therefore, while welcoming the provision, I should like a little further information to be given to the House.

    I was asked to give a definition on certain matters and wish to point out that it is to be found in subsection (1):

    "society, company or body of trustees for the time being approved by the Secretary of State for the purpose of this section……".
    We are dealing here with a new concept and we want it to be in the widest possible terms. Therefore, we feel that it would be undesirable to attempt too restrictive a definition. The important consideration is that the provision is subject to approval by the Secretary of State —indeed the whole matter is subject to his approval. Initially, it has to be subject to my right hon. Friend's approval because we may be dealing with a variety of circumstances.

    We are breaking new ground and we believe that it is right to provide for the approval of the Secretary of State in respect of any particular co-operative. If the matter goes well, we can at a later stage decide to tailor legislation in a different way, but this will enable the matter to get off the ground.

    I was asked about the powers of housing co-operatives. The powers would depend on the agreement between the co-operative and the local authority. If the local authority was restrictive, the cooperative would act only in restrictive ways. This would hardly be worth doing if we did not give certain powers to the co-operative on the matter of maintenance. I do not imagine the local authority would simply say, "You will have carte blanche to spend as much as you like on maintenance". But it might very well decide that, up to a certain limit, priorities in maintenance, the working out of a maintenance programme and whether the money should be spent on internal decorations or external improvements should be under the discretion of the co-operative. That is the sort of matter which, I think, would be intrinsic to an agreement of this nature. There might be certain arrangements about rent collection and the rest. The question of the determination of rents would not, however, come under the provisions that we are dealing with here, which are essentially management decisions and not matters of financial policy as regards the fixing of the rents.

    As regards the provision of furniture, the main answer must be that the 1966 Act powers which are referred to could be exercised by the co-operative—again, if the agreement provided that. I will check to see whether I am wrong about this, but I do not think that that agreement would override any general powers concerning, for example, hire purchase. Nor do I think that there need be any legal difficulties relating to the co-operative as such. If, however, we found unexpectedly that a local authority proposed to give powers to a co-operative which would give rise to legal difficulties—but I cannot think that that would be likely to happen—this matter could be taken care of by the Secretary of State's approval.

    Therefore, I would not wish to have written into the Bill—and clearly this was not written into the Lords Amendments—provisions which would be unnecessarily restrictive to meet situations which may never arise or which, if they did arise, could be dealt with by the general approval powers of the Secretary of State.

    I am grateful to the Minister for his answer. I do not suggest that particular difficulties will arise, but we are giving a co-operative—if the Secretary of State and the local authority agree—power to operate Section 140 powers, which include hire-purchase powers. If the Secretary of State agrees and the local authority agrees, what kind of entity is the co-operative for tax and registration purposes? Will it be regarded as a housing association, a company, a co-operative society or what? If we are to approve the Lords amendment, we should know what kind of legal entity the co-operative would be for tax and registration purposes.

    If the hon. Gentleman looks at the definition, he will see that it could be a company. That word is men- tioned. It could be a housing association, some kind of society or a body of trustees. It could be a variety of things for other purposes. For this clause, the question is whether it is approved by the Secretary of State. Other legal obligations or liabilities that might adhere to it arising out of its statutory basis for other purposes will determine the answers to some of the questions that the hon. Gentleman has mentioned.

    All that is necessary concerning the clause is that the body should be approved by the Secretary of State for the purposes of the clause, which, as I have explained, is deliberately drawn in these unspecific and wide terms because we do not wish necessarily to omit or exclude any particular body from the provisions of the clause. I repeat that it all has to be done with the approval of the Secretary of State.

    Question put and agreed to.

    " B.—(1) Notwithstanding any registration of a rent, or any rent agreement, which (in either case) permits the rent of a dwelling-house to be increased above the existing amount payable under a registration or rent agreement, nothing in section 6 or 7 of this Act or in Schedule 2 thereto shall enable the rent to be increased in a relevant period by more than £78 above the amount which was payable for the last rental period beginning before the relevant period.
    (2) In this section, "relevant period" means-
    10

    (a) in a case where the rent previously payable as aforesaid was in respect of a rent registered on or before the commencement of this Act, the period of 12 months beginning with such commencement, or any subsequent period of 12 months beginning with the anniversary of

    15such commencement;
    (b) in a case where the rent previously payable as aforesaid was in respect of a rent registered after such commencement, the period of 12 months beginning with the date of such registration, or any subsequent period of 12
    20months beginning with the anniversary of that date;
    (c) in a case where the rent previously payable as aforesaid was payable under a rent agreement in force before or after the commencement of this Act, the period of 12 months beginning with the date when the last increase
    25(before or after such commencement) took effect under that agreement, or any subsequent period of 12 months beginning with the anniversary of that date.
    (3) This section shall not affect any increase in respect of a service element within the meaning of Schedule 2 to this Act.
    30(4) The Secretary of State may by order substitute, for the sum of £78 mentioned in subsection (1) above, a sum other than that sum.
    (5) An order under subsection (4) above shall be made by statutory instrument subject to annulment in pursuance of a
    35resolution of either House of Parliament, and may be varied or revoked by a subsequent order made under that subsection.
    (6) Any notice of increase under section 21(2)(6) of the 1971 Act or any rent agreement which purports to increase the rent payable at any time above that permitted at that time in terms
    40of this section shall have effect to increase the rent to the extent so permitted but no further.
    (7)Section 7(9) of this Act shall apply for the interpretation of this section as it applies for the interpretation of that section."