Over The Counter Culture

Life in the coop continues apace. So a misleadingly-titled article on the BBC last Thursday caught my eye. Like most of London, Lambeth Borough Council (which runs Waterloo) is facing really serious budget cuts (around 20% reduction in central gov’t funding). Services will get cut – £30m pounds’ worth (that may sound a lot, but works out as about £111/resident).

We’ve already heard that Barnet is doing a Ryanair – you want your council to work for you (or just to put you to the front of the line on stuff like planning applications) – you pay them for it (in addition to council tax, of course).

Lambeth’s approach is to spin out services as co-ops. Note that this isn’t privatisation – a co-operative is owned, run by and run for the very same people. Retail giant John Lewis (also owns Waitrose) gives partner status in the business to all 69,000 permanent employees, who run the company and take the profits.

So according to the council, they are “proposing an alternative where [the Council] can give people the tools to do the job or mutualising where [the Council] can set up something and then hand it over to the people who will use it, to run it.”

They like to highlight housing as a prime example – Lambeth already has more tenant-run estates than any other London borough.

"We have been doing this for three or four years. We have experience of it. What has happened, as a result of recession we are putting it together to help save costs, keep services and give something to the community."

The company that runs Lambeth’s leisure centres is a co-op, owned by its employees.

They also float the idea of turning some schools into mutualised private co-ops – the idea of a teacher-run school is intriguing; to what extent would parents also get a say? Lambeth is trialling a ‘Parent-Promoted Foundation School’ (link to Lambeth mag) where “local parents with support from the council took the lead in setting the school up, appointing the head teacher, choosing the design, and deciding what the school would be like”. It’s the first in the country, and took 6 years to set up. The general Secretary of the National Union of Teachers has come out guns blazing against any experimentation:

“It is simply not right that public money should be given to a group of enthusiastic amateurs, motivated by what they want for their own children.”

“If they think there are issues with the schools, there is a number of ways to suggest changes through the existing structure.”

"Why do you live in a commune? Please explain…"

So asks a friend. I’ve moved. But not to a commune! To a co-op. This post aims to start explaining what it is and why living here is so desireable.

This is an especially good time to set out the basic principles, given Gordon Brown’s statement earlier this week that Ed Miliband will work with the Co-operative party to draft Labour’s forthcoming election manifesto. Gordon Brown, it is worth remembering, is the first British Prime Minister to be a member of the Co-operative Party, alongside his main party affiliation (New Labour).

This post will focus on the general legal principles behind cooperative housing, especially the one I now live in. I hope to discuss other aspects in later posts, if there’s any interest. My overarching aim is to spread some appreciation for the concept (both from self interest and in the hope that maybe readers or their acquaintances might consider helping co-ops to be set up or develop by getting involved in their financing, making gifts or provisions in their wills.

I’m a tenant, with similar basic rights and obligations as any other poor bastard grinding away in this big city, paying rent to a landlord. But in a co-op housing association, there’s a difference – my landlord is virtual; a legal fiction, a juristic ghoul created by the founders of the co-op when it was built 35 years ago, courtesy of a big change in the law in 1965.

When you sign the tenancy agreement, a token £1 payment gets you a share in the co-op society, making you a full member. Through voting  and volunteering, the members of the co-op animate this ghoulish puppet. Dear landlord – we would like to hedge against rises in gas prices and slash our CO2 output by installing woodchip-fuelled heating systems. And the landlord makes it so. Dear landlord – we would like you to please set aside some of our rent (about £51 a week – £40 for basic rent, the rest is bills, tax, insurance and service charge) to fill a room with paint, tools, flooring, lightbulbs any other consumables we need for our houses. Make it so! Dear landlord – we would like a totally noninterventionist, liberal policy concerning how we arrange the house, paint walls, put up fixings, etc. So.

The landlord is us; we hire CDS (itself a cooperative) to handle the bureaucracy. We own the land (on long lease from the council) and can do largely as we please with it. So when one resident – a designer with the very illustrious Heatherwick Studio – came up with a plan to build a huge storage cage for bikes built with Russian railway sleepers – the co-op agreed and members got together to get it built, with the money, as always, coming from our rent.

There are ~120 of us living here, in houses and apartments. We live a 20 minute cycle from Waterloo, five minutes from a Jubilee Line station, and just around the corner from Goldsmiths Art College. It’s insane how far rent can stretch, even this close to central London, when nobody’s trying to make a profit.

———- Legal detail

The governing statute for the co-op is the Industrial and Provident Societies Act 1965. Under it and the Financial Services & Markets Act 2000, the co-op is registered with the FSA (Financial Services Authority). As with most co-ops, companies (often co-ops themselves) provide co-op housing societies with management services and registration, doing the basic bureaucracy and letting the ‘hippies’ get on with actually calling the shots concerning the property.

Share structure:

Like public companies, a co-op has share capital. There are diverse ways of organising this, but where I live the share structure is par value, fully mutual: each member gets 1 share; each share costs £1; and on moving out, you get your £1 back – you can’t take it with you or sell it for more even if the property has gone up in value. Your share gives you a single vote on the rare occasions where everybody gets together to vote on something. Liability when things go wrong is usually limited to that £1. The property remains in the ownership of current occupants (members) – but any profit cannot go to them; it must, by its regulations (and probably by law*), be spent on improving the co-op. If one day the land is sold at a profit, that profit has to stay within the co-op or find another co-op (cy-pres principle) – the same with any excess from the rent. This is a form of land ownership that’s very different to most in the country – it is not owned in the hope of making a buck at the end (what this means for the mortgage provider, I’m not sure yet).

Tax:

The land is private property; my council tax is paid from my weekly £51 rent (council tax is £2.58/week at present). The co-op, if fully mutual, is normally exempt from Capital Gains Tax and Corporation Tax*; co-ops can also often classify as charities and get the vast tax benefits associated with that, too. I don’t know for sure whether my co-op is a registered society but I am going to infer it isn’t: charitable housing associations must give their members security of tenure, whereas my contract stipulates that I can be kicked out with a month’s notice (that’s also my notice period), which makes getting mortgages much easier (the lender is sure it can take exclusive repossession of the vacant property if the co-op were to default.

Tenancy:

A co-op, being run for its inhabitant’s benefit, is not an Assured Shorthold Tenancy; it is a contractual tenancy, which ends when membership is resigned or withdrawn. Things sometimes go wrong. The wrong sort of person is let in. A fully mutual status, with properly defined rules, allows the co-op to act to end a tenancy and withdraw someone’s membership; a sad but crucial control mechanism.

Financing the purchase

I’m fresh here and have little idea how the co-op was first set up, the lease acquired, or the houses built (surprisingly nice for 60s housing!). So this section is subject to the proviso that I’m talking about co-ops in general, which may or may not apply to where I live.

Primary funding for establishment will come from mortgaging the property, to the Housing Corporation and/or the bank (from my contract it seems both mortgages were entered into at the start – I have no idea what’s been paid off to date). Secondary funding is then from the members, from charities, the government. Some state funding was provided in the early 70s under Reg Freeson. Fresson was a member of the Co-operative Party and Housing Minister under the then Labour government – I suspect some of that went into this community; the timing fits. This co-op does not take council money as the council then demands the right to nominate people (e.g. the homeless) into membership – people that usually just want to get housed and don’t lift a finger for the co-op.

Most interestingly, co-ops can issue loan notes (properly called loan stock) to finance their activities. An investor will receive a fixed rate of interest back over the repayment term.

Those are the basics; I thought I’d start with the legal nitty gritty, having just come from a land law class on (of all things) leases!

*these are things I haven’t independently verified, for co-ops as a whole, and certainly not for the one I live in

Snippets from some astounding happiness, obesity and widowhood research. via Chris Dillow on Stumbling & Mumbling (with more findings, details on what was controlled for, and his thoughts as to whether this is true, and what it shows)

Marina-Selini Katsaiti finds that “obesity has a negative and statistically significant effect on individual well being”. She estimates that, in Germany, a three-point rise in BMI (from, say 24 to 27 – equivalent to gaining around 20 pounds for someone who’s 5’8”) reduces happiness on average by so much that it would require a 67% pay rise to compensate. In Australia it would require a doubling of income to offset the adverse effect of such a weight gain.
Now, contrast this to a new paper (pdf) by Andrew Clark and Yannis Georgellis. They show that, in the UK, men and women who have been widowed are happier in the 3-4 years after their loss than they were the year before it. Yes, their well-being slumps in the 12 months after bereavement, but it recovers thereafter.

Now, remember of course that winning the lottery will statistically do very little, if anything, to make you a happier person in the long run

How very peculiar!

Mixed bag of responses today in The Times’ online comments section appended to a story about accusations of war crimes filtering their way through various Western countries’ legal systems, levelled not at the usual motley crew of African nutters but at sophisticated, Westernised ancients of the Israeli government. Whatever your stance, that’s a development that’s bound to provoke interesting and possibly quite uncomfortable reactions from readers and leaders throughout the UK, and it’ll be interesting to see how the media picks this one up.

Unlike other systems, it is said that in the UK, political will can find it hard to block cases coming to court, because anyone in the UK can make the accusation and take it forwards, without the case being picked up (or shelved) by a prosecuting lawyer (e.g. in France, juge d’instruction).

It will be interesting to see how Cabinet can somehow repair ties. The Israelis are very displeased:

President Peres described the incident as “one of the greatest political mistakes” that Britain could have made and calling for the law to be changed.

Calling for our law to be changed, because they don’t want ex-leaders, now retired and stripped of their diplomatic immunity, having to stand trial for war crimes. Surely the office charged with protecting British values and interests around the world appreciates the strength of our system, and the will of our democratically elected Parliament in incorporating the United Nations Convention Against Torture into the Criminal Justice Act 1988, and responded in kind? Er…

The Foreign and Commonwealth Office said yesterday that the Government was “looking urgently at ways in which the UK system might be changed in order to avoid this sort of situation arising again”.

Yes. How terribly embarrassing, sorry about that chaps.

To dump this action would be to risk a very serious constitutional crisis within the UK, one that has been building for a while.

Remember that the arrest, in London, of General Augusto Pinochet for war crimes (wanted under Spanish warrant) was considered by many as one of the most significant developments in human rights and international law since the Nuremberg trials. remember, then, that our Home Secretary (none other than Jack Straw, the miserable shit) found a back door to let him go rather than send him to Spain: grounds of ill-health made him unsuitable to go to Spain to stand trial.

So he went back to Chile, stood up from his wheelchair and smiled.

We seem somehow to have escaped the battle even more recently, after the government decided that a case against BAE (bribery and corrupt business deals with Saudi Arabia) should be dropped due to:

1. ‘national security’ – a breakdown of relations with Saudi Arabia threatening bilateral anti-terrorism efforts if we decided to go after the globally corrupt instead
2. fear of job losses: under EU law the UK government cannot continue to contract with BAE if it is found guilty of corruption, which it argues might cripple the arms manufacturer far more critically than any punishment imposed

And the most immediate context is the growing anger at how easily members of our 2003 administration are escaping serious questioning over our entry into the Iraq war and subsequent behaviour therein.

I for one encourage serious outrage if our law gets changed or meddled with at the behest of alleged criminals in foreign lands.