Growing the co-operative economy could be as radical as right to buy

David Cameron's "big society" has so far identified mutualism as a means of localising public services through the creation of employee-controlled enterprises, pointing to the success of the retail sector's John Lewis model. Yet little has been said about mutualism enabling service-users to take control, or why co-operation in itself is a good thing. The case of social housing is worth considering for both these reasons. Evolutionary psychology shows human collaboration goes hand-in-hand with our more widely acknowledged competitive instincts and lies behind the added value of mutual organisations and, despite the coalition's recent support for mutualism, Labour's founders long appreciated this added value and the practical application of collective organisation and self-help. As Jonathan Freedland has observed : "Labour pioneers understood that more was at stake than providing services efficiently; that there was an extra, human value in people coming together and working for the common good". Case study research by the Commission on Co-operatives and Mutual Housing backs this up. Living in a co-operative enhances self-esteem, supports moves into employment, cultivates entrepreneurialism, and enables the wider contribution to community life so esteemed by big society advocates: for example, one third of residents of the Redditch community homes co-operative have at one time been school governors. Direct tenant involvement in housing management also generates a greater financial dividend through lower rent arrears and vacancies and higher tenant satisfaction ratings. This co-operative housing dividend replicates that of the UK's mutual economy, exemplified by John Lewis. In contrast to the recent anaemic growth in the wider economy, and an actual decline in GDP between 2008 and 2010, the co-operative economy grew by one quarter and now has an annual turnover of £34bn, employs 240,000 people and sustains a membership of 13m, according to Co-operatives UK . Despite the range of benefits inherent in co-operative enterprise, direct tenant control is under-developed in the UK. Less than 300 tenant-controlled organisations are registered with housing regulators, although research we conducted at the Human City Institute revealed there were at least 800 – mostly small – overseeing 169,000 homes, which indicates a more robust mutual housing sector than officially recorded. Yet it still equates to only 0.6% of UK housing compared to EU norms of five to 15%. So what's to be done? Mutualisation of the UK's 4.6m social homes, with an estimated asset value of £100bn and an annual turnover of £25bn, would enable tenants and some of the country's most deprived neighbourhoods to control substantial assets and shape housing and community services. Such a policy would be as radical as the 1980s' right to buy scheme. To put this task into perspective, however, more than 2m social homes would need to be transferred to UK tenants to reach the EU average. But there are sufficient tested mutual models available – traditional co-operatives, tenant management organisations, community gateways and mutuals and the emerging community land trusts – to provide tenants with a flexible menu of devolution options should wholesale mutualisation be sanctioned. And social landlords would still have a key role to play as housing service providers and developers, as well as facilitators of localised asset and management transfer to tenant-led organisations. Despite the scale of the task, social housing, ahead of the NHS, should be the primary arena where the big society is enacted to improve both service delivery to, and the life chances of, those living in the UK's most disadvantaged communities. Kevin Gulliver is director of the Human City Institute and Chris Handy is chair of the Matrix Housing Partnership strategy committee