The case of privatisation in Swedish public housing

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Housing Studies

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Corporatist implementation and legitimacy: The case of privatisation in Swedish public housing

Lennart J. Lundqvista a Housing Market and Housing Policy Division, The National Swedish Institute for Building Research, Gävle, Sweden

To cite this Article Lundqvist, Lennart J.(1988) 'Corporatist implementation and legitimacy: The case of privatisation in

Swedish public housing', Housing Studies, 3: 3, 172 — 182 To link to this Article: DOI: 10.1080/02673038808720627 URL: http://dx.doi.org/10.1080/02673038808720627

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The Case of Privatisation in Swedish Public Housing Lennart J. Lundqvist Abstract 'Corporatist implementation' plays an important role throughout the Swedish rental sector. It is based on close ideological affiliations and adherence to common policy objectives among the Social Democratic government and the organised interests in the public rental sector. In this article, I describe how it works in rent policy as well in the programme for widened tenant influence over housing management and renewal In the mid-1980s, however, the public landlord association invited a private company to manage and renew problem estates in public housing. The methods used by that company are examined and found to be in conflict with the objectives hitherto shared by Social Democratic governments and the 'recognised' interests in the public rental sector. I then go on to discuss the implications for the legitimacy of the existing 'corporatist implementation' structure, suggesting that a 'de-legitimisation' of that structure would prove too costly and difficult for government Once such a structure is established, the sector's governability may increase, but politicians will find their range of options for change substantially limited.

Introduction 'Corporatist implementation' through tecognised' interest organisations has been a cornerstone in Sweden's post-war policy towards the public rental sector. Particularly cherished by Social Democratic governments, such implementation can be found in rent-setting as weE as in housing management and renewal policies, especially in the public rental sector, and to some extent also in the private sector. The emergence of problem estates' in public housing, as well as increasing differences in housing quality and household influence between rental housing on the one hand, and co-operatives and owner-occupied housing on the other, seemed in the early 1980s to create a crisis for Swedish public housing, as evidenced by empty flats, concentration of low-income households, and high moving rates. At the time, the CentreRight government in power pressured for policies to convert public - and private - rental housing into co-operatives or condominiums. Under pressure to improve the image of public rental housing, the National Association of Munici172

pal Housing Companies (SABO) in the mid-1980s bought part of a private company - Foimator which had a record of successM management and renewal of problem estates around the country. In so doing, SABO - one of the key actors in 'corporatist implementation' -seems to have introduced principles which are incompatible with the traditional objectives of Sweden's rental housing policy. In this article, I will describe the Swedish system of 'corporatist implementation' in the rental sector, and discuss the ramifications for the rental housing policy of the privatisation of the unpleasant' represented by SABO's use of Foimatofs paternalistic practices.

'Corporatist Implementation' main features and conditions for legitimacy and stability In the sometimes heated debate over liberal corporatism' versus pluralism', certain features continue to appear as distinguishing the former from the latter. Against the background of constitutional democracy with voluntary group formation

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and involvement in politics, some of the leading supporters of liberal corporatism' have pointed to the following indicators: (1) Inter-group cooperation, at one level in the form of bargaining relationships between major interest groups, at another appearing as close co-operation between the government and tecognised' interest organisations (Lehmbruch 1977 pp92 ffi); (2) Intra-group monopoly of interest representation, meaning that the government recognises, licenses or grants a deliberate representational monopoly to an organisation within a particular category of interest, in return for some control over that organisation's interest articulation (Schmitter 1974 p93; Crouch 1983 pp453 ff); (3) Inter-group cooperative responsibility for public implementation, indicating that government - through laws, or through formal or informal agreements - leaves the implementation of a certain policy to the bargaining organisations that have been recognised' in that particular field (Cawson 1978 pl84; Schmitter 1979 p93). In emphasising the last two points, scholars point to the mutual benefits of this corporatist structure to the state as well as to the recognised' interest organisations. By granting a form of public status to Tecognised organisations, the state gets them to accept joint responsibility for the order and progress of the policy field, and to assure the on-going commitment of their members to continued co-operation. In short, the state increases the govemability of that segment of society (Crouch 1983 p457; McBride 1985 p443). And even if recognised' interest organisations have to accept constraints on their behaviour, they stand to gain internally; the representative monopoly given to them by the state makes the leadership more autonomous and less vulnerable in relation to the membership at large (McBride 1985 p444). Scholars seem less inclined to discuss possible problems of 'corporatist implementation'. In his discussion of implementation and legitimacy in the welfare state, Rothstein (1987 p29 f) says that it may be problematic in two ways, since (a) the state hands over operative powers of implementation to the recognised' interests, and (b) these special interests may come to dominate over the 'common' interest. But he argues that the state still retains the constitutionally given powers to arrange the rules of the implementation game to secure an outcome in line with policy intentions.

Furthermore, he finds no empirical evidence to indicate that 'corporatist implementation' produces outcomes which deviate more from policy intentions that do its "bureaucratic1 or professional' counterparts. In Rothstein's view, 'corporatist implementation' works well because (or as long as) the"participating actors share common objectives and perceive each others actions as legitimate in view of these objectives (Rothstein 1987 p30). Clearly, however, such a structure creates interdependencies. By placing implementation with recognised' organisations in order to legitimise policy among target groups, governments become dependent on the information and knowledge of these organisations for judging the development of policy (Cf. Nordfors 1985 pl71). And while 'corporatist implementation' offers recognised' organisations a degree of leadership independence from the membership, it makes the organisations dependent on the state for status and - in some instances - money. As long as the state perceives the "recognised' organisations as using their expertise and knowledge in line with common objectives, their legitimacy is assured Clearly, the stability and legitimacy of the structure will depend very much not just on how recognised' bargaining organisations act in policy implementation, but also on how they use information and knowledge to legitimate their actions in the eyes of the state as well as their memberships What happens, then, if one of the recognised' organisations introduces measures which could be interpreted as 'alien' to the common objectives of the corporatist structure? To avoid risking its legitimate place within the structure, that organisation would probably try to introduce it as fully "within' these common objectives. Depending on how the measure is introduced and received, splits may be caused within the ranks of the opposite bargaining party as to its legitimacy, as well as among actors in the state part of the 'corporatist implementation" structure. But for a total break-up to occur, the measure must probably lead to a fractioning within the opposing party, with at least one competing fraction challenging the legitimacy of the measure to the extent that the state must reconsider the whole structure of implementation. To shed some light on the question of stability in 'corporatist implementation', I take an example from Swedish housing policy, showing the growth of such implementation in rent-setting and housing management policies in the public rental sector. Then I present the privatisation' strategy recently introduced in public housing renewal Finally, I discuss the implications of that strategy 173

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for the legitimacy and stability of the 'corporatist implementation1 structure found to be operating in the public rental sector.


Sweden's rental policy and the growth of 'corporatist implementation' Two features in Swedish rental housing policy are particularly important to the growth of a structure of 'corporatist implementation'. On introducing a 'social' housing policy just after World War II, the Social Democratic government explicitly pointed to public rental housing as a major means of reaching the objective of 'affordable and decent housing for all'. Set up as non-profit foundations, the Municipal Housing Companies were to be favoured in housing production particularly by way of favourable State Housing Loans. Since the war their rental housing stock increased from 40,000 to 800,000 units in the mid-1980s, or from 222% of the total housing stock (see eg Dickens et al 1985 pp56, 86 1). At first rent controls were a central element of reaching this objective, but by the late 1960s and early 1970s, the Social Democratic government began phasing them out It was now explicitly stated that the rents set in the nonprofit public housing stock would function as a benchmark; no unit in the rental market should have rents 'essentially exceeding" those of public rental units with the same utility value' to the tenant (see Kemeny 1981 pp92 ff.). In the public rental housing sector rent control had been removed already in 1957. The Swedish Associations of Municipal Housing Companies (SABO) and the National Federation of Tenants' Association (Hyresgastemas Riksforbund, HGR) then recommended all their member organisations to accept a centrally agreed-upon 'order of negotiation'. This order regulates the bargaining parties1 rights and duties when bargaining over rents in public housing. The HGR was given a monopoly of representation for tenants. Through a 'negotiation clause' in the public tenants contract he or she would be bound by the rent agreements resulting from SABO-HGR negotiations. A similar 'order of negotiation' was agreed upon in 1970 between HGR and the Swedish Association of Real Estate Owners for the nonrent-controlled part of the private rental sector. In this sector as well, a Tiegotiation clause' gave the HGR monopoly of representation (Cabinet Proposal 1977/78:175, pp30 f). The gradual phasing out of rent control after 1968 can be seen as a corresponding phasing in 174

of 'corporatist implementation' of the 'equal utility value-equal rent' principle which now became official policy. A further development took place in 1971 when the Rent Control Act was changed Instead of general rent increases established by bureaucratic decree now came a system of basic rents', set through negotiations among the recognised' bargaining parties presented above, ie, SABO, the Association of Real Estate Owners, and HGR (Cabinet Proposal 1971:103, pp43 1; SFS 1971:418). This was followed up by the 1974 Rent Control Liquidation Act which stated that rent control was to end in 1978. Until then, the rents for units in the stock still subject to rent control could be increased only after written negotiation agreements between the three organisations already recognised' as legitimate implementors of the new rental policy (Cabinet Proposal 1974:150, p467; SFS 1974:1080). The 1977 Rent Negotiation Act consolidated this system by stating that rent negotiations between the parties in the rental market had become the normal way of determining rents for most of the Swedish rental sector. Scheduled to come into force in 1978, the Act confirmed that the 'equal utility value-equal rent policy would continue to be implemented in this way also when rent control was completely phased out (Cabinet Proposal 1977/78:175, pp89£). But to give the 'organisations a direct influence - within the framework of the binding clauses of the Rent Control Act - over all matters pertaining to the determination or change of the "basic renf' presupposes that the bargaining parties represent all those affected by the outcome of negotiations. While it is generally assumed that landlord organisations speak for practically every landlord in the stock subject to negotiation, the issue is less clear-cut on the tenant side. About 40% of the public housing tenants and only 15% of private sector renters are members of Tenants' Associations (Bengtsson 1985 p21). The governments view was, however, quite clear. Since the determination of 'basic rent is of equal concern to all tenants in a tenement building or on an estate, the •negotiated agreement should apply . . . regardless of the tenants' organisational affiliation' (Cabinet Proposal 1971:103, pp43 £). In other words, the HGR was given a representative monopoly to speak for all tenants, not just for the members. This was reiterated in 1974; negotiated rents should apply to all tenants, ie, also to (the majority) not members of the HGR (Cabinet Proposal 1974:150 p467). This expansion of 'corporatist implementation' may have been relatively easy to accept for Social Democratic governments. It was modelled on the



system established in the public rental sector, always the favourite child of their 'social' housing policy. Because of the recruitment of officials on all levels, and their support to Social Democratic housing policy, both SABO and the HGR were seen as belonging to the family of Social Democratic affiliatory organisations. It was thus only natural that the Centre-Right government formed after the 1976 election was reluctant to accept the "representative monopoly1 given to the HGR When the Liberal Minister of Housing presented the 1978 Rent Negotiation Act she accepted the fact that rent negotiations carried out by organisations of landlords and tenants had become the normal way of determining rents in Swedea Nevertheless, the Minister did not recognise HGR's representative monopoly. In fact, the new Rent Negotiation Act did not mention HGR and its local branches at all Instead, negotiations on the tenant side were to be carried out by 'an organisation of tenants', the only qualification being that it 'enjoys the confidence of the tenants' (Cabinet Proposal 1977/78:175, ppllOf). However, at the same time as this seemed to open the door to 'competitive pluralism' among different tenant organisations, the Liberal Minister proposed strengthening the position of tenants' associations already having an 'order of negotiation' with the landlord. Under the new Act, such an order would mean that the negotiated rent agreement would be binding on all tenants, even if their rental contracts have no "negotiation clause' - (meaning that their rents are subject to change according to negotiation between the landlords and the tenants' association). This compensation would be paid for all units on an estate, ie, also for those rented by non-members (Cabinet Proposal 1977/78:175, pplOO ff). In other words, the tenants' associations recognised' by having an 'order of negotiation' now got legal assurance of resources, which made them less dependent on their membership. With the HGR Tenants' Associations having 'orders of negotiations' for large parts of the rental stock, the new legislation thus actually did more to strengthen the HGR than to foster 'competitive pluralism'. By 1978, we thus find a fully-fledged structure of 'corporatist implementation' at work in Sweden's rent policy. As indicated, its growth was helped by the ideological commitment of the Social Democratic government SABO and the HGR to the broad objectives of the post-war 'social' housing policy. When establishing the system in 1971, the Social Democratic government showed great confidence in these "recognised interests'. They had proven their legitimacy as implemen-

tors in their earlier negotiations for the non-rentcontrolled public rental sector; rental market organisations are of utmost importance for the rental market to function well in modem society1, and they had evidenced their strong will and capacity to reach consensus agreement on important issues' (Cabinet Proposal 1971:103, pp36 £). This Social Democratic confidence in its affiliatory organisations was reiterated in 1974; SABO and the HGR had 'sufficient experience' and the best knowledge' to carry out the implementation of a new rent policy (Cabinet Proposal 1974:150 pp467£). Although in disagreement over who should legitimately represent the tenants, both Social Democratic and Liberal Ministers of Housing took the position that 'corporatist implementation' was a better way of legitimising rent control liquidation and 'equal utility value-equal rent1 policies than through governmental bureaucracy (Cabinet Proposal 1974:150, p464; ibid 1977/78:175, p89). As will be shown, the Social Democratic confidence in SABO and the HGR was so strong that the party recommended extending 'corporatist implementation' also to the areas of rental housing management and renewal

Rental housing management and renewal* 'housing democracy1 through 'corporatist implementation' In the 1974 Housing Policy Bill, the Social Democratic government placed great emphasis on the objective of housing democracy1. During the 1960s and 1970s, previously powerless groups throughout the Swedish society had begun to enjoy the right to participate in decisions affecting their daily life; workers, students and consumers were cases in point In housing, however, rights to make or to influence decisions concerning production, management, and renewal seemed to follow tenure. The Minister of Housing recognised this in admitting that compared to the freedom of disposal and the security of tenure enjoyed by owner-occupiers and co-operative tenant-owners, the renters' legal and practical possibilities to exert influence over the flat and the surrounding housing environment are very limited' (Cabinet Proposal 1974:150, pp351 £). In the Minister's view, the 'social' housing policy perspective necessitated a "widened housing democracy1. But he took a long view of improving the renters' legal rights and practical possibilities 175



to exert influence over flat and estate management and renewal. Necessary legal changes must await - and be founded on - Verified experience'. The state should not set down the precise forms of •housing democracy1 to be established; instead, the Social Democrats preferred that the landlords' and tenants' organisations together try to find adequate forms for increased housing democracy in housing management1. Thus, the tenant influence' experiments carried out so far in the public rental sector by SABO and the HGR should be evaluated before a more total solution of the problem of tenants' decision-making rights' was to be comtemplated (Cabinet Proposal 1974:150, p443). The Centre-Right Coalition coming into power in 1976 made it clear, however, that "corporatist implementation1 and self-regulation by the parties was not its favourite means for achieving more •housing democracy1. Instead, it proposed legislation to allow conversion of rental housing into cooperative tenant-ownership or owner-occupation. An investigatory commission was set up to propose ways of enabling tenants to initiate the transfer of tenement buildings into co-operatives; such a law came into force in 1982 (Cabinet Proposal 1981/82:169; SFS 1982:352). Another commission investigated the possibilities of converting rental flats into owner-occupied condominium units. Its report was delivered only three weeks before the Coalition Government lost the 1982 elections and has never been acted upon (SOU 1982:40). Meanwhile, the 'corporatist implementation' strategy favoured by the Social Democrats was moving forward. The HGR Committee on Housing Influence in 1977 published several proposals for new forms of increased tenant influence. In 1978, SABO initiated a research and development project containing, for example, experiments with decentralised management and decision-making rights for tenants (Bengtsson 1981 p26). And in 1979, these two parties were ready to sign a Principal Agreement on collective tenant influence over housing management The agreement foresaw three different forms of tenant participation in issues pertaining to the management of public housing estates: information, consultation, and tenant decision-making. Based on the Principal Agreement, local agreements are negotiated to regulate (a) the tenants' right to information from the landlord concerning management of the building or estate, (b) the tenants1 right to counsel on all management activities of importance to the tenancy, and (c) the transfer of management decision rights to the ten176

ants. Under these local agreements, the collective of tenants is represented by a Contact Committee, elected by a Tenant Meeting, and constituting the most local' level within the Tenants' Association (Bengtsson 1985 pp43 ff). By early 1985, 385 local agreements had been reached in the public rental sector. This represented about 90% of that sector. However, a transfer of management decisions concerning economic matters was included in only 50 cases, although there were plans for another 60 such inclusions. Agreements including rights for tenants to decide on service levels etc were negotiated in only a handful of cases (Palm 1986). In comparison, only 10% of the larger private landlords had signed local agreements by summer 1987 (Hyresgasten 1987b). It seems to have been the understanding of the negotiating parties that a widened housing democracy1 in the rental sector presupposes tenant influence on the building or estate level. For that purpose, SABO in 1981 presented proposals for a major decentralisation of public rental housing management Instead of centralised management on the Municipal Housing Company level, there would be rnini'-MHCs on the estate level, with an estate director in charge of day-to-day service and management In order for the tenants to have full insight into the economy of the estate, there would be a break-down of the whole MHC budget into budgets for each estate. This budget would be based on the concept of 'equal standard' for all buildings on all MHC estates, the content of which would be determined through the regular rent negotiations between MHCs and Tenants' Associations. The new feature of what SABO called 'selective tenancy1 would be that tenants get more freedom of choice; if tenants on one estate want a higher standard, they pay a higher rent Tenants opting for a lower standard would pay a lower rent than the 'equal standard' concept calls for; the surplus could be paid back to the tenants (SABO 1981). An often cited local agreement involving this model of tenant decision-making is the Alebyggen MHC north of Gothenburg (Alebyggen 1982, 1983; Bengtsson 1983 pp65 f£, 104). It is important here to note howSABO-the "recognised' negotiating party on the landlord side perceived of the connection between the rent policy and that of housing democracy1. For the rent-setting principle of 'equal utility value-equal renf to have any meaning, it must be based on equal standard and service levels for similar dwellings throughout the stock. In effect, this solidaristic' principle of rent-setting had charac-



terised the negotiations in the public rental sector since negotiations became the regular method of rent-setting. The SABO-HGR negotiations were based on cost-pooling and rent-averaging over the whole of an MHC stock of flats. Now, the policy of widened liousing democracy1 was interpreted as necessitating a break-up of MHC stocks down to the estate level. However, negotiations leading to tenants making decisions to introduce differing standard and service levels could disrupt the principles underlying 'solidaristic' rent-setting. In the end, this could threaten the legitimacy of the 'corporatist implementation' structure used to implement the 'equal utility-equal rent' principle. Hence SABO's concern to link 'corporatist implementation' of housing democracy1 to the concept of 'equal standard'. It seems safe to conclude that SABO - by founding the 'selective tenancy1 concept on the idea of 'equal standard and "normal rent' - was intent not to let 'corporatist implementation' of the housing democracy1 policy lead to rent-splitting, thereby compromising the legitimacy of this implementative structure in the eyes of housing policymakers. With respect to housing renewal, the Social Democratic drive for widened housing democracy" has followed a somewhat different route. Instead of leaving it to the parties to develop forms of tenant influence through negotiations, the Housing Rehabilitation Act was changed in 1974 to give tenant organisations an actual veto position on renewal matters. On the application of a tenant organisation, a Rent Tribunal can stop a landlord from modernising beyond a lowest acceptable standard'. If such measures require a building permit they can be taken only if the tenant organisation gives a written consent, a so-called tenant certificate' (Cabinet Proposal 1974:150, pp447 f). Originally applied only to the metropolitan areas of Stockholm, Gothenburg and Malmo, this tenant Veto right' has been gradually expanded to cover the whole country by 1987. From then on, state housing loans for renewal of rental housing can be given only if the landlord has given the tenant organisations a chance to comment on the size and necessity of the renewal (Cabinet Proposal 1986/ 87:48, pp34f). The 'corporatist' element in rental housing renewal is thus limited to rnonopoly of representation'. The 1974 Housing Policy Bill stated explicitly that in renewal issues, the HGR Tenants' Associations should represent the tenants. Furthermore, he said that the Tenants' Associations themselves can decide whether the 'actual decision should be delegated to sub-divisions or local contact committees, thus leaving open the question of

whether or not the tenants actually affected by the renewal should be consulted (Cabinet Proposal 1974:150, pp449). In the 1986/87 Housing Policy Bill, the rnonopoly of representation' was linked to tenant organisations having reached an 'order of negotiation' with the landlord As already indicated this in practice means the HGR Tenants' Associations (Cabinet Proposal 1987/87:48, pp35). The Social Democratic government seems to view the systems of 'corporatist implementation' in rent policy and in the policy for housing democracy1 both as inextricably linked together, and as the only acceptable alternative. The Minister put it like this: The parties in the rental market decide by themselves the norms for rent-setting. Any departure from this order would, in my view, lead to state rent control . . . Since the system of rent negotiations during the last years has also developed to become the basis for individual and collective tenant influence over housing management, every departure from free rent negotiations would threaten the continued development of tenant influence' (Cabinet Proposal 1986/87:48, pp32f.). Thus, the Social Democratic government makes the progress of its rent and housing democracy1 policies dependent on how the "recognised' parties within the 'corporatist implementation' structure act in the future. This faith could largely be explained by the close personal and ideological ties between the Social Democrats, SABO and the HGR Leaders in these two organisations have traditionally adhered closely to the legacy of the 'social' housing policy, introduced by the Social Democrats after the war. Nevertheless, the selfregulation implied by, eg, the 'corporatist implementation' of widened housing democracy1 provides the "recognised' parties with considerable leeway in choosing means and ways for housing management in the future. Elements could be introduced, which by some parties may be interpreted as illegitimate under the common 'social' housing policy legacy. It is to this problem we now turn.

Privatisation of the unpleasant: problem estates make strange bedfellows In many European countries, post-war public rental housing has faced problems and criticism. Physically, rental housing constructed according to new 'industrial' methods seems to have a tendency of sliding into premature obsolescence' 177



(Reade 1985; Priemus 1986). Socially, public rental housing estates have been criticised as segregated, void of good neighbourhood relations, subjected to vandalism, and rapidly becoming a residual' form of housing (Forrest and Murie 1983; van Kempen 1986; Boelhouwer and van Weesep 1987). These problems have also appeared in Swedish public rental housing, although to a lesser extent than in many other countries. However, the number of problem estates' seemed to grow in the 1980s, as the bulk of the public housing built during the 1965-1974 Million Dwelling Programme was approaching the age of comprehensive repair and renewal needs. As the government took steps to streamline financial support to rental housing renewal, SABO was also taking steps to solve the problems of problem estates'. In early 1984, SABO bought 30% of the stock of Fozmator, a private company specialising in renewing problem estates in public rental housing. Its record was one of astounding success; the renewal of the very problematic Hammarkullen estate in Gothenburg was especially notable, and the Vallby project in the city of Vasteras seemed equally promising (Svenska Dagbladet March 14,1984; Kommunaktuellt 1984). Formatofs strategy for problem estate management and renewal is nothing short of revolutionary, compared to traditional MHC methods. Three main ingredients can be discerned; (a) populistic paternalism1 towards the tenants, (b) 'service-intensive' and innovative management of buildings and estates, and (c) freedom-ofchoice'-directed renewal of buildings and flats far beyond the lowest acceptable standard'. The basis for implementing this strategy is the contract set up with the MHC owning the problem estate. FormatoT undertakes to solve the estate's problems on one condition; the company must be given a free hand' in dealing with the estate and the tenants.1 •Populistic paternalism1 is at the roots of Formatois philosophy. A few rowdy neighbours should not be allowed to disturb the majority of well-behaving tenants. In the words of a leading company spokesman, Formatorwants to prevent vandalism and to protect the interest of those tenants who wish to have law and order on the estate'. To this end, the company keeps a close eye on all tenants through (a) on-the-spot inspections of tenants' maintenance of flats and general behaviour, (b) investigations of tenants' financial situation, and (c) swift reaction to tenants' rows and estate disturbances(SVenstaDagWadefJuly31, and December 4, 1985; Caldenby, Claes and Hultin 1986; Deurell 1986a). Taking over the Vallby estate in 178

Vasteras on January 1, Formatofs directors began "knocking doors to call on tenants at 11 pm on the Twelfth Night, just to show who we were' (Kommunaktuellt 1984). One Formator director admitted to spying on tenants in food shops to find out their consumption patterns, so as to warn them to change these patterns if they wanted to afford their flats {Dagens Nyheter April 8, 1987). On some Fozmator estates, uniformed guards are on duty around the clock (Svenska DagbladetJuly 31, 1985). Having established who the troublesome1 tenants are, Formator then engages in several practices to get rid of them, including (a) formal eviction of hopeless1 tenants, (b) threats and warnings to "undesirables1 to make them move voluntarily, (c) late or no delivery of rental bills to create rent arrears (a formal cause for eviction), and (d) use of credit information to deny certain tenants renewal of contracts Certainly, the number of formal evictions have dropped on Formator estates (Svenska Dagbladet July 3, 1986). Some experts believe, however, that this is due to the practices of populistic paternalism' just described (Dagens Nyheter March 2.1 and 28, April 8,1987). Formatofs 'service-intensive' management has several characteristics. A manager is placed in charge of the estate, and the company is 'always available'; the estate office is manned 12 hours a day. Formator has also introduced a '24-hour service guarantee'. Every acute problem - leaking taps, broken windows, and the like - will be taken care of within 24 hours after having been reported If not, the tenant will get a rent rebate for every 24-hour period during which the problem is not solved (Bofast 1987a, 1987b). Following the SABO idea of mini-estates, Formator divides the problem estate into different management areas, each with personnel directly responsible for service and maintenance. These area service persons have monthly maintenance and repair funds, to spend as they find most efficient Formator induces them to look for other, unreported troubles when they visit flats with reported problems. This 'service-intensive' management philosophy has won praise from the tenants who manage to stay on Formator estates. The company was even named the best landlord by the Tenants' Association of Western Sweden in 1985 (Monbladet December 6, 1985). When it comes to estate renewal, Formatofs stated objective is to increase tenants' freedom of choice to the point where the estate provides the same standard of living in owner-occupatioa The means for achieving this involve (a) a redistribution of flats in terms of size, (b) a differentiation of



flat standard in terms of equipment, and (c) a restructuring of building facades together with new landscaping of ground areas. This renewal strategy was first tried in Hammarkullen in Gothenburg, and on the Vallby estate in Vasteras. From a physical and technical point of view, it is deemed a great success in these areas (Synnemar 1984 pp33, Dagens Nyheter October 18, 1984; Monbladet, January 20, 1985). At present Formator is rebuilding Brandbergen and Granangsringen, two earlier problem estates in the Greater Stockholm area, comprising a total of 3,600 flats, at a cost of SEK 1,200 millioa Brandbergen's image will be completely changed Closed staircases will be opened and glazed. Buildings will be partly teared down to make room for terraced apartments. Some buildings will have loft apartments placed on top. All buildings are to be named to encourage Tny home is my castle' feelings; there will be courtyards named Union Castle, Royal, Nobility and Residence, and a few Towers Qonsson 1987). Flat sizes will vary from three to eight rooms (kitchen included). Tenants can choose from among 13 different alternative equipment standards, in terms of colour, doors, carpeting, and wallpapering. All kitchen and bathroom equipment will be renewed. Rents will be differentiated according to the standard chosea Recent reports suggest that rents will probably increase upward of 15% (Andersson 1987; Dagens Nyheter April 7, 1987). At the same time as this radical management and renewal philosophy has been praised by remaining tenants and ordinary MHC managers, there has also been strong criticism Foimator is accused of violating agreements on tenant co-determination in housing renewal In one case, Formator is said to have forced the Tenants' Association's officer into signing the necessary tenant certificate' before there had been any consultation with the affected tenants. As a result, tenants annoyed with the complacency of the TA' have set up their own free associations to fight for their legal rights, and for the rights granted through the MHC-TA agreements on tenant influence discussed earlier (Deurell 1986b; Dagens Nyheter April 7,1987). Social workers criticise the free hand' given by the MHCs to Formator. They see discriminatory practices in Formatofs dealing with so-called problem' tenants. Because of the free-hand', however, these practices seem to have the tacit - and sometimes open - consent of the politicians responsible for municipal housing. With no political backing, social workers can do little to prevent

Formator from continuing its methods of populistic paternalism' (Meyer 1987). Finally, some critics hold what they interpret as a political acceptance of Formatofs methods to be a violation of the original principles of 'social' housing, and in particular of public housing; to provide affordable and decent housing for all'. On Formator estates, housing is only for those who can afford to pay and who behave 'well' in the eyes of the company (Holgersson 1986; Bjorklundetal 1986; Nordstrom 1987; Tilander 1987). Formator has replied to this allegation by pointing to its managerial record, to the radically improved condition on earlier problem estates, and to the 'silent majority1 of satisfied tenants (Dagens Nyheter April 8, 1987). This last line of reasoning has been particularly pronounced in the special housing newspaper published by SABO (Bofast 1987c).

Conflicting principles within the 'corporatist implementation' structure: political rejection or accommodation? What impact will Formatofs strategies have on the legitimacy and stability of the 'corporatist implementation' structure we have found in Swedish rental housing? To begin with, let us look at the relations between these strategies and the 'social' housing policy intentions which provide the basis for that structure's legitimacy. Of special importance here are such dimensions as (a) a socially integrated housing, (b) fair rents built on the principle of 'equal utility value-equal rent1, and (c) increased tenure equality in terms of household influence over maintenance, management, and renewal The legitimacy of the 'corporatist implementation' structure in public rental housing has come from the fact that the "recognised' parties - SABO and the HGR, both dominated by Social Democrats - have closely adhered to these intentions. However, SABOs use of Formator to privatise the unpleasant1 task of rehabilitating problem estates causes disharmony between these policy intentions and what is actually achieved in the field First of all Formatofs 'service-intensive' management and renewal beyond the lowest acceptable standard' may have gone a long way towards providing 'decent1 rental housing. Nevertheless, this seems to be achieved by violating the objective of 'socially integrated' housing; households with higher income are attracted to Formator estates, while the company's "populistic paternalism' 179



forces low-income and social benefit households out, often to be concentrated in one area or one building (Fall 1985). In this way, Foimator paves the way for polarised' or 'categorised' housing, a hitherto illegitimate alternative for those adhering to the legacy of 'social' housing. Second, it is true that Formator's renewal and management strategies are in line with the objective of providing 'decent1 housing. However, this is achieved at a considerable cost to housing democracy". Formator's populistic paternalism' has left little room for tenant influence and co-determination over management and renewal Tenants' Associations have been caught napping, or forced to provide tenant certificates' without properly consulting the tenants affected. The legitimacy of the Associations as representatives of tenants' interests has already been questioned; on at least one Formatoiestate, a competitive tenant organisation has been formed. Finally, Formator's extensive renewal strategies may induce a rent-splitting that is difficult to reconcile with the present principles of rent-setting. It is true that the 'equal utility valueequal rent1 principle allows for rents differentiated according to differing utility values. But how are the MHCs and the Tenants' Associations to determine "normal' rent levels for an MHC stock, if some estates renewed according to Formatofs diversifying strategy show a very split rent structure? And how will the "recognised' negotiating parties be able to argue for 'solidaristic1 cost-pooling and rent-averaging if it means that other, less attractively renewed estates are forced to contribute to the costs on Foimator estates renewed beyond lowest acceptable standard? In short further use of such renewal strategies could indicate an erosion of the present principles of rentsetting. SABO has been identified as a central actor in the 'corporatist implementation' structure in Sweden's rental housing. From what has been said here, its use of Formatoi in problem estate' renewal can be seen as a break with the common objectives of that structure. Such a break may cast doubt on the legitimacy of that actor, thus jeopardising the future stability and legitimacy of the structure as a whole. A crisis of legitimacy for such a structure is evidently also a potential crisis for the government who helped forming and accepted 'corporatist implementation', and for the legacy of its policies. Rothstein (1987 p30) points to two options. Government can rearrange the structure of implementation to secure legitimate' outcomes, the most drastic alternative being to dissolve the 'corporatisf structure and put some 180

bureaucratic' or professional' alternative in its place. But the government may also redefine policy objectives so as to accommodate the new elements introduced by a "recognised' party. In this way, the 'corporatist implementation' structure is again made legitimate, and the threat to government averted (c£ Rothstein 1987 p30). In the particular case presented here, we have seen that - albeit for different reasons - Social Democratic as well as Centre-Right governments have rejected the first alternative. Accepting neither free market rents nor rent control exercised through state bureaucracy, the Social Democrats have no alternative to the present rent negotiations. And with the close links between rent negotiations and tenant co-determination, an abandonment of 'corporatist implementation' could bring progress towards housing democracy1 - so cherished by the Social Democrats - to a halt (Cabinet Proposal 1986/87:48, p32 £). But does this seemingly total political dependence on 'corporatist implementation' mean that Social Democratic governments would be ready to accommodate 'alien' elements as legitimate parts of the traditional policy? In my judgment, the legacy of the traditional 'social' housing policy objectives is so strong among the rank and file Social Democrats that accommodating the segregational and paternalistic strategies used by Formator (and backed up by SABO, a crucial actor in the 'corporatist implementation1 structure) would be difficult to legitimise within the Party.

Concluding remarks I have argued that the legitimacy and stability of the 'corporatist implementation' structure found to be operating in the Swedish public rental sector stems from the close ideological and personal affiliations between the 'recognised interests' SABO and the HGR - and the Social Democratic Party. Because of these affiliations, the structure has for a long time worked in unison with the policies laid down by Social Democratic governments. But precisely because of these close affiliations, SABOs purchase into, and use of, Formatoi and that company's paternalistic practices will have repercussions going far beyond the few thousand flats managed and renewed so far. It represents a major break with earlier policy, and the fact that it has been introduced by a trusted •recognised party1 jeopardises both the legitimacy and stability of the 'corporatist implementation' structure and the legacy of 'social' housing policy. If a Social Democratic government flatly



Björklund, Marianne, et al (1986) Så här har människoma det i Formators nya värld', Socialt Arbete 1/86:5-6. Boelhouwer, P. J. and J. van Weesep, (1987) Public Housing Sales in the Netherlands: the Record and the Outlook', Scandinavian Housing and Planning Research 4:3-16. Bofast (1987a) Service och förvaltning viktigt när Granängsringen byter skepnad' 3/87:19 Bofast (1987b) Formator inför servicegaranti med hyresrabatt 5/87:3. Bofast (1987c) 'Apartheid i Vallby och Harnmarkullen? (editorial) 7/87:7. Cabinet Proposal 1971:103', Förslag till lag om dels fortsatt giltighet av lagen (1942) om hyresreglering m m dels ändring isamma lag m m Cabinet Proposal 1974:150, Riktlinjer för bostadspolitiken mm Cabinet Proposal 1977/78:175, Hyresförhandlingslag mm. Cabinet Proposal 1981/82:169, Atgäider för att främja övergång från hyresrätttillbostadsrätt m m Note Cabinet Proposal 1986/87:48, Om bostadspolitiken. 1 Knowing that Municipal Housing Companies in Caldenby, Claes and Hultin, Olof (1986) Samverkan Sweden usually contract out the physical rebuilding eller hårda nypor?. Arkitektur 5/86:21. of estates to private companies, it may seem surprisCawson, Alan (1978) 'Pluralism, Corporatism and the ing to make particular use of the term privatisation' Role of the State' Government and Opposition to denote Formator renewals. There is, however, a 13:178-198. distinct difference. Regular MHC renewals are Crouch, Colin (1983) 'Pluralism and the New Cordone on terms set by the MHCs, and the public poratism: A Rejoinder'. Political Studies XXXL452MHCs retain control over the renewal process as 460. well as over the regular management of the estate. Dagens Nyheter (October 18, 1984) Västerås: Gamla In Formator renewals, all responsibility for the conhus blir som nya på bara 10 dagar'. tracting-out of rebuilding activities as well as regular Dagens Nyheter (March 27, 1987) "Brandbergen byter management are left to the private company, ie to ansikte'. Formator, and the MHCs step out of their responsiDagens Nyheter (March 28, 1987) Fömyelsen har en bilities. This is why I find it appropriate here to call baksida'. the process one of privatising the unpleasant'. Dagens Nyheter (April 7, 1987) 'Hyresgäster flyr sanering'. Dagens Nyheter (April 8, 1987) 'Formator vämar orn de References starka' (Interview with the founder-director of Formator, Bjöm Pärsson). Aftonbladet (January 20, 1985) 'Gavlar-vilka tavlor!'. Deurell, Mats (1986a) 'ROT i 70-talsomräden', ĀrkiAftonbladet (December 6, 1985) 'Skandalhusen som tekttidningen 5/86:12. blev mönsterhus'. Deurell, Mats (1986b) 'Det kommer på hyran!', ArkiAlebyggen (1982) Rapport om boendeinflytande Surte: tekttidningen 5/86:13-15. Alebyggen. Dickens, Peter et al (1985) Housing, States and Alebyggen (1983) Rapport om boendeinflytande Surte: Localities London and New York Methuen). Alebyggea Fall, Carl-Axel (1985) Har han för hårda nypor? Vår Andersson, Morgan (1987) Förort på dekis blir som ny', Basted 11/85:2-4, 38. Byggindustrin 3/87:18-21. Forrest, Ray and Murie, Alan (1983) 'Residualisation Bengtsson, Bo (1981) Socialt bostadsbyggande och and Council Housing. Aspects of the Changing boendeinflytande iSverige Gävle: Statens institut för Social Relations of Housing Tenure'. Journal ofSocial byggnadsforskning, meddelande M 81:2. Policy 12:453-468. Bengtsson, Bo (1983) Förutsättningar och hinder för boinflytande i privata hyresfastigheter. Redovisning Holgersson, Leif (1986) 'Formator - den nya världen', av ett uppdrag för bostadskommitten Stockholm: Socialt Arbete 1/86:2-4. Ministry of Housing, Ds Bo 1983:5. Hyresgästen (1987a) Sarnhällsförändrare eller fastighetsförvaltare med hårda nypor...' 1/87:7-10. Bengtsson, Bo (1985) Lokalt hyresgästinflytande i privata och allmännyttiga hyresfastigheter--en jäm- Hyresgästen (1987b) 'Boinflytandet bryter in även i förelse Gävle: Statens institut för byggnadsforskprivatagda områden' 5/87:25-27. ning, M85:2. Jönsson, Lars-Eric (1987) 'Brandbergen; mitt hem, min rejects or prohibits Foimatofs practices, it risks losing a close affiliate and key actor in the implementation of rental policy objectives. If it accommodates these practices into official policy, it may very well lose its credibility as champion of 'social' housing policy. Caught between these unpleasant alternatives, what could the Social Democratic policy-makers do? They easy way out seems to be a gradual and marginalistic adaptation of policy objectives to the strategies and actions of recognised interests' in the 'corporatist implementation' structure. In a wider sense, this implies that policy-makers may become the captives rather than the custodians of 'corporatist implementation'; what they consider 'policy-making' is merely a reaction to what the •recognised interests' are already doing in the field.

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borg', Industri & Utveckling 4/87 (Supplement Haninge): 17-19. Kemeny, Jim(1981) The Myth of Home Ownership London: Routledge & Kegan Paul. Kempen, Eva van (1986) 'High-rise Housing Estates and the Concentration of Poverty', The Netherlands Journal of Housing and Environmental Research 1:5-26. Kommunaktuellt (1984) "Hårda tag mot förslumningenmen socialarbetama är tveksamma' 32/84:14-15. Lehmbruch, Gerhard (1977) Liberal Corporatism and Party Government' Comparative Political Studies 10:91-126. McBride, Stephen (1985) 'Corporatism, Public Policy and the Labour Movement A Comparative Study' Political Studies XXXV:439-452. Meyer, Robert (1987) "Lämnade smutsjobbet åt Formator', TCO-tidningen 11/87:8. Nordfors, Lennart (1971) Makten, hälsan och vinsten. Politik från arbetarskydd till arbetsmiljö. (Lund: Studentlitteratur.) Nordström, Gunni (1987) Privat bolag förvandlar Brandbergen till Svithiod Smygande apartheid anser socialarbetare', TCO-tidningen 7/87:8-9. Palm, Sven-Olof (1986) (Functioneer, at Hyresgastemas Riksförbund, HGR) Interview information to the author, October. Priemus, Hugo (1986) Post-war Public High-rise Housing Estates What Went Wrong with Housing Policy, with the Design and with Management?, The Netherlands Journal of Housing & Environmental Research 1:157-185. Reade, Eric (1985) 'Britain and Sweden: Premature Obsolescence of Housing', Scandinavian Housing and Planning Research 2:27-43. Rothstein, Bo (1987) Välfardsstat, implementering och legitimitet' Statsvetenskaplig Tidskrift 90:21-37. SABO (1981) 'Hyresvalsrätt vänder upp och ner på de allmännyttiga bostadsföretagen' (Stockholm: SABO brochure, May.)

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Schmitter, Philippe (1974) Still the Century of Corporatism?, The Review of Politics 36:85-131. SFS 1971:418 (Swedish Code of Statutes) Lag om hyresreglering. SFS 1974:1080, Lag om aweckling av hyreslagen SFS 1982:352, Lag om räft till fastighetsfövärv vid ombildningtillbostadsrätt SOU 198240, Ägarlagenheter (Stockholm: Ministry of Justice.) Svenska Dagbladet (March 14, 1984) 'SABO Köper del av 'husdoktorer'. Svenska Dagbladet July 31, 1985) Väktare dygnet runt i områdef. Svenska Dagbladet (December 4, 1985) "Över 100 hyresgäster mister sina lägenheter'. Svenska Dagbladet (March 7, 1986) Trots Formatorkritiken: Färre vräkningar i söderkommuner'. Synnemar, Karl-Erik (1984) 'Hyresgästvänligt renoveringsarbete fömyar Västerås', Byggindustrin 18/84:33-35. Tilander, Kristian (1987) Sanerar bort människor', TCOtidningen 11/87:14.

Lennart J. Lundqvist, Housing Market and Housing Policy Division, The National Swedish Institute for Building Research, Box 785, S-80129, Gävle, Sweden.

Part of this research was carried out under the auspices of a grant provided by the Bank of Sweden Tercentenary Foundation. For useful comments on earlier versions of the paper I especially wish to thank my colleagues in the Housing Market and Housing Policy Division of the National Swedish Institute for Building Research.