Lambeth Council plans to be a cooperative

Lambeth Council said the move aimed to save money

A south London council has unveiled plans to become a "co-operative" - where residents who help run services would get council tax rebates.

Lambeth Council hopes the scheme, based on the business model of the John Lewis Partnership, will save it about £30m.

Under the proposals, residents could vote to turn services, such as primary schools, into citizen-led groups.

But the Lambeth Conservative group described the proposals as a "gimmick" and did not think they would happen.

Lambeth Council, which is Labour run, will put the plans out for consultation next month with the aim of introducing the mutual approach in August.

The plans would also see tenants offered greater control of housing estates by being given the powers to reorganise them as co-operatives.

Funding cut

Residents of the borough will also be allowed to set set up small-scale mutuals -where everyone with a vested interest has a say - to use their personalised budgets for care service users.

It is contrast to north London's Tory-run Barnet Council which has adopted a "no frills" approach which could require residents to pay extra for certain services.

But Steve Reed, Lambeth Council Leader, said: "We are all looking at a reduction of 20% of funding from central government due to the recession.

"So we can cut services, ration them or do what Barnet is doing, which is charge extra - which I think is unfair.

We have been doing this for three or four years Lambeth Council Leader Steve Reed

"We are proposing an alternative where we can give people the tools to do the job or mutualising where we can set up something and then hand it over to the people who will use it, to run it."

He denied this was going to be a Labour blueprint to run local government, adding: "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."

Lambeth already has more tenant-run estates than any other London borough.

It is not a real prospect for a council which has services, especially in housing, in meltdown Tory councillor John Whelan

And Greenwich Leisure, an employee-owned company, is already running Lambeth's leisure centres.

The council is also working with local groups to complete the transformation of the old Lilian Baylis school site in Vauxhall into a community hub.

But Tory councillor John Whelan said: "It sounds to me like a bit of a gimmick. I am sceptical.

"It is not a real prospect for a council which has services, especially in housing, in meltdown, has overspends, which saw rents increase 14% last year and 3% this year."