Finance: The buck stops here

Housing associations are tackling inner-city problems head on, reports Paul Gosling

Northumbria's police committee has been considering this week whether it will allow the Home Housing Association (HHA) to pay for two extra police officers to patrol Newcastle's West End. The HHA wants to make an area that is a haven for drug dealers a better place to live, not only because of its responsibility to its tenants, but also to make its flats and houses easier to let.

If the Government's wish that 60 per cent of the needed 4.4 million new homes should be built on derelict urban land is to be achieved there has to be an investment in making the inner cities better places to live, not least by improving policing. For housing associations to contribute towards the cost of extra police officers makes financial sense, even at pounds 70,000 per officer: as more properties are let so more income is generated. And if the inner cities can be rehabilitated for families then the HHA can make savings in the future, by using brown land for development instead of the more expensive green belt.

The question that has been facing the police authority is whether to accept the principle of purchased policing. Posing and answering dilemmas is now common currency for housing associations as the main players in the social housing sector. Housing associations have taken over from councils as the leading builder of new properties for let, and as landlords of many of the poorest tenants.

So many of associations' tenancies are now nominated by councils that the profile of tenants is changing rapidly. The percentage of association tenants who are unemployed has risen to about 60 per cent, while 80 per cent of new tenants are on benefits.

Associations have had to accept a central role in poverty alleviation. London's St Pancras is one of many associations in the process of setting up a credit union aimed at tenants, but open also to employees. "There is a hope that if people manage their money better it will keep arrears down, but we have wider aspirations," says Margaret Pitt, central services manager for St Pancras. "We are concerned by the increasing numbers of tenants who are on low incomes or on benefit."

Credit unions are savings and loans co-operatives, which lend money cheaply to tenants, while, in times of low inflation, pay competitive interest on deposits. They are popular in Ireland, and there is a particular enthusiasm for credit unions among St Pancras's Irish North London tenants. Credit unions also assist the broader economy of an area by keeping money within the community.

A similar principle is behind the economic activities of South London Family Housing Association. It has set up its own building firm employing tenants, many of whom were previously long-term unemployed. The association also has a training programme, and will begin an apprenticeship scheme next year, and, while awarding contracts on the basis of competitive tenders, it is trying to maximise the work won by local firms, particularly those employing local people.

South London is also encouraging self-build by potential tenants. It has participated in 11 self-build schemes, creating more than 100 new homes. Although tenants are not paid wages they have a large nominal capital stake in the home, which is released to them if and when they move and which keeps rents low while they remain tenants. For the association it means that building the homes is achieved for little more than the land and materials cost. The association has a training and support unit, to ensure that work is undertaken to a good standard. Self-building tenants find their skills have improved, and their prospects for employment rise.

Across the country a range of associations are committing themselves to programmes which aim to make their tenants less poor and more employable. Many associations now employ welfare rights advisers to assist tenants claim their maximum benefits entitlement. One is making properties more energy and water efficient, and runs courses for staff and tenants in how to reduce utility bills. Presentation, a black and Asian association, is setting up a mentoring scheme to help youths enter the work force.

While all the programmes require a financial and staff commitment from associations, they can attract funds from elsewhere. The Housing Corporation funds good practice grants, supporting a so-called Housing Plus role for associations. Hyde, in the East End of London, has been successful in also raising money from the European Commission, is leading a major bid for Single Regeneration Budget money, and has gained so much experience in its economic development work that its Hyde Plus associate company is earning money from consultancy work.

Tom Titherington, director of Hyde Plus, says that associations need to intervene in their local economies on "moral, pragmatic and strategic" grounds. He believes that whichever party wins the next election will expect social landlords to take a more "holistic" approach to their responsibilities. Lenders, he suggests, will favour this to protect the value of capital assets against which they have made loans, and to ensure that associations achieve the maximum return on capital.

For the social landlord, altruism and self-interest can amount to the same thing.