Public Services Management: Shaping a scheme sure to put people into action: Paul Gosling reports on ways investment in housing associations is being used to create employment and stimulate local economies

WITH hopes rising of a gradual climb out of recession, attention is starting to focus on the relationship between housing policy and the health of the economy. A conference later this month organised by Shelter will argue that the housing market has become seen as the primary motor for the economy, rather than the means by which people are housed. One result, Shelter says, is that a change in housing policy is a prerequisite for sustainable economic growth once the recession is over.

Meanwhile there is pressure for housing investment to be used as a means of stimulating local economies. People For Action (PFA), operating from the offices of the Shape Housing Association in the Sparkbrook area of Birmingham, this month begins a series of seminars promoting the use of local labour in house-building and renovation programmes.

People For Action was established last year, funded by the Department of the Environment and the Wates Foundation, to promote the role of housing associations as agents of economic development. In addition to the founder members Shape and the South London Family Housing Association, and recent affiliates Mosscare Housing in Manchester, another 42 housing associations are in negotiation with PFA about joining. A new building programme of the Deptford City Challenge is using the local labour principle, and other city challenge projects are considering following suit.

The promotion of local labour has already proved successful at Shape, where contractors are required to employ at least 20 per cent of their labour from the community. The hope had been that jobs would come from local businesses winning many of the contracts. Chris Wadhams, director of Shape and PFA, explains that this hope proved optimistic: 'We found the businesses that could do the work were few and far between.' It was decided that only a more interventionist approach would be successful.

The result is PFA's Ambassador training programme, which has just recruited its first five trainees out of 25. 'It is a programme for the long-term unemployed to start small, sub-contract businesses,' Mr Wadhams explains. 'It's an opportunity for people to become self-employed as sub-contractors. We take a small group of people, build on their existing skills, and do a business training programme for them - tax, VAT, invoicing, marketing, estimating - everything that a small contractor needs to know.

'The difference is that the sub-contractor has a sheltered entry into the construction trade, into the housing association market, so they are not thrown into the deep end to go bust. So during their year's training they make contacts with all the other housing associations in the city, the commissioning managers of the big contractors, and form their business network. They are given their business opportunities and after that they sink or swim.'

When it was created in 1973, Shape was both an employment and housing scheme. Soon this seemed too ambitious and Shape concentrated on housing, but in 1986 the management committee, aware of the poverty of many tenants, started asking what proportion were unemployed. Shape had to admit it did not know, and was shocked by research which found that 83 per cent were out of work at a time when the economy appeared healthy. From that time Shape's investment programmes were seen as potential opportunities for the employment of local people.

A central element of this new approach was the creation of a related trading company, Shape Urban Renewal Enterprises (Sure), which aimed to win some of the building contracts that Shape awarded.

Sure has five sections - architecture; building, painting and decorating; metal working and fencing; landscaping; and garaging - providing quality services and winning contracts from Shape and elsewhere on the basis of competitive tenders. Tendering is important not only to guarantee that Sure is organised on a commercial basis, but also to reassure the Housing Corporation that housing grant does not go as a subsidy to a trading business.

One contract just coming to an end is for the refurbishment of derelict maisonettes on the deprived Highgate estate near the Shape offices. Handwood House is now in use as supported accommodation for single men who were previously in hostels. Sure won contracts for the design and renovation of the property and for the new ornamental railings around it. On an adjacent site, where maisonettes had to be demolished, Sure is building new flats for Shape.

Although Sure is a 'not for private profit' company, it is now a major business, returning profits of pounds 30,000 a year, to be re-invested for the benefit of local people. Profits could rise to as much as pounds 200,000, Chris Wadhams believes, once local industrial units which Sure has acquired on leasehold have been let. Shape believes that its skills as managers of residential properties can provide the expertise to enable commercial units to be let profitably. As part of a broader Enterprise Sparkbrook initiative, PFA is providing training for existing local traders.

PFA does not believe that the Shape / Sure experience offers a blueprint for other housing associations. It wants to promote local labour clauses, but also sees that associations could assist with the creation of community business run by the tenants themselves (as has happened in Scotland).

Shape's initiatives are in effect an argument for housing associations taking a broader view of their local community, and a less narrow commercial approach. The Shape group is promoting what it calls a third sector of the economy - neither private nor public - which combines trading activity with welfare concerns.

A research study to consider the practicality of this approach, based in Berlin and involving PFA, is being conducted, financed by the European Commission. Whether it could prove effective in this country is partially dependent on whether PFA can now persuade more housing associations to take the ideas seriously.

'Housing - The Road to Economic Recovery', organised by Shelter at Queen Elizabeth II Conference Centre, London SW1, 28 April.

'Using Local Labour in Urban Regeneration'. Seminars held in York, Birmingham, London and Manchester, for further details contact People For Action (021-622 2747).

(Photograph omitted)