Clash of priorities in housing policy puts community investment at risk

Two reports commissioned by the Joseph Rowntree Foundation find housing associations faced with competing priorities and uncertainties over their potential role as agencies for community investment.

Research by People for Action – a network of housing organisations committed to putting power and influence in the hands of local people – suggests that policies promoting area regeneration risk being squeezed out by other policies designed to hold down rents and make homes more affordable. Some associations lack surpluses to fund their non-housing activities – and there is no public money is current earmarked for the purpose within government grants.

Looking in-depth at the way that 19 English housing associations organise community investment, the study found that:

• Housing associations usually funded community investment activities by using surplus rental income. Activities ranged from environmental and security improvements to programmes designed to reduce poverty and social exclusion. 
• Attempts to obtain additional funding, including the European Union, central government regeneration programmes and local partnerships, had met with varying degrees of success. The contribution that external funding made to community investment by the associations under study ranged from 83 per cent to nothing.
• Associations without sufficient surpluses or alternative income often relied on rent as their only internal source of funding. The amount that tenants were paying towards community investment activities varied between 10p and almost £3 a week.
• There was evidence that the growing policy emphasis on rent constraints, as well as the pressures to use surplus resources to expand the number of affordable homes, was leading some associations to give community investment a lower priority.

The study found that community investment had run into regulatory as well as financial barriers. It identified wide variation in the way that housing associations accounted for their activities to the Housing Corporation. Many said they felt caught between the need to meet existing regulatory requirements and their ability to fund innovative programmes.

Researchers Paula Smith and Bob Paterson describe the specifications for a new accounting tool for community investment that the Housing Corporation could incorporate in its current review of the regulatory framework. They urge the Corporation to allow housing associations the freedom to invest in a wide range of innovative activities.

They also propose a new system of Community Investment Grants to ensure that housing associations give a high priority to community services:

• An “infrastructure grant” (based on the organisation’s inability to pay from its own resources) would enable housing associations and other community organisations to spend more time assessing local needs and planning a coherent investment strategy.
• A ‘sustainable tenancies grant’ – also means-tested – would help housing associations working in areas with a high turnover of tenants or where there were significant crime problems.

The second report published today (thurs) also calls on the Government to introduce a system of Community Investment Grants. It proposes that 10 per cent of the Housing Corporation’s development budget – around £64 million a year – should be earmarked for the revenue grants to housing associations.

Local authorities could also be required to use some of the funds set aside from capital receipts (15% of the total; around £32 million) for local community investment grants. The report warns that current government funding of housing associations is skewed towards the ‘bricks-and-mortar’ costs of new homes. It argues that timely investment in non-housing services could avoid the kind of expensive mistakes that, in the past, have contributed to crime, poor health and social exclusion on new estates.

Debby Ounsted, Chief Executive of the Octavia Hill Housing Trust and chair of the JRF Community Investment Working Group said: “Regeneration by local authorities has already moved away from bricks-and-mortar funding. We believe housing associations need the same chance to transform the opportunities for their residents. Their dynamism, their social entrepreneurship, their track record in maximising resources and their passion for fighting poverty equips them for the challenge.”

She added: “Our argument is not for extra cash. It is that some of the mainstream funding available for bricks and mortar – whatever the annual budgets – should be available for people too. Regional flexibility would mean that new homes would still be built where they are most needed, but not at the expense of community development.”