Profit is not the only goal

The future of regulation is a major preoccupation for housing associations. It is now expected that the Government will announce a review of regulation, alongside the anticipated decision to establish the new Communities England agency.

But the real agenda may be much wider: the future status of housing associations is in question.

Some time ago, the Treasury spotted that commercial housebuilders could apparently build homes at lower cost than housing associations. In reality, the picture is more complicated, but this led Government to open up Housing Corporation development grant to non-housing associations. This happened first with the New Partnerships in Affordable Housing programme, followed by the National Affordable Housing Programme 2006-08.

So now Social Housing Grant has been allocated to housebuilders and others. One by one they have started to sign the Grant Agreement with the Corporation. The sums are not great, but the clear intention is that this element of the programme will increase.

The Grant Agreement is a contract setting out the basis on which grant is provided and used. Plainly it will be extended to housing associations in future.

At the same time, a new system of accreditation is being developed for managers of affordable social housing. Pinnacle-psg, the private sector housing and facilities management provider, is currently going through accreditation with the Corporation. Subject to the regulation review, this process will also apply to housing associations.

Thus the principal tools of regulation are expected to be contracts and accreditation, for housing associations and non-housing associations alike.

In an environment where any organisation that passes appropriate tests can access grant and manage social housing, the benefits of housing association status are increasingly limited. The only real advantages appear to be access to preferential borrowing rates (though these are subject to negotiation rather than quantifiable), and Corporation Tax relief for charitable HAs. These advantages are not to be disregarded, and for the largest associations, could be worth substantial sums. But for many, the advantages may be marginal.

It is likely then that housing association status may disappear. This could leave associations having regulation - other than contract and accreditation - limited to the oversight conducted by the Charity Commission and the Registrar of Friendly Societies. Will this be of any value beyond a bureaucratic nuisance? Or will some further form of regulation be needed, and if so would it apply equally to HAs and commercial organisations?

Further, will one still be able to say that there is a benefit for many associations remaining in their present form? Might associations not just as well become commercial companies? They could still hold charitable objects, and could still be not for profit, as companies limited by guarantee or indeed as PLCs.

The Corporation and Charity Commission may hold that charitable associations cannot change their status. But some may feel this is no longer good enough, and that the opportunity to compete on an equal basis with commercial operations (for example allowing the opportunities to redress the VAT disadvantage, and to raise equity finance) should be pursued.

Over time then, present trends could take us further away from the social purpose of housing associations. I believe we would all be the poorer for that. Housing providers should not simply be driven by growth and profit. Many of the greatest achievements of the housing movement have come from the commitment to tackle community and individual needs and help people improve their situations. Yet unless the Government and its new Communities England vehicle are prepared to face up to this, and make it worth associations' while to retain their social organisation and social purpose, this ethos could be lost.

Greg Campbell is a director of management consultancy Campbell Tickell.