A moral maze: can housing sustain its ethical role?

Housing has been a moral issue for thousands of years. It was the book of Isaiah which warned against those who bought up house after house, leaving none for those in need. In more recent times, great waves of outrage at poor housing conditions, first in Victorian times and then in the 1960s, laid the foundations for many of today's housing associations. But housing providers, whether established by 19th century philanthropists or post-Cathy Come Home campaigners, have come a long way. Can they still hold fast to their moral purpose, or does the drive for more commercial ways of working – and the need to develop homes at higher rents under government policies – mean they are no longer wedded to the values on which so many were founded? Ethical questions There's plenty of soul-searching going on across the housing association sector. Organisations are struggling to balance the demands of a tough operating environment with their traditional ethos. Steve Howlett, chief executive of Peabody , concedes that it is a challenge. "It has caused us quite a lot of anxiety," he says. "We've been very conscious of what [the trust's original benefactor] George Peabody said about the need to, in his words, 'alleviate the conditions of the poor and needy of this great metropolis'. It hasn't been easy to hold fast to our values, but I think what we've come up with does allow us to do that." For Howlett, developing new homes at a higher affordable rent and charging more for some existing homes has to come hand in hand with providing lower-rent homes for those that need them. Peabody is still developing homes at a social rent through local authority-subsidised land deals. "We are trying to find innovative ways of moving forward while not losing our principles," he says. "London needs housing. We can't sit on our hands; we've got to find different ways forward." At another big London-based association, Metropolitan Housing Partnership , Bill Payne, the chief executive, is determined that his main driver should not be growth for growth's sake, but instead support for communities. Metropolitan, with its roots in the 1950s as a tiny organisation providing homes for Afro-Caribbean families, now manages some 36,000 homes. But Payne says it still retains its founding values. "It is in our DNA," he explains. "People are looking at their surpluses and using them to build more and more homes. I'm of a view that it's a good thing to build new homes – but not at any price. We are not-for-profit organisations, so we really have a major duty to be as commercially viable as possible to generate money, but the output isn't in money; it's measured in problems solved, homes provided and services provided." Building pressure The tensions between associations' commercial imperatives and their moral purposes are not new, but some feel the pressures have now become so intense that they risk changing the sector forever. Kevin Gulliver, director of the Human City Institute thinktank, says associations were originally steeped in social purpose, but in recent years that has been diluted. "The issue for associations for some time has been that sometimes they are requisitioned for state policies, but sometimes they are seen as independent organisations and sometimes they are seen as social purpose organisations in their community. One of the strengths of associations historically is that they have been able to balance those things, but if you pull too much in one direction, you collapse the others." Gulliver insists he doesn't want to see associations set in aspic. But he adds: "How can organisations with tens of thousands of homes across the country claim to be community-based? Increasingly, associations are being asked to behave commercially. There is a lot of pressure on them in terms of operating costs and to go for efficiency through economies of scale. My view is that if we are going to have a vibrant third sector with social purpose housing organisations, they should stop aping the commercial sector." Larger ambitions? That's not a view shared by a large developing association, The Hyde Group . Hyde was one of four social landlords at this autumn's Conservative Party conference to call for a change in the way the social housing grant already invested in building homes is treated. A change could, they say, allow them to borrow more and to bring in private investors to fund new development. The arrival of significant numbers of equity investors might mean the housing association sector would look very different – but those involved in pushing the idea say that shouldn't matter. "If you become an organisation that wants to attract private investment, some people might say that is not consistent with your social purpose," says Hyde's chief executive, Steve White. "But the fact is, with 1.8m on the waiting list, I can't countenance not developing new homes. "We can't abandon what we are here to do. We have to continue to build new homes and to provide services to individuals and communities, and the only way to fund that is to make the organisation slightly more commercial than it has been in the past. If we don't, we can't make the organisation an attractive place to invest in." White says the affordable rent model has been the "gamechanger", requiring associations to find much higher proportions of private finance to public grant than ever before. "At Hyde, we can afford the affordable rent programme for the next four years and probably a bit thereafter, but after that, like all housing associations, we start to run into capacity problems," he says. "The change in the landscape means if your objective is to build homes and provide services, you have got to look at everything because the old model won't work any more." White's way of tackling the challenges ahead is for his organisation to have "a business head and a social heart". It will be a blend that could be the key for many organisations looking to hold on to their values as they reinvent themselves to face the future. This content is brought to you by Guardian Professional. Join the housing network for more comment and analysis direct to your inbox