Spirits dampened during a recent evening with friends when discussing weekend plans; tax returns loomed for several of the party. Fleetingly, we toyed with the idea of joining musician Billy Bragg in refusing to pay tax until the government curbed City bonuses, at least in the banks that we taxpayers had to rescue.

The social housing sector is acutely aware that the highest exposure to market failure is borne by the most vulnerable people in society. The credit crunch should really have been no surprise. The signs were clear when I visited homelessness projects in the US in summer 2007. Family homelessness resulting from foreclosure was on an upward trajectory. Policy makers were talking of the urgent need for more debt advice as an ‘innovative’, preventative measure. But the impending consequences of the scale of irresponsible lending to low income families in unstable employment were already irreversible.

Priced out

In the UK, lack of affordable credit means the recession has failed to open up homeownership to those on lower incomes. Housing associations are struggling to sell shared ownership properties in many areas. This affects their ability to invest in both more affordable homes for rent and wider social concerns.

In this context, the housing sector needs to pay particular attention to the raft of recent reports on inequality in the run-up to the Equality Bill. The latest is that of the National Equality Panel, which is chaired by London School of Economics professor John Hills and commissioned by equalities minister Harriet Harman. Part one of the bill imposes a duty on public authorities to ensure their policies tackle inequality.

The report identifies that inequality is at a 40-year high. It rose most sharply in the 1980s and 1990s, but has remained high in the past decade. Investment in anti-poverty measures has failed to reverse the trend, which is exacerbated by the unfettered rise in top incomes. New data on wealth inequality shows the gulf to be most acute between those who own their homes and social housing tenants.

Deep-seated variations in economic outcomes remain between different social groups, including men and women and ethnic groups, despite a narrowing of some of the widest gaps. And where you live continues to be a key factor in determining your life chances - if you grow up in a poor area, the chances are you will remain poor.

The weight of evidence of the systematic nature of inequality and the ways in which advantages and disadvantages are cumulative over the life cycle is shocking. As the National Equality Panel points out in its summary, this makes it hard to suggest that people are making decisions about their lives against a background of equality of opportunity.

At a recent Housing Associations’ Charitable Trust seminar, a funder of our ‘Age2Age’ intergenerational project referred to another contribution to this debate, The Spirit Level. The authors of this book argue that an unequal society cannot be happy and cohesive. Interventions should focus, they say, on tackling socio-economic divisions.

But where would the housing association community development worker and the residents’ association begin in a west Cumbrian coastal town with high unemployment across five generations of the same family? Surely the work they are doing to build trust between younger and older people is a good thing and to be encouraged and resourced?

Exploration of these questions must be at the heart of addressing the contribution that housing providers can make. They are there to stay in some of poorest areas of the country and can make a more meaningful contribution to opening up employment opportunities.

People are needed in construction, repairs and caring roles. As an employer or contractor’s client, housing providers can target training and job opportunities. Set-up and procurement from social enterprises can be supported. Why buy sandwich packs from major high street stores when local people can provide them?

Poor take-up of benefits continues among many older people. Housing providers can extend the reach and effectiveness of advice and community finance schemes, and reduce fuel bills through retrofitting.

Strengthen communities

Community development is the glue that binds these interventions together. Backing for such work can be found in the Young Foundation’s recent report on Britain’s unmet needs: Sinking and swimming. Based on a large-scale survey funded by 12 foundations working in collaboration, the research highlights the value of community and family support networks, and charts the effects of isolation. It recommends that funders should support services that strengthen communities and their informal support networks. Joining forces with others is essential. Too many players engage in a disjointed approaches to this kind of investment in neighbourhoods.

So, what of housing tenure and the wealth gap? The social housing sector has sought to respond to this trend partly by supporting people to ‘staircase’ into homeownership. But is the goal of homeownership realistic for all? What is the wider impact of this goal on the economy? Do we run the risk of pushing vulnerable people into unmanageable debt?

Housing providers cannot tax the rich or raise benefit levels; but with the right partners, excellent local relationships and effective use of their resources, the contribution they can make to tackling inequality is immense. They can also argue for and provide a greater range of affordable and flexible housing options rather than pushing the pipe dream of homeownership.

On a personal level I’m going to go away and ponder Billy Bragg’s stand and at least give more money to charity until politicians are brave enough to stand up to the City and tax me more.

Heather Petch is chief executive of Hact

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