We mean business
Landlords can boost revenues and put something back into the community by setting up a social enterprise, as Anita Pati finds out
As housing providers come increasingly under pressure to create their own revenue, the prospect of launching their own social enterprises, which can generate funds to be ploughed back into communities, has become increasingly attractive. Social enterprises are defined as businesses driven by a social or environmental purpose which reinvest their profits into the achievement of that purpose.
According to the Social Enterprise Coalition, there are 62,000 such businesses in the UK. Housing associations are the social landlords most likely to have the flexibility to set up social enterprise businesses. Incidentally, some in the housing sector believe that housing associations should technically be classed as social enterprises themselves.
Here, Inside Housing speaks to three housing associations, City West Housing Trust, Aspire Housing and Futures Housing Groupeach of which has launched at least one social enterprise, to find out how they did it.
However, they are by no means the only organisations to have founded these types of businesses. Furniture recycling schemes, which can employ and serve locals, have been a typical social venture within housing associations - for instance, West Kent Housing’s Abacus Furniture Project or Circle Anglia’s Furniture on the Street. Other popular enterprises involve home and grounds maintenance and repairs, or green schemes that improve the local environment.
Interest from organisations that have not already set up their own social enterprises is growing. Will Nixon, director of regeneration at Aspire Housing and chief executive of Enterprising Futures, the business the housing association has set up to manage its two social enterprises, PM Training and Indigo Training Solutions, says that over the past year he’s received enquiries from more than 30 housing associations wanting to find out more about the social enterprises its invested in. ‘They, like us, are interested in being a vehicle for change in communities, rather than just a landlord,’ he explains.
Jane Greenoak, senior fundraising and partnerships advisor at the National Housing Federation, says the changing policy landscape and shifting role of housing associations have spawned this movement. ‘The government’s drive to create a smaller public sector means the third sector will increasingly deliver public services itself,’ she says.
‘Housing associations are, in many instances, looking at establishing social enterprises that can deliver public services. As the largest civil society organisations - voluntary sector organisations that are not run for profit - in the sector, they will be well-placed to pick up this business and are establishing social enterprises to deliver these services.’
She adds that these social enterprises are ‘aimed at employing local people, delivering services for local people and injecting finance into the local economy’.
Housing association: City West Housing Trust
Social enterprise: City West Works’ Handy Van, Garden Guerrillas and Pirate Painters
City West Housing Trust launched in October 2008 and owns and manages around 14,600 homes in west Salford.
In 2009, it spent £1 million refurbishing an old maintenance depot to create an operations centre from which City West Works, its maintenance division, operates. This investment also included the creation of a construction training centre.
City West made it a non-negotiable condition of all its framework contractors that training and job opportunities had to be created as part of its £235 million home improvements programme.
So far, 108 people, almost three quarters of whom were previously unemployed, have been employed and trained through City West Works receiving qualifications of at least NVQ level 2. By 2013, City West Works estimates its initiative will have created 250 new jobs.
‘As part of our corporate social responsibility we have been committed to getting unemployed residents trained and into work from day one and it’s proven to be very successful with people going on to gain careers as plumbers, electricians, carpenters and quantity surveyors,’ says Colette McKune, director of asset management at City West Housing Trust.
Following this success, City West created three social enterprise schemes; Handy Van, Garden Guerrillas and Pirate Painters. The Handy Van service was set up in 2009. It helps with any home-related maintenance jobs from decorating homes and putting up shelves, to fitting light shades and assembling flat pack furniture.
The Garden Guerrillas and Pirate Painters, which got started last year, offer complementary services to reinvigorate homes and neighbourhoods and were initially financed by City West with future jobs funding but proved so popular with tenants and those seeking work that City West has £35,000 per year to continue these scheme when funding ends. The housing association is sure it will see a return on its investment. Last year schemes made a surplus of £60,000, which has subsequently been reinvested back into the service.
Housing association: Aspire Housing
Social enterprises: PM Training and Indigo Training Solutions
Aspire Housing in Staffordshire was created to take over ownership of Newcastle-under-Lyme Council’s housing stock, which was transferred in January 2000. It owns 8,400 properties, managing a further 500 on behalf of Stoke-on-Trent Housing Society. In 2008, Aspire acquired social enterprise PM Training, which works mainly with young people who have limited formal qualifications, to give them work experience and skills.
In April, Aspire acquired another training provider, Indigo Training Solutions, which operates from training centres in Stafford and Leek and helps people prepare for employment and develop their skills. The two training organisations were bought using part of Aspire Housing’s £140 million in loan funding from banks.
PM Training provides 1,000 employment and training opportunities per year, including workforce development, apprenticeships and foundation learning in such sectors as housing, business administration, and painting and decorating.
Any surpluses are ploughed back into the housing association’s own charity, the Realise Foundation, to create apprenticeships and develop lifelong learning.
Will Nixon, director of regeneration and business development at Aspire Group, who heads up the association’s social enterprises and is also on Inside Housing’s Ask the Experts panel, says that buying a training company such as PM Training was ‘a natural but bold next step’ towards improving tenants’ lives through skills.
PM Training, which is 100-staff strong, turned over £4.2 million in 2009/10 with a profit of £225,000 - all of which was gift aided to the Realise Foundation.
Mr Nixon says that PM Training provides, ‘young people who often have not have had the best start in life the chance to gain skills and get into work’.
‘We benefit the community through contracts for work such as gardening for older people in social housing, which results in better understanding of older people by young people,’ he says.
Housing association: Futures Housing Group
Social enterprise: Futures Greenscape
Futures Housing Group manages 8,600 affordable homes across the East Midlands. It set up Futures Greenscape, a grounds maintenance social enterprise, in April. Martin Sherman, chief operations officer at Futures Housing Group, says that the idea of setting up a social enterprise came about when group member Amber Valley Housing’s grounds maintenance contract with an external contractor came to an end.
‘We believed that bringing the service in-house, as a social enterprise, would enable us to improve the service through direct management as well as make a wider impact on the local community by boosting employment and training,’ he recalls.
Futures Greenscape employs two permanent workers as well as providing five, six-month placements annually for unemployed people in the local area. The placements will cover the busy grass-cutting season, with work such as trimming hedges and other landscaping to open spaces. The housing group hopes eventually to offer gardening services directly to tenants and residents.
Before finishing the six-month placement, trainees will be offered help with CVs, interview skills training and support finding jobs. Mr Sherman says the start-up capital costs of Futures Greenscape were approximately £70,000 - money accessed from an internal reserve fund, set aside for business development and new ventures.
The social enterprise has only just started trading, but Mr Sherman predicts small surpluses in the first two years of trading: ‘In year one, we expect to break even, becoming 100 per cent sustainable through trading income.
‘To achieve social enterprise status, a minimum of 50 per cent of income must be generated through trading activities, with up to a maximum of 50 per cent grant dependency,’ he explains.
Need to Know: social enterprise
- A social enterprise is a business with primarily social objectives; its surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners
- There are 62,000 social enterprises in the UK. They contribute more than £24 billion to the economy, and employ 800,000 people
- Social enterprises can take on a variety of legal forms, including: unincorporated associations, trusts, limited companies, some industrial and provident societies such as community benefit societies, community interest companies and charitable incorporated organisations
- Setting up a social enterprise as a charity brings other benefits, including significant tax reliefs and results in increased regulation and less flexibility
Source: Business Link and the Social Enterprise Coalition