Can housing associations save public services?

First the good news: housing associations are making more money. Nobody in social housing talks about recording a profit, of course, because that is not what social landlords were put on earth to do. But the bald facts show that associations' total surplus in 2010 after tax was £609m - up £406m on the previous year. Even associations set up following the transfer of ex-council homes chipped in for the first time, reporting a modest surplus of £56m. Normally they record deficits.

There was some criticism in 2009, when the sector's overall surplus fell from £319m to £203m. Associations should be capable of better, said finance directors, especially as turnover was rising. Last year's more impressive result came in spite of the fact that sales of homes (either outright or part-sales through shared ownership schemes) have not recovered to pre-credit crunch levels.

The Tenant Services Authority's analysis of housing association accounts, published on the same day as the Budget, shows surpluses from the sales of 'fixed assets' down 40% on 2008. But the TSA praised associations for controlling management and repair costs better, while the sums paid in impairment charges where associations have to write down the value of land they own fell by £20m.

But why, you might say, is all of this important? Historically, associations have ploughed surpluses back into not just housing but into other activities that benefit communities, including health and training. With councils reeling from government cuts, associations might be the best bet we have to ensure community services are not completely decimated over the next few years.

Liverpool Mutual Homes, the largest housing association in the city, has set up a £700,000 social dividend fund that offers grants to community groups for social enterprises and other projects. It would be surprising if other associations did not do the same thing, so proving that social landlords were part of the 'big society' long before anyone at Conservative Central Office came up with the idea.

Whatever happens, there will be far more money flowing through associations' balance sheets in the years to come as they raise rents for new, and some existing, homes to as much as 80% of market rates. While they will be expected to use much of the extra proceeds to fund borrowing for further development, there is no reason why some money could not be set aside to fund community services.

With the future of associations' charitable status being questioned in some quarters, what better way to show that they have not lost touch with their local communities and vulnerable people in particular?