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Last month the Housing Bill received royal assent. At that point the Housing Corporation gained new powers to make social housing grants to a wider range of bodies, including housebuilders and developers. This brings housing associations鈥� 30-year monopoly on this source of subsidy to an end.

In New Partnerships for Affordable Housing, published this week, the corporation has signalled its intentions for a 拢200m pilot programme in the new year, using these powers for the first time.

The new legislation creates the potential for the biggest shake-up in the delivery of social housing since the introduction of private finance in the late 1980s. The government has made it clear that its aim is to introduce competition, drive better value for money in the social housing programme, contribute to Peter Gershon鈥檚 efficiency targets and promote the 鈥渟tep change鈥� in housing supply that John Prescott called for in the sustainable communities plan. If the pilot is a success, more will be on the table in future years.

The Housing Corporation now has two funding options for social housing 鈥� its traditional power to invest in housing associations, backed by statutory regulatory muscle, and a new ability to support unregistered bodies, specifying its conditions in contract. The pilot programme is an opportunity to deploy these alongside each other to meet regional and national priorities.

The corporation intends to support a small number of large dispersed programmes, which match the priorities in Regional Housing Strategies. These will comprise social rented housing, shared ownership and shared equity, perhaps complemented by some intermediate rented provision. At a minimum, these will be to the standards currently expected of new housing association homes.

Although some housing associations have protested at this policy, I see the pilot primarily as a challenge for developers and housebuilders. To succeed, they will need to demonstrate that they can match and indeed better housing associations in the delivery of social housing programmes. To do this they will need to show an understanding and responsiveness to regional and local priorities. They will need a commitment to raising standards in construction and the effective use of modern methods. And they will need to demonstrate how their proposals contribute to building sustainable communities, whether it be in growth areas, a regeneration context or in a village setting. Providers will need to meet the same demanding completion targets that face housing associations. These are all challenges in which housing associations have a track record and a head start.

But with the new challenges come new opportunities. Soft market testing this summer showed the private sector had an appetite to be involved and was confident that better value for money would result 鈥� from economies of scale, from better value management through the supply chain, from competitive tension and from creativity, ingenuity and flair.

It will be vital that allocation decisions are transparent, based on an assessment of value for money that is consistent for all players

It was also clear that prospective participants did not expect a wedge to be driven between housing associations and developers 鈥� rather they believed that consortiums would emerge, that roles would be redefined and that relationships would be established with other participants, including local authorities.

Inevitably, major change causes anxieties and some real risks. Private companies and housing associations have called for a level playing field. The top priority is to secure consistent outcomes for tenants 鈥� in the design and construction of their homes and the services they receive. To achieve this, the corporation will need to work with housing associations and the private sector in new ways. It needs to recognise the regulatory controls that it already has over associations and the accountability of private companies to their shareholders. If the controls are different, it will be vital that allocation decisions are transparent and based on an assessment of value for money that is consistent for all players.

This pilot is primarily about value for money in procurement. But we do need to consider value in the round 鈥� taking account of management standards as well as development approach. We are cautious about giving responsibilities for the management of social housing to unregulated bodies. But this is not ruled out if organisations can demonstrate cost-effectiveness and an ability to match the standards of the best housing associations. The corporation proposes an accreditation scheme for those bodies that intend to manage homes produced under the pilot and will be consulting further on the details.

With the pilot, the corporation is setting a challenge to the entire supply chain for social housing. We welcome views from both sides on how we can make the pilot work effectively.

Jon Rouse is chief executive of the Housing Corporation