We don’t hire people to bake brownies, we bake brownies to hire people.

That is the philosophy of a New York bakery which is inspiring a new business set to help Birmingham’s homeless out of poverty.

Many in Birmingham will already have tasted the Do-Goodie brownies from The Greyston Bakery in the New York district of Yonkers as it is the exclusive supplier to Ben and Jerry’s – turning out 20,000lbs of cakes a day for the luxury ice cream maker.

The cakes are all made by a staff of 65 homeless people as they attempt to rebuild their lives and equip themselves for the world of work.

Now that business model is being brought to Birmingham with a new cupcake factory attached to Midland Heart housing association’s Snow Hill homeless hostel – currently undergoing a £11 million Government and city council backed redevelopment.

A temporary kitchen has already been set up and some trial runs have taken place ahead of a launch later in the year.

Chris Munday, director for care and support at Midland Heart, has led the new development following a fact-finding visit to New York three years ago.

He said: “They had this factory in Yonkers, with homeless people doing all the jobs, from the cleaning, mixing and baking to marketing and selling.”

Midland Heart decided to adopt the model to help Birmingham’s homeless back into the world of work and prove a cupcake business was viable.

“I don’t really like cupcakes,” Chris explained. “But I understand there is a market for them and people are willing to pay for quality cakes.

“We have carried out some market testing and looked at some recipes and we believe that after the start up, the business will pay for itself. Any profits will go back into helping homeless.”

Mr Munday stressed that, as for Greyston, the key to the business is job creation rather than profit. “It is about training and getting people used to the culture of work. There’s been nothing like that here. The Big Issue has got people used to working and selling for themselves, but we are talking about training, giving people new skills, and running a business.”

The cupcake bakery is just one part of the £11.2 million overhaul of Midland Heart’s Snow Hill Hostel. While Birmingham’s most well-known homeless charity, St Basil’s, concentrates on teenagers and young homeless, Midland Heart is focusing on the over-25s.

The refurbishment will see cubicles and dormitory accommodation, replaced with self-contained studio flats to encourage residents to become self sufficient.

A cultural shift, inspired by another New York homeless project, Common Ground, will see a mix of working residents and those out-of-work on benefits. Common Ground, off Broadway, found places for low earners, mainly struggling actors, who fill their hours waiting tables or cleaning, to live alongside the out-of-work homeless.

Unemployed residents see the benefit of work as they watch their neighbours go out and return from shifts, able to afford little treats and fill their days productively.

Council director of housing Elaine Elkington said this marks a “seismic shift” in homeless policy. “The reason the city is putting in £1 million is that this takes homeless people out of dormitory accommodation of the last resort and gives them the opportunity to change their lifestyle,” she said.

“We want to get away from the idea that these are buildings full of people with drink and drug addiction problems. There is no dignity and no privacy in the hostel and there is no incentive for people to do something different with their lives.

“The Common Ground accommodation in New York is highly desirable as well as affordable. They have waiting lists for residents.”

The refurbished hostel is set to open early next year.