Getting a foot on the housing ladder


The Berkshire town of Reading is facing severe key worker shortages. Few public sector staff can afford the £120,000 or more needed to purchase a three-bed semi-detached home there and many services are approaching a staffing crisis.


The Berkshire Fire and Rescue Brigade is having to employ firefighters who live in Durham, Merseyside and Norfolk – and a third of its staff live outside the area.


Public transport in the region is close to collapse, with local bus companies struggling to recruit enough drivers, said Joyce Markham, former chief executive of Reading Borough Council, at a recent conference on key workers.


Staff turnover among teachers in Reading is running at 23 per cent and in social work and occupational therapy it stands at 45 per cent. Applications for these posts are so few that 50 per cent of job vacancies have had to be re-advertised at a cost of £2,000 a time.


A staffing catastrophe is looming unless the Government acts quickly to support key workers, warns Markham.


Her view is supported by a study by the Joseph Rowntree Foundation published earlier this month. It warns that crippling staff shortages in the public sector are unavoidable as the current rate of housebuilding stands, and argues that there will be a property shortage of more than one million homes by 2022 if the building rate does not increase.


But it is not only local government and Reading that is affected – businesses and services across the South East are being damaged by spiralling property prices.


Lord Best, report author and director of the Joseph Rowntree Foundation, says: “This shocking statistic shows why the time has come for policymakers to recognise that a plentiful supply of new and affordable homes is of the greatest importance for the nation’s future health and prosperity.”


While the Government has launched a number of housebuilding initiatives to promote the construction of affordable homes (see box, right), many employers doubt whether these are sufficient to head off the impending crisis.


And with an increasing number of employers starting to suffer from high staff turnover, skills shortages and soaring recruitment costs, some employers are starting to take the initiative themselves.


The NHS is looking for solutions to the affordable housing crisis. John Yates, housing co-ordinator of NHS Estates, says that in London alone the NHS needs to recruit another 7,000 nurses, but the process is being undermined by high housing costs. NHS staff can only afford to spend between 25-35 per cent of their disposable income on housing.


Initiatives include making more than 2,800 new units in London available for staff, which are being rented at rates up to 40 per cent lower than the market value. Staff hotels are also being developed close to hospitals. One is currently being trialled in the Barbican, London, and two more are being developed at Great Ormond Street and in Oxford. The projects are supported by the Government’s £250m Starter Home Initiative for key workers.


Ian Young, director of HR at Hammersmith Hospital NHS Trust, says that affordable housing for its 1,900 employees is a key part of its recruitment policy. He is considering the use of the newly launched LiveIn Quarters – portable flat-pack homes that can be assembled on disused land. Developed by the Peabody Trust and the London Development Agency, the units are likely to cost £70 a week to rent or £65,000 to buy. “They are something we are looking at. Most importantly, it gets staff onto the housing ladder and that is the key in London,” says Young.


The trust is also building a range of purpose-built housing as part of its drive to attract and help staff, particularly those from abroad. Young has targeted overseas to help reduce staffing shortages and recruited 189 last year.


Private-sector employers are also helping staff meet housing and transport costs. To improve its recruitment and retention, London bus company Go-Ahead provides new staff with subsidised accommodation.


Passenger numbers in the capital are increasing and the company has recruited aggressively for bus drivers from all over the UK to meet the demand – it now boasts 3,200 drivers.


To lower the hurdle of high accommodation costs in London, the company offers new staff rented accommodation at half the market rate for three months. The company rents 50 houses for staff with between three and six people occupying each. Such measures have helped lower the company’s staff turnover rate from 45 per cent to less than 25 per cent.


John Traynor, operations director of Go-Ahead London, says: “If you earn between £18,000 and £20,000 in London it is very difficult to get on the property ladder and we have to work out how we are going to get round it.”


Traynor is also lobbying to get bus drivers recognised as key workers – the government has focused its attention on nurses, teachers and police for the Starter Homes Initiative.


“Planning regulations for new housing developments state that 35 to 50 per cent of the accommodation must be for affordable housing. We want this affordable housing to be available to bus drivers, so we’re trying to gain influence with developers, house builders and local government,” says Traynor.


He adds: “The NHS is two years further down the line on where I would like us to be – its staff hotels are now offering accommodation to other key workers, such as police officers, and I would like bus drivers to be considered too.”


IT firm Logica has taken the subsidy of staff housing costs a step further. It either helps staff save for a deposit for a house, or contributes to mortgage repayments.


Glenn Connell, director of compensation and benefits at Logica, says the company offers it as an alternative to its contributory pension scheme. “We use it as a recruitment and retention tool for young graduates who are on relatively low pay at the start of their careers,” he says.


In its house purchase plan, Logica matches staff contributions to a two-year savings scheme towards a deposit. If the staff member has already bought a house, they can apply to join the mortgage subsidy scheme where Logica contributes to mortgage repayments for up to six years.


The schemes have been successful, with a 12 per cent take-up among its 4,500 UK staff. “We help them get their deposit together, or provide cash towards high mortgage repayments in the early years,” says Connell. “We are assuming that because they are young graduates, they will be able to make up the loss in pension contributions as their career develops.”


Markham, former chief executive of Reading Borough Council and new head of Harrow Borough Council, wants the Government to enable public-sector employers to play a bigger financial role in securing accommodation for its staff.


She wants local authorities to be able to arrange and provide affordable mortgages on the behalf of their staff.


“Employers need to realise that if they don’t put anything back in, then they may not have cleaners or electricians,” she says.


A report released by the think tank Institute for Public Policy Research (IPPR), entitled Squeezed Out, also calls for both private and public-sector employers to help staff finance their homes in expensive areas to reduce spiralling skills shortages. It advocates wage additions, interest free loans and help with deposits.


This is not solely a key worker crisis. Organisations in the South East that employ staff who cannot afford to buy a house and earn too much to qualify for social rented housing will have to become increasingly sympathetic to their employees’ predicament.


More private-sector employers are going to have to start exploring accommodation solutions for their lower paid staff because, if they don’t, they could be left with severe skills shortages – particularly among support staff.


As London mayor Ken Livingstone puts it: “Frankly, I think everyone is a key worker.”

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