Britain's public service workers hardest hit by property prices

For many teachers, nurses, police officers and other public sector workers in Britain, getting on to the first rung of the property…

For many teachers, nurses, police officers and other public sector workers in Britain, getting on to the first rung of the property ladder is becoming increasingly difficult.

In high-cost areas such as London and the south-east of England, but increasingly in Edinburgh, Oxford and other university towns, key workers cannot secure mortgages and cannot find affordable housing, often because they do not earn enough. And, as they are forced to turn down or leave jobs in these areas, property prices keep on rising.

In response to this growing problem, the British government announced proposals last year for the "Starter Home Initiative", designed to help finance homes for public sector workers. Unveiling more details of the three-year initiative last week, the Transport and Local Government Secretary, Mr Stephen Byers, said it was unacceptable that essential workers should be priced out of their profession by the cost of accommodation.

The first beneficiaries of the £250 million sterling scheme will be 2,000 teachers looking for homes in London and the southeast, and eventually the government aims to help 10,000 nurses, teachers and police officers to buy their homes.

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When the government publishes detailed plans next month following consultation with housing trusts and local authorities, workers within these groups will be able to apply for aid of up to £25,000 in grants, interest-free loans and shared-ownership schemes (buying part of the mortgage and renting the rest) to help them buy homes.

Under the scheme, at least one member of a household must work within one of the public sector professions, and grants must be repaid when the property is sold. The subsidies will be given only after a mortgage agreement has been signed.

"Any teacher who benefits will be delighted and so will their school," a spokeswoman for the National Union of Teachers (NUT) told The Irish Times this week. "But this scheme is not dealing with the problem of shortages and it is not just found in London and the south-east; it is across the country. The scheme is aimed at helping 2,000 teachers. Well, a recent survey showed that actual vacancies in the south-east, where there will be no teacher to cover in September, is 5,500."

It is difficult to quantify how many key workers are being priced out of jobs because of the high cost of housing and other living expenses such as child care, travel and car-parking. But anecdotal evidence - 10 teachers recently left a school in Berkshire because of the cost of housing - offers an insight into what is a very difficult situation for key workers and their families.

The link between low pay, housing and recruitment problems could be broken by increasing the salary of key workers, argue the NUT and the Royal College of Nursing (RCN), which represents more than 32,000 nursing staff.

At present, newly qualified teachers and nurses in Britain can expect to earn about £17,000. On that salary they would be eligible for a mortgage of about £51,000 but, with the average price of a house in London around £160,000 and expected to rise, teachers and nurses simply cannot afford to buy that first home.

While welcoming the government initiative as "a start" to solving the accommodation problem, the RCN wants to see a more vibrant and affordable rental sector - rent on a one bedroom flat in London can be up to £300 a week - and government subsidised mortgage repayments. It is also concerned that the provision of affordable housing by local authorities varies across the country and should be monitored more closely.

Other organisations such as the Council of Mortgage Lenders (CML) and the Teachers' Building Society question whether the scheme will be popular enough to make a difference to public sector workers. CML director Mr Peter Williams says the government initiative is a "cosmetic" exercise, and only a high take-up rate among the public sector could encourage mortgage lenders to lower lending rates that are already considered extremely competitive. "If they (the government) want to deliver on better public services, they have to deliver on recruiting and retaining staff," says Mr Williams.

The Teachers' Building Society also has reservations about the scheme and suggests that if key workers join the housing market with large government subsidies, house prices could rise even further in popular areas.

"We are trying to get involved in the scheme," said Mr Hugh Nichol, general manager operations, "but it is not a great seller at the moment. It needs an awful lot of cash and this doesn't sound to me like a lot of money.

"The trouble is the government has to stop house prices going up or look at pay packages. It's difficult for everyone; prices are higher than the wages of the lowest earners."