Roof Magazine - Ocotber 2001
 

COUNCIL HOUSING IS THE ANSWER FOR KEYWORKERS

By

Lynne Jones MP

Looking through the property pages on the Internet for the cheaper areas in inner London, I see that prices range from 80,000 for a studio flat in Streatham to 195,000 for a 3-bed semi in Camberwell. With sky-high private rents too, no wonder record numbers are leaving the Capital in search of a cheaper, better quality of life and there is growing concern about attracting key workers. Even with the London allowance, most newly trained professionals in the public service start off on salaries less than 20,000. So raising a sufficiently large mortgage is out of the question. Experienced workers fare little better. A family house is well beyond the means of an F grade nurse, who, at the top of her scale gets around 23,000 and even a police sergeant starting off on 33,000 (which includes a housing addition of over 4000) would struggle to afford a decent home.

In recognition of the problem, the Government has allocated 230million to 95 starter home schemes that will help about 4,000 nurses and healthcare workers, 2,800 teachers and 900 police officers. The assistance is in the form of either subsidised rents for shared ownership or 20% equity loans that are repaid on the sale of the property purchased. A further 2000 public sector workers living in housing hotspots outside London will be provided with 10,000 equity loans.

It is good that the Government has recognised that the provision of high quality public services depends on recruiting and retaining key staff and valuing their input. The number of people employed in the public service has already increased by 150,000 since 1997 but clearly this is insufficient. Seen in this context, the starter home initiative should only be the start of a larger programme to provide additional good-quality, affordable homes. Subsidising the purchase of existing stock is not a long-term solution and may well have the effect of causing further overheating in the market, as demand outstrips supply. Purchasers could be trapped in their first home as ‘moving up’ becomes impossible because of the upward drift of prices and the requirement to repay the loan. But at least the public money put in will eventually be recouped for re-investment. In contrast, most shared ownership schemes will provide much-needed new homes but the low-cost benefit is unlikely to be available to future workers if ‘staircasing’ to outright ownership is permitted. This is the problem with most schemes that subsidise home ownership. They only help the first beneficiary. We have seen this with the ‘right to buy’:

On popular estates a large proportion of the best council homes have been sold. This is particularly the case where purchase prices were initially modest because of low cost floors. Even with discounts, homes could not be sold to sitting tenants for less than they cost to provide, making newer properties unaffordable but older ones very cheap. Now, in the SouthEast and elsewhere, such properties command high prices.

In contrast, those tenants who purchased in low demand areas have lost out and many former council homes have been bought up cheaply by absent landlords who profiteer out of poorly managed and maintained property that adds to the spiral into decline. So does any policy aiming to ‘free-up’ social housing by offering financial inducements to tenants to move out to owner occupation.

The net result is greater polarisation between ‘sink’ estates and more affluent areas, promoted by the ill-conceived drive to greater home ownership funded out of the public purse.

If the emphasis were switched towards renting, any grants or cross-subsidy (as in the much undervalued system of council house rent pooling) can be locked in for future generations. It makes enormous economic sense. If the Government is really serious about combating social exclusion, the case for providing general needs council housing for middle income groups, and not just the poor, needs to be re-visited. What is so unthinkable about teachers, nurses, police officers (or even housing officers and MPs) living in rented housing amongst the people they serve?