Why home is the key

Little wonder that the government has woken up to a big problem. With house prices that high, how can nurses, teachers, police officers, firefighters, bus drivers and all the other people whose jobs are essential to running London actually afford to live there? And, with a booming jobs market, why would anyone take up lowly paid jobs in the public sector? Even if they do, why on earth would they do it in London?

That is the existing position. The government’s ambitious plans for the NHS envisage recruiting an extra 20,000 nurses in the next five years. But where will they live?

Ten years ago, the answer might have been the sort of flats that Linda Bailey saw in her local paper. Bailey, a health visitor who represents the South Thames region on the council of the Royal College of Nursing, was surprised. She knew that they used to belong to King’s Healthcare Trust in nearby Camberwell and that nurses used to live there.

Alice Dawnay and Hester Singer were shocked when they discovered that the empty houses next to the Royal London hospital, where they are attached as student nurses, once housed junior doctors and nurses. ‘It’s depressing and scandalous,’ says Dawnay. ‘It shows you where we lie in their list of priorities.’

The position is just as bad in some other parts of the country. What makes London different is the sheer number of key workers the capital needs to keep it running and the fact that virtually nowhere is affordable within a reasonable commuting distance. This is a vital consideration for people who work shifts which may finish late at night. Private renting is often more expensive than buying, and rising homelessness means the queue for social renting is rising too.

The problem is likely to be most acute in the national health service. London already has 5,000 fewer nurses than it needs. The cost of housing is not the only problem to be overcome, but it is one of the main ones. A report from the influential King’s Fund recently found that: ‘The highest level of concern (on working conditions) was reserved for accommodation difficulties. This was raised repeatedly by nurses, managers and external commentators. The difficulties in obtaining affordable housing were thought to be especially bad in London because of the high costs of private rented accommodation and of housing to purchase.’

This message has got through to the government and health service managers. Help is on the way through the government’s starter home initiative with £250 million on offer over three years to help key workers into home ownership, and new schemes by employers to help their staff into affordable rented accommodation. The Department of Health has even appointed its own housing tsar to help find a solution to the problem. The NHS plan promises 2,000 extra units of accommodation in London over the next three years and also raises the idea of ‘staff hotels’ for people who find the journey between work and home too difficult.

But why is apparently useable accommodation still being sold off? The sales seen by Bailey, Dawnay and Singer are not isolated examples. In central London, for example, the Charlotte Street Association, a group of local businesses and residents has complained to mayor Ken Livingstone about plans by the UCL hospital trust to sell off a block of 58 flats for nurses to private developers. According to Max Newfeld, secretary of the Charlotte Street Association, the sale will partly fund the redevelopment of a new hospital through the private finance initiative (PFI). ‘It makes no sense to build a new hospital, flog off the housing and then not be able to get the staff,’ says Newfeld.

NHS managers say the position is more complicated. The Royal Hospitals NHS Trust, which runs the Royal London and Barts hospitals, points out that the houses next to the Royal London are actually owned by Queen Mary and Westfield medical school. It says they are too expensive to redevelop. King’s and UCL were unavailable for comment.

Hospitals have always owned accommodation and housed some of their staff in hostels or separate flats and houses. The police did much the same, and the police house was once a familiar feature of many areas. Since the 1980s the government has encouraged them to become more business-like, and part of that process has been to sell off their accommodation, using the receipts to invest in core services. Others have done stock transfers to housing associations.

Finding hard statistics is next to impossible. However, in 1991, when the first trusts were set up, health authorities in London still owned more than 20,000 units of accommodation. A Department of Health spokesman was unable to say how many homes they still own – or how many are provided by housing associations – though studies are promised.

‘A lot of trusts have said to the government that we need more accommodation,’ says Bailey. ‘Not everyone wants to live in a nurses’ home, but it was very short-sighted to sell them off. They cherry-picked the accommodation which is not part of the hospital.’

Other unions and campaigning groups agree. ‘Most trusts are downsizing their accommodation,’ says Michael Walker of public service union Unison. ‘Nobody knows for certain, but I would say they’ve reduced their accommodation by at least half since they were set up.’

And Geoff Martin of London Health Emergency argues: ‘There needs to be a complete audit of what housing stock the health service has got and how much of it is vacant. On the basis of what I’ve seen I’m pretty cynical.’

Trusts say that they do not have enough money to house their staff, and that nurses no longer want to live in crumbling nurses’ homes sharing a kitchen and bathroom with ten other people. A spokeswoman for the Royal Hospitals Trust says it found that it had a £96 million maintenance backlog just to bring its buildings up to a standard to comply with health and safety regulations. ‘The NHS simply isn’t in a position to develop or maintain proper quality accommodation for its staff,’ she says. ‘Over the next few years we are going to be ceasing to provide accommodation other than for staff on call.’

The trust has made agreements with housing associations to develop new accommodation under their ownership and management. The first units opened late last year a few miles away in Stratford. The Stratford building was built by Peabody Unite, a joint venture between the housing association and a private developer. New business manager Steve Logie is well-placed to know the issues as a former accommodation manager at the trust. He argues that old-style hospital accommodation, where staff lived 20 or 30 to a corridor, was so poor that it was more likely to make nurses leave than stay.

The new accommodation in Stratford costs nurses £65 a week plus a £10 service charge. The trust takes some of the risk on void properties, but no social housing grant or health service subsidy went into the project. Affordable for qualified nurses, perhaps, but not for cash-strapped student nurses.

Peabody is also part of the Keep London Working consortium which has just won £4.5 million of single regeneration budget funding for a

programme to provide 500 low-cost rented homes for key workers. Partners include five local authorities, three developers, and employers. The idea is to use planning gain. Local authorities will allow developers to build homes to a greater density on proposed developments on condition that the additional ones provide sunbsidised rented homes.

Moves are also underway to relax local authority lettings policies and Housing Corporation rules to allow them to take up social tenancies. Meanwhile, the starter home initiative will help key workers on to the home ownership ladder. But the impact could be limited when house prices have risen so rapidly. A report by the GMB union in August found that a household of two people on an average London wage, with a maximum mortgage, would still be £31,000 short of being able to afford the £180,000 cost of an average London home.

In one sense, the report is misleading. By definition, around half the homes in London will be below the average price. But key workers’ wages are also well below the average wage. The report estimated the shortfall between borrowing power and average London house prices to be £51,000 for teachers, £71,000 for nurses, £78,000 for postal workers, £102,000 for bus drivers and £112,000 for hospital porters.

Could pay be the real problem? After all, real increases in earnings are one of the main forces behind rising house prices. If the wages of public sector workers rise less quickly than in the economy as a whole then, over the long term, house prices will inevitably rise out of their reach. This is precisely the position in which workers like nurses and teachers – even housing managers – find themselves. For workers like hospital ancillary workers and bus drivers, the position is even worse. Many have seen their wages fall in real terms as a result of compulsory competitive tendering.

Meanwhile, London weighting payments – up to £3,000 for nurses – have barely kept pace with price inflation, let alone house price inflation.

‘What nurses really want is to be paid a decent wage so that they can afford decent accommodation rather than feel like they’re living on charity handouts,’ says Linda Bailey. ‘They are entitled to the same expectations as anyone else.’

Market forces are already starting to have an effect on pay. Payments of up to £6,000 are on offer to students training to be teachers. The police in London have had a £3,000 housing allowance – scrapped in 1984 – reintroduced and consolidated into their basic pay.

The NHS plan promises a new pay system which will reward staff for their skills and abilities rather than their job title. As part of the current negotiations on pay, the government is considering a more flexible system capable of responding to different pressures in local labour markets. It also proposes a ‘market forces supplement’ to top up the pay of staff in areas with labour market shortages.

As new housing initiatives come on stream and house prices stop rising, the accommodation crisis for key workers may become less acute. But without radical action on pay it seems unlikely to go away.

Even worse for students

Finding affordable accommodation is hard enough for qualified nurses. For student nurses – the next generation who will be needed to meet the ambitious targets set out in the NHS plan – the position is even worse.

Ever since the education of student nurses was transferred from hospitals to universities ten years ago, they have been in a financial Catch 22. They are students, but unless they are on a degree-level course they only qualify for a £459 a month bursary. They do not qualify for student loans. They cannot work during the holidays like other students. And they need – and have to pay for – accommodation during the holidays which universities often cannot provide.

They are also full-time workers. They work 37.5 hours or more a week, but their rate of ‘pay’ works out at far less than the national minimum wage. They do not qualify for housing benefit. The only financial solution is to moonlight (against college rules) as an agency nurse.

Alice Dawnay, 22, from Hackney and Hester Singer, 24, from Bristol are student nurses attached to City University but based at the Royal Hospitals Trust in east London. They qualify in September.

Dawnay lived with her boyfriend when she started her course, but they found they could not afford to live together. Eventually, £3,000 in debt, she moved back in with her parents. Singer found a £50 a week short-lease flat from nearby Bow housing action trust, but even this cheapish rent took half of her monthly income. Some of their fellow students are paying £300 a month in the trust’s new accommodation in Stratford.

‘Things have definitely got much worse in recent years,’ says Dawnay. ‘Living expenses in general, not just accommodation, have got much more expensive in London. And salaries haven’t kept up – ours is apparently only going up below the rate of inflation this year.’

Worryingly for the government, the drop-out rate on their course has been 50 per cent. ‘Everyone I know says they would never have gone through it if they had known,’ says Singer. ‘It’s not just the money, it’s the accommodation, the way you get treated – everything. Once I’d started I just wanted to stay on and complete it. But there were 300 of us at the start and it’s down to about 150.’

In May, Dawnay organised a sleep-out protest outside the Department of Health through the public service union Unison to highlight the issue of nurse poverty. Health secretary Alan Milburn met her and 10 other student nurses and midwives in July to hear their concerns. He has agreed to consult them when the bursary for student nurses is up for review in September.