Can Ken Keep the Key Workers?                               


  Jan 2001  
  The Mayor’s plans for housing key workers in London      
Sacks of rotting refuse everywhere, the dead left unburied and rats running riot in the unswept streets. No: this is not a picture from the Winter of Discontent but of what London could  be like in ten years time.  It won’t be because the public sector workers are on strike.  There simply won’t  be any of them left.  Without refuse collectors, street cleaners, grave diggers and other manual workers, civilised life in our cities would cease to exist very quickly.  The same is true of the police, the fire brigade, nurse teachers and other public service workers like bus drivers .But their pay has not kept pace with the private sector. The problem is particularly bad in the London area.   The high cost of living is driving
Key workers need homes at affordable rents

Ken Livingstone

people on modest incomes out of the  city.  High council taxes and fares are amongst the reasons people give when they leave.  But the biggest complaint is the lack of affordable housing.  So how do we stop key workers from leaving?  This is an urgent matter if London is to thrive as a world class city.  London remains the locomotive economy for the whole UK.  Its success is vital for everybody. Last July, the Mayor set .up a Housing Commission to look at affordable housing in London.  The  report entitled ‘Homes for a World City’ was published in November. In this article, we look at the part of the Mayor’s plan that deals with key workers.
  What do we mean by affordable housing?  The report identifies it as falling into two categories.  The first is rented property where the rents charged are below market levels.  These would be for people whose pay is between £14k- and 20K.  The second is an ‘intermediate market’ of homes to rent or buy for people who are on medium incomes (i.e. £20K-30K) but who are not able to afford to buy properties on the open market.  These would be  experienced key  workers who, through promotion, are no longer on the bottom rung of the income scale.  The government needs to review wage rates urgently.  But in many public service jobs, the salary scales are decided by national bargaining supplemented by London Weighting.    
  This can vary from £6000 for the police to zero for bus drivers.  This needs rationalisation.  The government can’t control house prices.  In London, an ordinary three bed-roomed semi can cost between £90K and £250K depending on the location.  To get a mortgage for one of these you would need an income of between £30k and £70K.  So people have to commute.  Giving evidence to a Greater London Assembly scrutiny committee, the teachers unions stated that very few teachers in London who are owner-occupiers live in the city.  Some will have clocked up an hour and a half travelling before they even get to work.  Nurses have similar problems.  Under the Tories, many nurses homes were sold off.  Some became luxury hotels.    
  It’s the same with the police.  In the past, the Metropolitan Police used to provide hostels for young unmarried officers and flats for families. Very little family accommodation remains. Today, the hostels are for new recruits.  The average stay is about 2 years.  The Tories axed the rent allowances which the police used to get.  This hit recruitment.  But it is transport workers who have been hit the hardest, particularly bus drivers. Much of the London bus services are now provided by contractors.  Since privatisation, drivers’ wages have fallen to between 20% and 30% below equivalent jobs.  London Transport used to own its own flats but these have all been sold off.  Drivers and conductors used to be able to get council flats near their garages.  Not any more..  The sale of council houses was very popular.  It also created more mixed communities;  ‘pepper-potting’ as it is nowadays termed.  However, there has been a down-side too.  The Right to Buy policy has been catastrophic for key workers.  
  Many work unsocial hours so they need to live near their work.  But what sort of accommodation should be provided and by whom?  Few people want their employers to be their landlords as well.  They don’t want tied cottages!  But they would welcome help with their housing costs.  For many low paid employees even cut-price mortgages are out their range.  Nor is the private rented sector much help.  The rents are high and suitable family accommodation is difficult to come by.  The proposed tighter regulation of private landlords proposed in the Housing Green Paper registration scheme should curb the cowboys.  However for most people on low pay, their only chance of a decent home lies with social housing. For people on higher salaries, owner-occupation may be possible.    
  Financial incentives to help people to buy their own homes can help with both recruitment and retention.  These may be in the form of subsidised mortgages , shared equity or shared ownership schemes.  However the effect on the availability of affordable housing may only be short term, for when the property is sold on it will usually be on the open market.  Shared equity and shared ownership schemes nowadays may not involve subsidy.  Shared equity schemes are particularly attractive to lenders and borrowers alike because both share in the capital gain on the sale.  They also enable first-time buyers to get onto the property escalator.  As their salary increases over time, they can buy a bigger share in their property.  However in recent years, they have become less popular in London due the rise in property values.  At the moment, the minimum stake that the borrower can have is 25%.  This may need to be reduced in future if prices continue to rise.  
  It’s time that employers were made to accept some responsibility here.  The National Health Service, the Metropolitan Police, the London Underground, the Post Office and the bus companies should enter into partnerships with registered social landlords (RSLs) to provide homes for rent or purchase.  This does happen on a small scale now.  But a general culture change is needed.  Ensuring that their staff are decently housed should be regarded as part of their duty of care.  Many would not accept this and there would be difficulties in imposing it in the private sector. But in the public sector or privatised utilities, it could become a regulatory obligation.   
  The scale of the problem is immense.  Homes for a World City’ shows that London needs 43,000 new affordable homes a year over the next 10 years merely to clear-up the backlog and cater for current needs..  At no time over the last 30 years has London house building reached this figure. However, it is achievable given adequate funds. The Labour government’s release of capital receipts is very welcome.  So are the extra grants announced as part of the Comprehensive Spending Review.  Even so, cash-strapped councils cannot cope with the existing demands and the consequences of years of Tory neglect.  Homelessness is still a major problem. Councils are very reluctant to turn away people in desperate need to let key workers ‘jump the queue’.  Extra ring-fenced funds are needed for key worker housing.   
  So what can be done?  Although ‘Homes for a World City’ is a very wide ranging survey of London housing and contains many practical suggestions on how the housing crisis could be tackled, no costing has been attempted.  The report merely identifies the problems.  The solutions are a matter for government.  One of the statutory duties of the Mayor is to produce a Spatial Development Strategy.  The Mayor will use this to ensure that in all new residential developments, 50% shall be reserved for social housing:- 35% for social housing for rent and 15% for the intermediate market.  The latter is aimed at key workers.  Predictably, this has raised howls of horror from the Tories and their friends in the private building industry.  ‘Land values collapse so the landowners won’t sell.  Livingstone will get 50% of nothing’.  Not true.  As the Mayor’s plan will allow increases in density, the sites will then have added value.  There is no shortage of brown-field land in London.  Much of it is owned by privatised utilities.  They got it for song.  If they refuse to release it, let’s compulsory purchase it.  
  By commissioning the report, Mayor Livingstone has produced the first serious survey of London’s housing for a generation.  The London Assembly has also carried out its own survey.  Working together the Mayor and the Assembly are putting housing back on the political agenda.  But it is the London Boroughs and registered social landlords who will have to get the job done.  They will need every help they can get.  Mr Livingstone has started the ball rolling.  It’s now down to Westminster to play its part and make sure adequate funds are provided to keep London in the premier division of 21st century world cities.  

This article was published in THE CHARTIST JAN 2001

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