Memorandum by Surrey County Council (HOU
1. This submission is made by Surrey County
Council. The County Council fully endorses the evidence submitted
by the Surrey Local Government Association (SLGA) on behalf of
the 11 borough and district councils and the County Council, to
both the previous Transport, Local Government and the Regions
Committee's inquiry, and to the current inquiry. The County Council's
submission builds on that evidence and addresses some of the specific
questions raised in relation to the Comprehensive Spending Review
2. Surrey plays a crucial role in the economic
success of the south east region, London and ultimately the UK.
The county is a significant generator of economic wealth in its
own right, being home to many national and international companies
as well as the regional administrative centre. At the same time,
it provides a significant part of the workforce and expertise
required to ensure that London remains a World City. If the economic
growth in Surrey is restricted, this will impact adversely on
the economy of the region, London and the wider national economy.
3. In terms of housing, market demand in
the county remains strong. In part this is due to the area's economic
success and its proximity to London and the UK's premier airports
at Heathrow and Gatwick. House price inflation in Surrey has exceeded
that in the south east and many parts of London. The average house
now costs £246,572,
compared with £232,830 in Greater London and £168,111
in the south east. Even though incomes are above the average for
the region, it still requires seven times the average income to
purchase the average house in the county. For many key workers
the problem is even more severe. A firefighter, for example, earning
around £22,000 per annum would require over 11 times their
income to purchase the average house.
4. The high cost of housing is widely seen
as a major factor in problems of recruitment and retention within
Surrey, high rates of staff turnover and increased traffic congestion
as people commute longer distances from lower cost housing areas.
Research carried out for the SLGA by the University of Cambridge
has shown particular problems within the public sector, lower
paid occupations in the private sector and amongst some professional
groups who recruit nationally. This research was published in
the SLGA's key worker housing strategy "Housing to Underpin
Economic Success", a copy of which was submitted to the earlier
Affordable Housing inquiry.
5. Within Surrey County Council itself,
there is growing evidence that the cost of housing is affecting
recruitment and retention, with potential knock-on effects for
service delivery. Within Education, for example, at June 2002,
there were 349 full time teacher vacancies, in addition to 56
part time vacancies and eight head teacher vacancies. The table
below shows how this impacts on full time staff turnover:
FULL TIME STAFF TURNOVER, 2000
|Surrey||20.2 per cent
||19.5 per cent|
|All Shires||12.8 per cent
||14.4 per cent|
|All London||16.4 per cent
||15.5 per cent|
|All LEAs||12.7 per cent
||12.8 per cent|
5. Within other services, problems are also acute. For
example, within Fire and Rescue, 169 firefighters (27 per cent
of the total workforce) commute to work because they are unable
to afford accommodation within the Operational Area. Eighty-six
firefighters (at March 2002) were actively looking to transfer
or leave the service due to housing costs.
6. Problems within the county are made all the more acute
by its close proximity to Greater London and the increasing pay
differentials between public services in London and those in Surrey.
For example, Metropolitan Police Officers receive a London allowance
which is £4,000 higher than the equivalent for Surrey officers,
as well as being entitled to free public transport in and around
How spending of the new resources should be balanced between
social housing and options for owner occupation for those who
cannot afford to buy and the mechanism to be used for their distribution.
8. Surrey County Council believes that the basis for
the allocation of the additional resources should be the level
of identified housing need, for both social rented housing and
owner occupation (including the needs of key workers) in a particular
9. There have been suggestions that a significant proportion
of the additional resources will be directed to the four regional
growth areas (Ashford, Thames Gateway, Milton Keynes and Stansted)
identified in Regional Planning Guidance for the South East and
the subject of the Deputy Prime Minister's announcement in July.
Whilst these areas may provide opportunities through the supply
of land for affordable housing, the County Council strongly believes
that the availability of land should be a secondary consideration
to the overall level of need for affordable housing in an area.
The provision of significant numbers of new affordable houses
(whether social rented or owner occupied) in these areas will
do nothing to address the needs within Surrey, which have to be
addressed if the economy is to continue to prosper.
10. Within Surrey there is a real need for additional
affordable housing, both social rented and owner occupied. In
the context of the limited additional funding available and the
growing level of need amongst low to middle income earners, the
County Council believes that a significant proportion of the additional
funding should be directed towards low cost home ownership options.
By their very nature, these are more likely to address the needs
of the key worker sector, who are not generally catered for within
existing funding mechanisms. However, it is important that this
is seen as additional to the existing social rented funding streams
which, themselves need to be increased to more accurately reflect
housing and land price inflation.
11. The need for home ownership options covers both new
build accommodation and existing mechanisms for providing housing
utilising the existing housing stock, particularly the Starter
Home Initiative (SHI) and locally operated Do-It-Yourself Shared
Ownership schemes. The need for additional funding for such initiatives
is evidenced by the scale and rate of take up of SHI within Surrey.
Surrey has received the highest allocation of funding for any
shire county outside of London, sufficient to assist 491 key workers,
and has seen probably the fastest rate of take up of the scheme.
Since its inception in September 2001, 121 applicants have either
completed or exchanged contracts on houses and a further 126 are
in the process of identifying and buying property.
12. However, despite the current success of the SHI,
signs are emerging that the level of funding available (currently
approximately £20,000 per worker) may not be sufficient to
ensure delivery over the remaining years of the scheme. The rate
of take up of the SHI has been slower amongst lower income groups,
such as nurses, and with house prices rising at well above the
rate of inflation or the rate of wage increases, it is likely
that other groups will have difficulty in the future, unless funding
13. In making the case for increased funding, the County
Council believes that the Government must also address the following
The definition of a key worker. The SHI
has a very restricted definition of a key worker, being largely
limited to health workers, teachers and police officers. Although
Surrey has been successful in attracting additional funding to
help a small number of social workers and firefighters, there
remain many public sector employees, who are key to the delivery
of public services, together with workers who are contractually
linked to the public sector and quasi public sector staff, eg
transport workers, who have been largely excluded from the scheme.
If additional funding is to be put into SHI, the County Council
believes that the regulations governing the scheme should be amended
to allow much greater local discretion as to the key workers who
will benefit, the overall income levels at which workers are eligible
and much greater flexibility to switch funding between employee
groups in response to needs and/or take up.
Issues of retention in perpetuity. A fundamental
requirement for increased funding of home ownership options must
be the ability to retain any public subsidy input into the schemes
in perpetuity, ie the housing must remain low cost for the initial
and all subsequent occupiers. This will necessitate changes to
the current regulations surrounding staircasing to full ownership
and, potentially, changes to the operation of the Right to Buy
legislation. The County Council awaits with interest the results
of the current research commissioned by the ODPM into the operation
of Right to Buy.
Allocation mechanisms within the Housing Corporation,
particularly the TCI framework. The current TCI framework
is inflexible and does not allow RSLs and local authorities within
Surrey to best meet needs for affordable and key worker housing.
Cost limits in Surrey need to be increased to at least match those
in London, given that house and land prices in Surrey are often
greater than those in the Capital. There also needs to be a system
of in year reviews to allow changes in TCIs in the course of a
year to reflect rapidly changing local circumstances.
14. The ODPM has recently published the findings of research
carried out into potential fiscal measures to increase the supply
of affordable housing.
This paper considers six potential fiscal policy options which
could increase the supply of affordable housing, drawing on experience
in the UK and abroad:
Tax incentives for the construction of affordable
Government assistance to purchasers in high cost
Savings schemes for first time buyers.
Policies to increase employer involvement.
Providing affordable housing on non-residential
VAT reduction on the renovation of affordable
15. The County Council believes that the concepts raised
in this research paper require more detailed consideration and
that decisions on the allocation of funding arising out of the
CSR should take on board the messages in the paper. In particular,
the County Council believes that there is real merit in looking
at further assistance to help key workers purchase homes in high
cost areas such as Surrey, through an extension of funding for
the SHI or through alternative mechanisms, such as those suggested
in the research paper. For its part, the County Council is actively
looking at what actions it can take as an employer to address
the needs of its own staff, through recruitment and retention
packages and, possibly through new build schemes for key workers
on surplus land or within surplus property.
16. Within Surrey, the high cost of both land and housing
and the cost restrictions imposed by TCI levels, mean that Registered
Social Landlords and local authorities are unable to compete with
the private sector for land. Consequently, the bulk of new affordable
and key worker housing in the county is being delivered through
the planning system via S106 agreements (planning obligations).
17. As a matter of principle, the County Council believes
that the planning system should not be the primary means of delivery
of affordable housing. The provision of a decent home for all
requires sufficient investment from Government to ensure that
needs can be met without relying on subsidy from the private sector.
With rising concern in urban areas about the lack of adequate
social and community infrastructure and the need for improvements
to public transport infrastructure, there are increasing demands
for funding from S106 agreements which often squeezes out the
requirement for affordable housing. Increased funding is important
to enable the provision of such housing. However, the County Council
recognises that the level of resources required to meet needs,
outside the planning system, are not likely to be forthcoming.
In this context, important changes are required in the operation
of planning obligations to increase the supply of affordable housing
through this route.
18. In many ways, the changes required mirror many of
the suggestions made by the Government in the Planning Green Paper,
through the proposal for planning tariffs. Although this proposal
is not being pursued, a number of elements of the proposals should
still be incorporated into revised guidance for planning obligations,
Removal of the site size thresholds for affordable
housing set out in Circular 6/98. These limit the sites on
which new affordable housing can be provided. In Surrey, for example,
over the past two years, 58 per cent of new housing has been provided
on sites under 25 units or one hectare in size. Reducing the thresholds
to the level suggested in the Green Paper (approximately two units
or more) would significantly increase the opportunities to provide
affordable housing in Surrey.
The requirement for commercial development
to contribute towards the provision of affordable and key worker
housing. New commercial development often has an impact on
the local housing market in an area, particularly the need for
key workers, but it is difficult to require such development to
provide any affordable housing. A specific requirement for such
development to contribute to affordable housing would again increase
the funds and/or land available.
19. The issue of the provision of affordable and key
worker housing is of crucial importance to the County Council
and Surrey as a whole. In turns this impacts upon the ability
of the county to contribute to regional and national economic
success. To ensure the continued success of the Surrey economy
and the successful delivery of local services within the county,
increased funding for affordable and key worker housing schemes
as part of the increases announced in the CSR, is essential.
Source: Land Registry, April-June 2001. Back
Source: Employers' Organisation. Back
Fiscal Policy Options to Promote Affordable Housing, Housing
Research Summary No. 168, 2002. Back