Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by National Union of Teachers (NUT) (AFH 37)


  The National Union of Teachers believes that the problem of affordable housing has significant implications for the recruitment and retention of teachers. In the particular context of teachers, the problem of affordable housing is linked to inadequate salary levels which are not competitive with other graduate occupations.


  Though the focus of the debate on house prices has been on London and the South East, the problem of affordable housing is not limited to those areas. Even in regions where average house prices are significantly lower than the national average, there may well be areas where house prices are not affordable for the majority. The rate of increases in house prices demonstrates how the issue extends beyond London and the South East. For example, the Land Registry reported in May that increases in property prices in London lagged the rest of the country: in contrast to the increase of 9 per cent in London, prices in East Anglia were rising by 20 per cent and those in the South West by 18 per cent.

  The lack of affordable housing is a key driver of market supplements to salaries. In its evidence to the Greater London Assembly (GLA) London Weighting Advisory Panel, Incomes Data Services (IDS) stated that such supplements were being paid across the South of England, as far as Avon and the Cotswolds and as far north as Northampton.

  High housing costs tend to have knock-on effects. For example, teachers working in areas where housing is not affordable may face significant and unavoidable travel costs due to the fact that they cannot afford to live close to the schools in which they teach. The necessary additional time spent on travel is likely to be a deterrent, have an adverse effect on work/life balance and can also increase stress.


  There are severe problems with regard to the recruitment and retention of teachers. These problems are evident across the country, though particularly severe problems exist in London and the South East and in certain subject areas. The Government has set challenging targets for teacher recruitment. In England alone, initial teacher training places have been allocated for some 32,000 teachers in each of the academic years 2002-03, 2003-04 and 2004-05. This excludes employment-based routes into teaching, which provide for an additional 3,000 recruits a year.

  Recruitment of teachers is affected by the fact that teacher starting salaries are not competitive with those of other graduate occupations. According to figures recently released by IDS, the average graduate starting salary for 2002 would be £19,714. This compares to a starting salary for teachers from 1 April 2002 of £17,595. There is thus a salary gap of 12 per cent between teacher starting salaries and those for graduates generally. Potential entrants to the profession are bound to take account of this fact in the context of their current and future housing needs.

  IDS also published findings on graduate salary progression rates. On average, graduates could expect to see their salaries increase by 45 per cent after three years and by 70 per cent after five years. For teachers, the equivalent figures even under the shortened pay spine to be implemented in September 2002 will be 26 per cent after three years and 46 per cent after five years. The difficulties in retaining serving teachers are exacerbated when such teachers find that they progress more slowly than other graduates in terms of salary. We believe that, alongside salary levels which are inadequate and uncompetitive, the housing issue represents another disincentive to teacher recruitment and retention. The availability of affordable housing therefore would improve teacher recruitment and retention.


  Although the problem of affordable housing is manifest across the country, teachers in London and the South East face particularly severe problems. House prices in London remain significantly more expensive than those in the rest of the country. According to the Nationwide Building Society's Quarterly Review for Spring 2002, in the first quarter of 2002 the average price of a property in London was £171,692. This compared to an average for the United Kingdom as a whole of £95,356. Property in London was likely to cost 80 per cent more than property in the country as a whole.

  To raise a 10 per cent deposit on a property at the average price for London of £171,692 would require over £17,000. Even a teacher who managed to raise such a sum would need a salary of around £51,500 in order to obtain a mortgage at the rate of three times an individual's salary. This level of salary is only available to less than 1 per cent of teachers. The vast majority are headteachers, with a small number of deputy headteachers. Most of these will have been in teaching for over 20 years.

  Similar or in some cases greater problems exist in terms of the cost of housing in the areas around London. In Surrey, for example, the average property price has reached £227,256 by early 2002.

  The final report of the Mayor of London's Housing Commission, which was published in November 2000, reported that London's population was set to experience an increase in population unseen since 1945, with the capital's population rising to over eight million by 2016. In London alone, 31,800 additional homes would be required each year for the following 10 years to meet new demand for housing. The increasing demand for homes will cause price increases in excess of any national average.

  Teachers experiencing the additional costs of working in London and surrounding areas, including housing costs, receive additional premia known as London area allowances to take account of these costs. London area allowances as an addition to pay structures are justified due to the unavoidable additional costs of working in London and surrounding areas. The value of such allowances should be determined according to the cost compensation approach, which quantifies additional costs such as differentially high house prices. At present the level of the allowances vary from £792 for those in the Fringe Area including Surrey to £3,105 in central London.


  The Government's Starter Homes Initiative set aside £250 million over three years. The majority of the bids for this funding came from Housing Associations based in London. Keys to the Capital, a partnership between four London Housing Associations, secured almost half of the total funding available nationwide under the Starter Homes Initiative. The Starter Homes Initiative, of course, applies to a range of public service workers and not just to teachers.

  Government initiatives such as this, though welcome, cannot solve all of the problems caused by high property prices in London and elsewhere. They are unlikely to help more than a small minority of teachers. On 25 February 2002, the Schools Minister Stephen Timms MP reported that help had been provided to 1,588 teachers in London under the Starter Homes Initiative. This represents around 3 per cent of teachers in the capital. The GLA's own report, "Key Issues for Key Workers", concluded that affordable housing initiatives could make no more than a small contribution to the problem of affordable housing. This is despite the fact that London secured most of the funding under the Starter Homes Initiative.


  We are aware of the alternatives to outright purchase of housing. These include housing associations and shared ownership schemes. In our view such initiatives have a significant part to play in the provision of affordable housing for teachers. The extent to which they will be able to make a significant contribution to solving the problem of affordable housing for teachers, however, depends on their being adequately funded.


  Where particularly severe problems with affordable housing are recurrent, predictable and quantifiable, additional premia and Government initiatives have a role to play. Problems with affordable housing can however emerge in parts of the country other than those which have traditionally experienced such problems.

  This means that it is essential that teachers have a pay structure which generates salary levels sufficient to ensure that they are able to enter the housing market. Most newly-qualified teachers will have a starting salary of £17,595, with additional allowances paid to them if they work in the London area. They then receive salary increments each year in recognition of their teaching experience. Teachers who have reached the top of the salary scale for classroom teachers will be on a salary of £25,713 after seven or eight years. The average property price in the UK reported by the Nationwide Building Society in its latest Quarterly Review was, as noted above, £95,356. This means that classroom teachers at the top of the main scale, with seven or eight years' experience, do not earn a salary which is sufficient to enable them to afford a mortgage at the normal rate of three times an individual's salary—even if they have managed to raise a 10 per cent deposit.

  This imbalance between house prices and teacher salary levels means that a holistic approach needs to be taken to the problem of affordable housing—an approach which embraces salary levels as well as the existence of salary premia alongside fully-funded initiatives such as housing associations and shared ownership schemes and preferential loan arrangements.


  The problem of affordable housing is particularly acute for teachers because teacher salary levels are inadequate. The problem of affordable housing therefore makes a significant contribution to the overall problem of teacher supply.

  The problem of affordable housing is widespread, though particularly severe in some areas. Such problems have significant implications for the delivery of a high quality education service given that they create financial problems for teachers and can increase stress levels. Where particularly severe problems exist with housing, there is likely to be a knock-on effect in terms of the delivery of education should it prove difficult for schools in those areas to recruit and retain teachers.

  The problem of affordable housing should not, however, be looked at in isolation. Initiatives such as the Government's Starter Homes Initiative, housing associations and shared ownership schemes are welcome, but are limited by the level of funding available. The problem of affordable housing for teachers is one which can only be tackled by a combination of increased funding for the supply of affordable housing and increases in teacher salary levels.

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