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
A WIDESPREAD PROBLEM
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.
A HOLISTIC APPROACH
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 salaryeven 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 housingan 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.