Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witnesses(Questions 82-99)



Christine Russell

  82. Mr Studdert, I have three questions, just to set the picture. In Cambridge how much affordable housing do you need? What are the constraining factors in providing it? Thirdly, what will the consequences be if you are not allowed to or cannot build affordable homes in Cambridge?
  (Mr Studdert) We need lots of affordable housing. I could not put a figure on it, but the demand is huge. We need all sorts of affordable housing, both social rented housing and shared ownership and intermediate housing, key worker housing, as well. The reason for that is because we have a very prosperous local economy. We are also an increasingly important regional centre as well—a lot of regional institutions are locating in Cambridge—yet within the city we have a very constrained land supply because of our tight Green Belt. The pattern of house building over the last 20 or 30 years has been a pattern of decentralisation of housing beyond the Green Belt, to expanded villages and to the market towns, but a lot of the jobs and other facilities are still back in Cambridge, which has obviously led to an increase in long-distance commuting and in traffic congestion, and also has put a very high premium on property within the city. The key worker housing study that was carried out for us last year I think has put a ratio of 1:6 for the average salary to the average house price. I think that has probably gone up to nearer 1:7, if not 1:8 in the last year, where house prices have gone up by something like 26 per cent between June 2001 and June 2002. So we have an increasingly dysfunctional city, and the availability of affordable housing close to where people need it, which is close to where the jobs are, is the main issue for us.

  83. What is the average cost now in Cambridge of a starter home, a two bedroomed flat or a small house?
  (Mr Studdert) The average house price overall is round about £150,000 now, so for a starter home it would be somewhat below that.

  84. What are the City Council's views on having a better national economic strategy, where jobs and employment opportunities are targeted to areas that do not face the housing crisis that cities like Cambridge do?
  (Mr Studdert) I think it is right for government to try as hard as it can, but from the work that has been done looking particularly at the Cambridge economy, a lot of our growth comes from the cluster effect of high technology businesses in and around Cambridge, particularly the start-ups and spin-offs from existing companies, and those companies stick very stubbornly to Cambridge. A lot of it is to do with having access to the employment pool of specialised people; a lot of it is just for purely personal reasons, that that is where people already are and already have their families. So because of the dynamics of the high-tech sector and the start-ups—some of which fail, but some of which grow to be quite large companies—I think the Government could only influence that at the margins, and there is a danger that if one squeezes it too much at the Cambridge end, all that happens is a lot of that economic activity would relocate abroad rather than to another part of the UK.

Mr Clelland

  85. Could I put a question to Keep London Working. Could you tell us a bit about your role: is it mainly research or are you moving more into provision? How are things progressing in terms of what you are doing?
  (Mr Gregory) It is both things. We are providing a number of properties, up to 175 between now and early 2004, and we are researching them and organising other research programmes around that. We are about halfway through the research programme.

  86. What are you gleaning from the research? Do different key workers require different kinds of tenure or different kinds of properties? What sorts of results have you had from your research?
  (Mr Gregory) We have been surprised by the findings of our own waiting lists and the people we have let properties to. One thing is that the key workers that we are letting to are older than we expected. When the SRB programme started, we had an idea of key workers as being largely professional people—nurses, teachers, police—at the beginnings of their careers, who needed initial help with housing. That is certainly the case, but we have found that almost half of the key workers we are letting to are over 35, and are looking for more long-term housing solutions, rented and shared ownership. Secondly, we have not been able to let to lower income key workers. Again, when we started, we imagined that key workers were probably earning starting at around £15,000-£18,000 a year and could afford about 35 per cent of their gross income as rent. What we have found is that we have not been able to let. We have only been able to let about two flats to bus workers. Bus workers' incomes start at about £15,000 and they get about £19,000 if they earn overtime. They cannot afford the rents we are offering, and they represent, we feel, quite a large working population of clerical and semi-skilled workers that are excluded from the housing provision at the moment, partly because they are not in severe housing need, and partly because the rest of the housing that is available to them is too expensive. This particularly affects families.

  87. Are they mostly families, if the age group is as you have described?
  (Mr Gregory) A lot of them will be families. Hospitals have waiting lists. Human Resources departments at hospitals have waiting lists which have quite large numbers of families in ancillary work that cannot find housing. We have found that what people will afford—they will find other ways of coping in the short term—is about 25 per cent of gross income. That is what they pay on average as rent. Couples and people that share pay less, at about 22 per cent, and families pay more, at about 30 per cent on average. What is quite interesting is that we have found 30 per cent is about the limit to which private insurance schemes that insure private landlords will indemnify rent, and our experience has been that you get people defaulting on the rent much over 30 per cent of gross income.

  88. What more does the Government need to be doing in this area in order to help key workers? More money?
  (Mr Gregory) Yes, I am sorry to say. Yes, it is very important.


  89. If you have been looking at key workers, you have presumably also identified a whole series of people who are not key workers. What scope is there for moving a lot more jobs out of London, moving jobs which do not have to be done in London to places like Gateshead or Denton?
  (Mr Gregory) One of the characteristics of people we are calling key workers is that they are employed locally. They are in service sectors locally.

  90. Yes, I understand that, but some local authorities in London have suddenly realised that things like the Council Tax administration can be done almost anywhere in the country, so is there scope for moving some of the people who are not key workers, in that they do not have to work physically in London, out to actually improve the housing market?
  (Mr Gregory) Yes, there would be scope for some.

  91. Can I go on to Addenbrooke's and this question about how far it is really making the hospital inefficient as a result of not having the accommodation for people?
  (Mr Day) There is very clearly a direct correlation between our ability to recruit staff and our ability to deliver the services that we are charged with delivering. In the evidence we have quoted to you the impact of our inability to recruit staff and our having to close beds in consequence. Of course, I do not attribute the whole of our inability to recruit staff to issues of housing, but I would say to you that it is a very significant factor in that equation.

  92. You are talking about 5,000 bed days lost as a result of staff shortage.
  (Mr Day) Approximately one ward of patient capacity, yes.

  93. What happens? When you advertise, people just do not come, or they come and then they start looking at the housing market in Cambridge?
  (Mr Day) People frequently want to come to us, because they generally speaking think Addenbrooke's is a good place to work at. When they come for interview and start to look around, you can see the look of disappointment that comes across their faces as they realise they are either going to have extreme difficulty or they are just not going to be able to afford to come, and therefore they will either decline at the time or they may accept and fail to take up appointments. This depends on the staff groups. The position varies tremendously across the whole spectrum of people that we are dealing with. It is a totally different situation if you are talking about some professional classes at the higher end of the spectrum as opposed to nurses or indeed ancillary workers.

  94. Is Addenbrooke's starting to do things at Addenbrooke's that could be done in other parts of the country rather than at Addenbrooke's?
  (Mr Day) I find it hard to think that we are doing things that it is not appropriate for us to be doing in Cambridge. Clearly, there is some scope amongst specialist services for those to be provided elsewhere, but then those services can only be provided where the expertise is, and a lot of our expertise in specialist areas is associated with our close relationship with the University of Cambridge. It is not something that can be simply shifted all round the country. Also, an awful lot of this work we are talking about is work for our local population, because as well as being a specialist centre, we do provide the vast majority of the district general hospital services for Cambridge and the surrounding area.

  95. If you were allowed to pay your nurses more than the national scales, would that not simply push the housing market up even further? It would not solve the problem at all.
  (Mr Day) Indeed so, and I would not hold that out to you as being the sole answer. Also, I would say nurses are an extremely mobile element of the work force, and they will simply move around depending on where the opportunities and advantages are. It is very easy to get into a game of tag or catch-up, where we pay a little bit more, people come to Cambridge, somebody else then of course suffers from that, and then they up the rates a little and more people move away. It is not a permanent solution by a very long chalk.

Dr Pugh

  96. The ultimate test, it seems to me, of key worker problems is the unfilled vacancies, and not just unfilled vacancies but unfilled vacancies that are particular to the public sector. Have you collected any comparative data on how unfilled vacancies compare with the public sector as opposed to the private sector?
  (Mr Hayler) Not at this stage; only broad comparators. We have taken the particular groups we have to try and get a cross-section of type of occupation and type of income, so bus workers, hospital workers through to professionals like teachers. We are conscious that turnover rates in other industries are not dissimilar in some questions, but I think it is the case that the extra pressures you get in London and the South East occur because of the structures of wage rates.

  97. If you do not have that data, you do not know whether it is a key worker problem or just a worker problem, a general problem in economic recruitment in London?
  (Mr Hayler) Inevitably it is both things. The issue here is, I suppose, understanding, rather as was suggested by the hospital trust experience, that there is a range of people in different housing situations, in different occupations, who need different sorts of housing solutions. There are pay and conditions factors impacting on recruitment, but housing, particularly in London and the South East, is impacting on retention. The types of solutions and housing interventions you need vary according to where people are in their life cycle and in their employment cycle.

  98. If I can take you to a specific case, Keep London Working suggest that 40 per cent of secondary school teachers are looking for a new job next year—presumably that is 40 per cent of London secondary school teachers—and it goes on to say that the main reason is to find cheaper accommodation. I would suspect that a large number of these teachers are looking for not cheaper accommodation but rather more substantial accommodation, which they can easily get elsewhere, and that situation will prevail so long as prices are very high in London. Do you not agree?
  (Mr Hayler) I do largely agree with that. I think it is partly to do with quality, it is partly to do with travel-to-work arrangements, it is partly to do with being cheaper. Being cheaper is what they said. This is from the teacher survey.

  99. What can be done?
  (Mr Hayler) We do know that the majority of teachers who actually leave London leave predominantly for housing reasons.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2003
Prepared 17 January 2003