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


Memorandum by the National Union of Teachers (NUT) (AH 44)

INTRODUCTION

  1.  Housing affordability is a key issue for teachers. The problem of affordable housing has implications for teacher supply. In particular, the high cost of housing combined with inadequate pay levels for teachers is likely to deter many graduates from entering the teaching profession and cause serving teachers to leave the profession. Teacher pay levels are not sufficient to enable teachers to be able to comfortably afford to buy a home.

RECENT DEVELOPMENTS

  2.  Although in recent months house prices have increased at a lower rate than previously, they remain high. The Nationwide Building Society reported in its Quarterly Review of 29 September 2005 that the average property price in the United Kingdom was £158,987 in the third quarter of 2005.

  3.  Nationwide reported that activity levels had increased in the third quarter of 2005 with improvements in buyer enquiries, expected prices and agreed sales. This may be a sign that house prices will continue to increase, albeit at a slower pace than in previous years.

  4.  Although there is a significant regional pattern to house prices, the gap between prices in the south of England compared with the rest of the UK has been reduced. Nevertheless, teachers in London and the south of England face significantly higher house prices.

  5.  Teachers in London and the Fringe Area receive higher pay than those in the rest of England and Wales. The pay premia in these areas do not, however, compensate for the higher cost of housing in London and surrounding areas. Teachers in Inner London receive a salary premium of between £3,639 and £6,288, depending on their position on the pay spine. Teachers in the early years of their careers, paid on the Main Scale, receive significantly less than more experienced teachers who have crossed the performance threshold and reached the Upper Pay Scale, or who are paid on the Leadership Spine. The additional value of pay on the pay scales for Outer London and the Fringe Area is around the same whatever a teacher's place on the pay scales.

  6.  Other teachers are in areas of particularly high cost housing and receive no additional pay premium, unlike other public sector workers. For example, police officers in the local authorities bordering London receive additional pay. This is currently worth £2,000 for police officers in Essex, Hertfordshire, Kent, Surrey and Thames Valley. With the exception of Surrey, where teachers across the county receive the Fringe Allowance, additional pay in these areas is only available to teachers in a small number of places. For example, in Kent the only teachers who receive the Fringe Allowance are those in Dartford and Sevenoaks. The Fringe Allowance is worth around £900 compared to the £2,000 for police officers.

  7.  Police officers in Bedfordshire, Hampshire and Sussex receive additional pay worth £1,000. Aside from those in Crawley, West Sussex, teachers in these areas receive no additional pay at all.

GOVERNMENT HOUSING HELP FOR TEACHERS

  8.  The Government's response to the problem of housing affordability for teachers and other public sector workers has been the introduction of a number of initiatives. The most relevant initiative for teachers has been the Key Worker Living Programme (KWLP) and its predecessor the Starter Home Initiative.

  9.  The help available under schemes such as these is limited by the overall budget made available, which in turn limits the number of teachers who receive assistance. Under the Starter Home Initiative some 3,000 teachers received help between 2001 and 2004. In the context of a teacher workforce of some half a million, this represents a very small minority of less than 1%. The authors of an evaluation of the Starter Home Initiative conducted for the Office of the Deputy Prime Minister and published in August 2005 noted that as the initiative came to the end of its life demand exceeded supply in many areas

  10.  The KWLP covers certain parts of the country only. Although housing "hotspots" in areas outside London and the south of England exist, no help is available to teachers in such areas under the KWLP.

  11.  These schemes tend to be complex in practical terms. The KWLP, for example, is operated by a number of different Zone Agents across the country with different eligibility criteria. The lack of simple, clear criteria for help further reduces the effectiveness of these schemes in targeting need. The Sunday Express reported on 17 July 2005 that less than a fifth of the 27,465 applications to the key worker scheme in 2005 had been completed or were at an advanced stage.

HOUSE PRICES AND TEACHER PAY

  12.  According to the Nationwide Building Society's Quarterly Review, house prices in England ranged from £124,488 (North) to £241,898 (London). In Wales, house prices were £139,212.

  13.  The table below shows the pay a teacher would need in order to afford the average price in each area of England and in Wales. The calculations are based on the assumption of a 10% deposit and a mortgage of three times salary.
Pay Needed (£)


North
37,346
Yorkshire & Humberside41,876
North West43,814
East Midlands43,429
West Midlands45,800
East Anglia48,377
Outer South East55,790
Outer Met66,011
London72,569
South West53,073
Wales41,764


  14.  According to the latest Teachers' Pay Survey for the School Teachers' Review Body, most classroom teachers were paid on Upper Pay Scale 1 or below. Upper Pay Scale 1 currently generates a pay level of £30,339 outside of London and the Fringe Area. On the basis of a 10% deposit and a mortgage of three times salary this would not be sufficient to afford the average house in any area of England, or in Wales.

  15.  Teachers would need to be paid on the Leadership Group pay spine in order to afford the average house on the basis of 10% deposit and three times salary. The Leadership Group is comprised of head teachers, deputy head teachers and assistant head teachers. Aside from head teachers, most other teachers on the Leadership Group are paid on the first 12 points of the Leadership Group pay spine, currently worth £33,249 to £43,611 outside of London and the Fringe Area. This means that even many teachers in positions of leadership in schools would have difficulty in affording the average house in their region.

HOUSE PRICES AND TEACHER SUPPLY

  16.  High housing costs inhibit the recruitment and retention of teachers. Teaching has to compete effectively against other graduate employers in order to support recruitment and retention. Serving and potential teachers can see that other graduate employers offer higher pay than teaching.

  17.  Incomes Data Services (IDS) has estimated average graduate starting pay in 2005 as £20,769. This is some 8% higher than starting pay for teachers from 1 September 2005. IDS research on pay progression after five years shows that the average graduate then benefits from faster pay progression than teachers. In pay terms, teachers start behind other graduates and then lose further ground in the early years of their careers.

  18.  It is inevitable that with low pay relative to other graduates, teachers will experience problems in affording housing. These problems are acute in areas of differentially high housing cost.

  19.  The link between high housing costs and teacher supply problems is demonstrated by the particular recruitment and retention problems faced in London. Under the teachers' pay structure schools can at their discretion pay recruitment and retention incentives and benefits. The latest data show that the proportion of full-time qualified classroom teachers in receipt of such payments was 26% in Greater London, compared some 1 to 4% elsewhere in England and Wales.

  20.  High house prices have significant knock-on effects. Many teachers find that they cannot afford to live close to the schools in which they work. This means that they then face significant and unavoidable travel costs. They also have to spend a significant amount of time travelling to and from work. These factors are likely to increase stress and to adversely affect teachers' work/life balance, increasing the likelihood of teachers seeking alternative employment.

THE NUT'S APPROACH

  21.  We believe that a holistic approach is needed to the problem of housing affordability for teachers.

  22.  Notwithstanding the limited "catch-up" of the rest of England and Wales with London and the south, house prices in the latter areas remain significantly higher. An effective solution to this problem needs to involve pay levels, pay allowances and fully funded initiatives such as housing associations, preferential loan arrangements and shared ownership schemes. Other initiatives that might assist teacher recruitment and retention in London and the South East should be examined, such as properly financed childcare schemes and support for childcare costs.

  23.  The NUT's view is that the cost compensation approach, under which additional costs such as high relative housing costs are quantified, should be used to determine the value of pay allowances for areas of particularly high cost such as London.

  24.  In general terms, teachers need to be able to afford housing in all parts of England and Wales. That they cannot do so currently shows that teachers do not receive the proper, professional and competitive pay levels that the profession should command. Other graduates receive higher pay than teachers and this gap must be closed if the teaching profession is not to suffer further supply problems in the future. The discrepancy between house prices and teacher pay is a key indicator of the need for significant increases in teachers' pay.





 
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