Loan plans won't cure chronic ills

Poorly paid public sector workers remain sceptical of government proposals aimed at helping them get on to the first rung of the property ladder in expensive areas like the south-east of England.

John Prescott's Department of the Environment, Transport and the Regions (DETR) announced its housing green paper on Wednesday, suggesting interest-free loans, cash incentives and development grants, as ways of helping helping poorly paid professionals buy their first home.

But union representatives for nurses and teachers - two of the key professions the proposals hope to target - said it falls far short of helping workers.

Karen Jennings, head of nursing at Unison, the public sector union, said most nurses earn £14,800 a year and that even with interest-free loans they will still fall far short of being able to buy anything in London or the south-east.

Even the 200-odd nurse consultants, who earn £40,000 a year, would be unable to buy a home in most parts of the capital.

Assuming a salary multiple of three when buying a house, £40,000 would only result in a mortgage of £120,000. A quick look through the Land Registry's property price index shows that this would only buy you a house in half of London's surrounding boroughs and nothing at all in the centre of the city.

It is possible to get cheaper properties in London, but they are hardly ideal for a first-time buyer, let alone anyone with a family. The internet property website www.propertylive.co.uk found one property within a nurses's salary range - a studio apartment in east London for £36,000.

Teachers don't fare much better. More than half the profession earn £23,958 a year or less, which, again, will only stretch to a one-bedroom flat in one of the peripheral areas of London.

Doug McAvoy, general secretary of the National Union of Teachers said: "This is a headline-grabbing proposal and I'm sure that any teacher who benefits from it will be delighted, but it doesn't get to the heart of the matter.

"We keep getting proposals from the government which just fiddle round the edge of the issue. What they should do is deal with the real problem - inadequate teacher salaries."

The teachers' union also pointed out that other areas of the country have been hit by house price rises and that teachers need to be able to buy their own homes in these regions as well.

The public sector pay issue has gained momentum over the past year as booming house prices have effectively priced low-paid workers out of the property market, leading to staff shortages as many either leave the property hotspots or quit the profession altogether.

The government's green paper proposals are still in their early stages and the DETR is keen to point out that nothing concrete can be said until the end of the consultation period and the chancellor's spending review - probably towards the end of the year.

If all goes to plan, Mr Prescott wants to extend the support to jobless home-owners moving back to work by paying their mortgage interest for their first month back in a job.

In the meantime, housing authorities and local councils have been asked to draw up costing plans for several of his proposals.

Research from the Council of Mortgage Lenders found that three-quarters of those surveyed want to own their own homes within the next two years.

Unfortunately, Mr Prescott's proposals will be unlikely to turn this dream into a reality for low-paid workers.

As such, they will have to take consolation from his commitment to improving the rental market, although many public sector workers have been priced out of this as well.