Government must help us get priorities right

The government's concession that it is unlikely to meet its commitment to house 10,000 key workers through the starter home initiative by next April is hardly surprising. But it is perverse, given the store placed on housing for key workers in the past three years, especially in the recent response to the housing, planning, local government and the regions select committee report on affordable homes published in March 2003.

From its inception, SHI has suffered from the narrow definition of the term "key worker", unrealistically low maximum loans and insufficient regard to the aspirations of those that it aims to help. Not before time, these limitations are being relaxed. Furthermore, the homeownership taskforce is now reviewing all programmes that can help key workers and others to move into sustainable homeownership. But what about the contribution of the planning system?

Provided that key-worker housing can be regarded as a category of affordable housing, the planning system is obviously expected to contribute to meeting that need. Circular 6/98 makes no reference to key workers. Planning policy guidance note PPG3 does, however, refer to key workers as one of a number of "specific groups" whose needs should be taken into account.

Many local authorities have overlooked the issue – some by choice, others by omission. Few have made key workers a priority to the degree that Milton Keynes council has: its 30% affordable housing target comprises 25% key worker and 5% social rented.

A significant number of authorities take the view that key-worker housing is not part of the affordable housing needs in their area. For example, Cambridgeshire and Peterborough's joint structure plan review concluded that key-worker housing should be defined as a subset of affordable housing, not separately.

A similar conclusion was reached in the Hillingdon Hospital appeal decision on 7 November 2000. The proposal was for residential development, including new accommodation, to be occupied by persons employed by or studying at the north-west London hospital. The council had rejected the scheme, partly because it considered that the proposed staff accommodation would not amount to affordable housing. Reliance was placed on paragraph 13 of PPG3, which refers to "affordable housing and housing to meet the needs of specific groups ". The inspector concluded that "there is nothing in PPG3 to suggest that these two groups are mutually exclusive and there will often be a substantial overlap". The Hillingdon case therefore confirmed that key-worker housing is a specific category of affordable housing if it is based on a demonstrated need, and affordable housing would be occupied by people who cannot afford to rent or buy houses locally on the open market.

A significant number of councils take the view that key-worker housing is not part of affordable housing need in their area

Some councils have already extended the definition of key worker beyond the original SHI definition. For example, the London borough of Hammersmith & Fulham has extended the list beyond teachers, healthcare workers and police officers to include social workers. It says other occupations might be identified on review.

Prioritisation is a key issue. PPG3 advises planning authorities to work jointly with housing authorities to assess the range of housing needs in their area. Understandably, authorities will assess and prioritise competing needs. The emergence of the key worker and intermediate housing categories has fuelled a debate about the relative importance and urgency of satisfying these particular needs and, as yet, the government has provided no clear guidance.

A fundamental problem is that government good-practice guidance on housing needs assessment says very little about key workers, and most local housing needs assessments reflect this. Partly as a result, many unitary development plans or local plans fail to mention the issue at all. The appeal decision in a case in St Albans on 3 March 2002 demonstrated that where the local authority has not investigated the need for key worker housing as part of its overall housing needs assessment, it can be left vulnerable.

In the St Albans case, the council operated a points system when allocating council housing and providing nominations to housing associations. It argued that the restricting the proposed scheme to key workers would not secure affordable housing for those in greatest need.

The inspector rejected the argument. She concluded that first, the council's housing needs assessment had not investigated the needs of key workers or how many people working locally could not afford to live in the district; second, she found it significant that the local plan made no reference to prioritising housing needs or limiting provision to those perceived to have the greatest need; third, she recognised the benefits in terms of accommodation for persons employed in a sustainable location adjacent to key facilities, providing a social mix and increasing housing choice; and finally she considered that Circular 6/98 did not support the council's approach.