Housing associations are set to provide affordable accommodation for nurses in the centre of towns and cities.

Secretary of state for health Frank Dobson said the department was talking to the Housing Corporation about housing provision and that the talks were encouraging.

Speaking at a fringe meeting for the Socialist Health Group, Dobson said affordable housing was needed for nurses. “One of the biggest hurdles to recruiting new nurses is that they can’t afford to live close to the hospitals,” he said.

Roger de la Mare, assistant director of investment at the Housing Corporation, said that talks started a few weeks ago but that they were still at an early stage.

It is thought that housing associations may renovate and run disused nursing homes.

At the meeting, Dobson also rejected claims that the private finance initiative allowed the private sector to exploit the NHS.

“The private sector has always made a fortune out of hospitals; the average cost overrun was 15-20% under the old system.

Now it is a welcome novelty that hospitals can be handed over early.”