Britain faces a skills crisis. Vacancy rates are running high and businesses simply cannot get enough lorry drivers, chefs, fruit pickers – the list goes on and on.
At the same time, public sector employers are finding it hard to fill roles such as social care and prison staff positions. All the while, the cost of living continues to rise.
So, how can we improve the offer to key workers without triggering an inflationary spiral? Discounted housing for key workers could be the answer, and here’s how it could work.
This idea is based on the nomination schemes used by universities to commission student accommodation. Employers could guarantee to fill a development with tenants for, say, 20 years. That would eliminate void risk and swap the tenants’ credit risk for the employer’s.
This would be enough to attract patient capital such as pension funds that are seeking long-term, low-risk exposure but are not investing in the fragmented and short-term buy-to-let market. Given the lower yield that would bring, if you passed on some of that saving to tenants, rents could be reduced by as much as 40%.
Imagine the difference that would make to nurses, teachers and prison officers. With that level of discounted rent, it seems unlikely the employer would fail to keep the accommodation full. The chance may be so low, in fact, that the employer wouldn’t need to declare the guarantee on their balance sheet.
As an adviser to businesses currently facing skills shortages, we see other advantages, too. Offering key workers discounted housing could reduce churn. In some parts of the UK, the labour market is so competitive that we are seeing rates of churn of up to 30% in social care. Imagine trying to run those vital services at the same time as recruiting a third of your workforce every year. Making a home part of the offer has the potential to make the employment relationship much more stable.
Developers, investors, employers and key workers can all benefit. We just need to find the first site.
Mark Essex is director of skills and Jan Crosby is head of infrastructure, building and construction at KPMG UK