Government of Jersey Key Worker Housing Final Report December 2018

Government of Jersey Key Worker Housing Project – Final Report

Contents

Executive Summary 1

Section 1: Introduction and Context 7

Introduction 8

Socio-Economic Context 9

Political Context 11

Population Context 13

Housing in Jersey 16

Section 2: Key Worker Definition 19

International use of the term ‘Key Worker’ 20

Developing a Definition 22

Recommended Government of Jersey Key Worker Definition 25

Section 3: Key Worker Situation and Drivers for Change 28

Recruitment 29

Retention 32

Implications of Recruitment and Retention Challenges 34

Section 4: Key Worker Accommodation Options 36

Introduction to Key Worker Accommodation 37

Options for Key Worker Accommodation 39

Affordable Leasing 41

Affordable Ownership 47

Section 5: Recommendations 51

Options Appraisal 52

Suggested Approach 54

Financial Implications 58

Recommendations and Next Steps 61

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Appendix 1 | Document Review List 62

Appendix 2 | Interviewees and Focus Groups 64

Appendix 3 | Affordability Calculations 65

Appendix 4 | Financial Assumptions 69

Appendix 5 | Best Practice Case Studies 71

Appendix 6 | Technical Annex: Housing Demand Analysis 73

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Tables and Figures

Table 1: Key Worker Recruitment Push and Pull Factors 2 Table 2: Key Worker Retention Push and Pull Factors 3 Figure 3: Options for a key worker housing solution 4 Figure 4: Key worker journey 5 Table 5: Residential and employment statuses 14 Table 6: Rental Affordability Calculations 17 Table 7: Example Uses Of the term ‘Key Worker’ 21 Figure 8: Stepped key worker definition 22 Table 9: Suggested key worker definition 26 Table 10: Aspects of a key worker definition 27 Table 11: International approaches to key worker accommodation 38 Figure 12: Options for a key worker housing solution 39 Table 13: SFA analysis 40 Table 14: Illustrative financial performance of the leasing options 43 Table 15: SFA analysis of short-term leasing 44 Table 16: SFA analysis of long-term leasing 45 Table 17: Illustrative financial performance of the ownership options 48 Table 18: SFA analysis of partial ownership 49 Table 19: SFA analysis of full ownership 50 Table 20: Summary of SFA for key worker options 52 Figure 21: Key worker journey 54 Table 22: Demand Analysis of Three Housing Options 56 Table 23: Unit mix required for key worker accommodation based on census data 57 Table 24: Assumed delivery of Key Worker Accommodation 58 Figure 25: Annual Surplus for Block Leasing and Development approaches 58 Table 26: Business plan debt and financial ratios 59 Figure 27: Interest Cover 59 Figure 28: Debt per Unit 59 Figure 29: Net Debt 60 Figure 30: Operating Costs per Unit excluding inflation 60 Table 31: Assumptions for illustrative modelling of options 69 Table 32: Base assumptions for financial modelling 70

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Our report is addressed to the Government of Jersey. We stress that our report is confidential and prepared for the addressees only. It should not be used, reproduced or circulated for any other purpose, whether in whole or in part without our prior written consent, which consent will only be given after full consideration of the circumstances at the time.

If the report is released to a third party without prior consent from Altair, we do not acknowledge any duty of care to the third party and do not accept liability for any reliance placed on the report.

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Executive Summary

1.1. Introduction 1.1.1. In September 2018, the Director General Department for Strategic Policy, Performance and Population (SPPP) appointed Altair to undertake research into the suitability of a key worker accommodation solution to address staff recruitment and retention difficulties faced by a number of the Government of Jersey’s (GoJ’s) departments. This report summarises our findings and makes recommendations as to: ▪ How the term key worker could be defined for use by GoJ ▪ Options for delivering a key worker accommodation solution

1.2. Context 1.2.1. Jersey has high vacancy rates in a number of areas of Health, Education and Children’s Services provision, and there have been difficulties in both the recruitment and retention of staff in these areas. Jersey’s island geography and limited training opportunities means that Jersey often has to rely on off-island recruitment (whether of people new to Jersey or returnees) to fill vacant positions. 1.2.2. The provision of services, and therefore the need for staff, in these departments can be seen as essential to the health and wellbeing of the island, but are made more critical by both the findings of the Independent Jersey Care Inquiry (IJCI) and subsequent OFSTED inspection which found failings in Jersey’s child care system, and changing demographics on the island as the population, in common with many other Western nations ages. 1.2.3. On the island, restricting access to work and housing is used to control population (e.g. inward migration) but can create difficulties for key workers and their families when moving to the island. However, the government has taken steps to reduce these barriers, and while our qualitative research suggests these measures are not currently widely understood, it is hoped that this will in future support key workers and their families to remain on the island. 1.2.4. Jersey has a high cost of living, and low housing affordability in both the rental and ownership markets. This can make it challenging for all residents, including key workers to afford accommodation. However, housing assistance through the housing gateway is only open to those who have been resident on the island for ten years. This has left many key workers in the private leased sector where accommodation is reported to be of a low standard, although the introduction of the recent Public Health and Safety (rented dwellings) Law should begin to address this. 1.2.5. In addition to the private market, GoJ provides c.224 homes in locations located near to key worker workplaces. Of these 134 (60%) are provided to Health or Education staff.

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1.3. Key Worker Definition 1.3.1. The term ‘key worker’ is widely used in the UK and has also been adopted by the States of Guernsey, and to some extent in New Zealand and Australia. The term is specifically linked to housing solutions for particular employee groups where there are skills shortages, or their roles are seen as essential. The purpose of defining what it means to be a key worker is to enable policy interventions targeted at this group of workers. Internationally approaches generally focus on four key factors: ▪ The service that the key worker is involved in providing ▪ A skills shortage, or other recruitment difficulties ▪ The public sector as an employer ▪ Income threshold that determines qualification 1.3.2. Through workshops with cross-departmental stakeholder engagement, we developed the following recommended definition of key worker in the context of Jersey: Those in (1) delivering statutory services or those akin to statutory services, where there is (2) evidenced difficulty in recruiting and retaining staff, who have a (3) household income below a minimum threshold. 1.3.3. Further analysis will be required for this definition to be able to be adopted, and Jersey will need to determine: ▪ Which roles are statutory or akin to statutory for the delivery of public services? ▪ Which roles are difficult to recruit to and retain staff in? ▪ What should be the household income threshold?

1.4. Barriers to Recruiting and Retaining Key Workers 1.4.1. Key workers in Jersey come from both on-island (where training may be required) and off-island (whether having previously lived in Jersey, those from the UK or those from other nations). While there are common pull factors and barriers in recruitment for these pools, some factors may be specific to the expectations and experiences of each group. Further, an individual’s circumstances (e.g. household composition, lifestyle preferences, culture and values) will influence the extent to which they experience the pull factors and barriers. 1.4.2. Table 1, below highlights the competing recruitment pressures for key workers Table 1: Key Worker Recruitment Push and Pull Factors Pull Factors Barriers ▪ Funding for training ▪ International skills shortages ▪ Higher salaries ▪ Significance of moving to Jersey ▪ Additional responsibilities ▪ Employment, health and housing ▪ Low tax regime ▪ Difficulties in securing ▪ Similar culture to the UK accommodation prior to moving ▪ Moving benefits ▪ Probation period ▪ Perceived lifestyle benefits

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1.4.3. In terms of key worker retention there is also a competing set of pressures determining whether a key worker is retained or exits (either by leaving the island or leaving the profession). These are summarised in table 2. Table 2: Key Worker Retention Push and Pull Factors Key Push Factors ▪ Provision of key worker ▪ Cost of living, particularly housing accommodation (where this is affordability available) ▪ Housing quality ▪ ‘Settling’ of family members ▪ Lack of preparedness to make the (particularly dependents) move to Jersey ▪ Lifestyle benefits ▪ Weaknesses in the on-boarding ▪ Reported good work-life balance process ▪ Better career progression ▪ Lack of clarity over employment and opportunities housing policy ▪ Sense of inequity between permanent and locum / agency staff

1.4.4. The recruitment and retention difficulties for GoJ have implications both in terms of the need to rely on short-term staff and increases in the cost of recruitment. This has not only financial consequences for GoJ, but creates difficulties in workforce sustainability, morale, quality of service delivery, and the relationships with service users.

1.5. Key Worker Accommodation 1.5.1. Internationally there are a range of approaches to key worker accommodation, including both leased and ownership models. As such GoJ could offer key-workers one of four tenures: ▪ Short-term leasing (‘Landing’ accommodation) ▪ Long-term leasing at an affordable rate ▪ Part-ownership which may function similarly to Andium Home Buy ▪ Full-ownership 1.5.2. With housing being delivered through: ▪ Development or refurbishment to provide new or renovated homes ▪ Block leasing from the private sector and social housing providers and sub-leased on to key workers ▪ Private sector subsidy (e.g. a rental subsidy scheme, or money towards home purchase on the private market) 1.5.3. There is potential overlap between tenures in the delivery mechanisms, as illustrated in figure 3 below.

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Figure 3: Options for a key worker housing solution

1.5.4. We tested each of these options with key stakeholders, and considered their appropriateness in meeting Jersey objectives, how implementable they would be for GoJ, and their acceptability to key stakeholders including politicians and the Jersey public. This is called an SFA analysis. 1.5.5. On the basis of this analysis the full ownership tenure was excluded as it was seen as inequitable to offer this opportunity to key workers when other groups on the island were also struggling with the affordability of home ownership. Further, full ownership models result in a permanent loss of the home into the general market, whereas in a partial ownership scheme, a home can be affordable in perpetuity and recycled for use by another key worker in the future. 1.5.6. Private sector subsidy was also ruled out as a delivery route. This was due to the likely market distorting effects that any such subsidy would have on the already expensive private leased and home ownership markets in Jersey. 1.5.7. The recommended approach is therefore a combined offer of: ▪ Landing accommodation: Short-term leased accommodation available for 6 – 9 months and open to all key workers (regardless of income) arriving on the island, at a market rent. This will provide the opportunity for key workers to settle and become familiar with the housing market in Jersey before moving to longer term accommodation. ▪ Long-term leasing: Accommodation leased on 3 – 4-year terms (to allow a review of key worker circumstances), to those below an income threshold at the social rent rate to ensure the accommodation is affordable and provide security of tenure. ▪ Partial ownership: Sale of homes at a discount (c.25%) with the homes covenanted to remain within the key worker ownership scheme and to be affordable in perpetuity. 1.5.8. The way a key worker may interact with these different types of accommodation throughout their career is shown in figure 4.

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Figure 4: Key worker journey

1.5.9. Our initial modelling suggests that to deliver this mixed offer through development of new homes would be financially viable for GoJ, although the landing accommodation is cross subsidised by other tenures. However, block leasing would have a cost to GoJ and require ongoing revenue subsidy. Once, the definition has been determined, further demand analysis is required to inform more detailed financial modelling to understand the impact of a key worker offer on GoJ budgets and financing requirements.

1.6. Recommendations 1.6.1. Based on the findings of this report we recommend that GoJ: ▪ adopt the key worker definition: ‘those in (1) delivering statutory services or those akin to statutory services, where there is (2) evidenced difficulty in recruiting and retaining staff, who have a (3) household income is below a minimum threshold. ▪ review employment practices, such as the use of probations and other non- accommodation barriers to recruitment and retention which it has control over ▪ develops key worker accommodation provision made up of three offers: • Short-term ‘landing’ accommodation for new arrivals • Long-term leased accommodation • Partial ownership

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1.7. Next Steps 1.7.1. To implement the recommendation GoJ, need to: 1. Agree how the minimum income threshold will be calculated to inform further key worker accommodation research. 2. Obtain or collect more detailed data on skills shortages, and vacancies to evidence those roles that will fit within the key worker definition, and to inform more detailed demand analysis. 3. Undertake more detailed financial modelling to establish the likely level of subsidy required to deliver the scheme, but also to quantify likely savings in recruitment costs and the use of short-term staff. 4. Consult more widely on the proposed approach to further test the suggested offer with stakeholders, and potentially key workers as the target market. 5. Seek approval of the newly formed Housing Policy Development Board and incorporate the approach into relevant strategic documents. 6. Make any required changes in legislation to facilitate the delivery of the key worker accommodation solution.

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Section 1: Introduction and Context

Overview This section summarises key contextual considerations identified in the desktop and qualitative research phases of the project, which inform our understanding of the challenges facing the Government of Jersey (GoJ) in relation to key workers, and more specifically key worker accommodation.

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Introduction

2.1.1. In September 2018, the Director General Department for Strategic Policy, Performance and Population (SPPP) appointed Altair to undertake research into the suitability of a key worker accommodation solution to address staff recruitment and retention difficulties faced by a number of the Government of Jersey’s (GOJ’s) departments, including Health, Education and Children’s Services. 2.1.2. From September 2018 to November 2018, Altair undertook research into key worker housing as a recruitment and retention tool for essential public sector workers and developed options for housing delivery for Jersey. This report provides the findings of this work. 2.1.3. The aim of the research of was to deepen GoJ’s knowledge base about key worker recruitment and retention challenges related to housing. The scope of the project was to: ▪ Research who Jersey’s key workers are and understand the extent to which the availability and affordability of housing impacts the recruitment and retention of key workers ▪ Define what the term ‘key worker’ should mean for Jersey with a particular focus on the use of the term for GoJ’s internal policies ▪ Outline and recommend high-level options for delivering a key worker housing solution to address challenges identified in the research 2.1.4. Our approach to this research was based on five key activities: ▪ A desktop review of State’s policy framework, the external operating environment in Jersey, market analysis and other relevant data to establish the context of housing affordability and accessibility for key workers ▪ Qualitative research engaging in one-on-one conversations and focus groups with staff from relevant government departments (including Health, Education and Children’s Services), and currently employed key workers to understand the extent of the impact of housing on key worker recruitment and retention and to explore potential solutions ▪ A best practice review examining international approaches to housing solutions for key workers ▪ Options development and appraisal including assessing high-level financial implications and working with key government stakeholders. ▪ Presentation of recommendations in this report

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Socio-Economic Context

3.1. Overview 3.1.1. The socio-economic context of Jersey is important in defining the key worker experience outside of the workplace, particularly in relation to affordability. It also underscores the importance of key workers on the island and can be seen as a key factor shaping the public acceptability of particular solutions.

3.2. Geography and Economy 3.2.1. Jersey is an independent Crown Dependency. It forms part of the British Isles but has its own laws and its own parliament. Jersey is the largest of the Channel Islands. 3.2.2. Jersey has a constitutional relationship with UK that gives Jersey the rights to self- govern and have independent courts, but Jersey is neither part of, nor independent of the UK. Jersey is not part of the EU but is treated as part of the EU for the purposes of free trade of goods. Jersey’s culture is influenced by its Norman heritage and English and French cultural traditions and today Jersey has a similar culture to that of the UK. English is Jersey’s main language but Jèrriais (Jersey French) is taught in most schools as a traditional language1. 3.2.3. Jersey’s island geography has a number of implications for its society and economy. Formal professional training, and other upskilling opportunities are limited in Jersey due to the size of Jersey’s economy, so it is not uncommon for Jersey natives to leave the island for a period to study or undertake specialist training courses early in their careers. These movements may be encouraged by employers because they allow prospective employees to gain international insight with the hope that Jersey natives will return to work on the island. However, one possible effect of this trend is that gaps exist in particular employment skills. For example, in the sectors which are the focus of this report: ▪ GoJ has budget for 34 Psychologists, and currently has 6 vacancies (18% vacancy rate) ▪ GoJ has budget for 51 Children’s Social Workers, and currently has 25 vacancies (48% vacancy rate) ▪ GoJ has budget for 117 Mental Health Nurses, and currently has 21 vacancies (18% vacancy rate)2 3.2.4. Some Jersey natives leave the island for most, or for the duration of their careers. Anecdotal evidence suggests that some individuals return to Jersey later in life for healthcare reasons or for a change in lifestyle due to retirement. A continued increase in the population of these individuals has important implications on health and social care systems on the island. 3.2.5. Although Jersey’s tourism industry developed as an important industry post-WWII, the financial services sector has grown in importance to the Jersey economy since the last quarter of the twentieth century. Today, financial services make up nearly 40% of

1 Jèrriais: Jersey's traditional language, GOV.je 2 Key Worker and Vacancy Analysis - August 2018

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Jersey’s Gross Value Added (GVA), whereas hotels, bars and restaurants make up 4.2% of Jersey’s GVA3.

3.3. Cost of Living 3.3.1. The cost of living in Jersey is high, with monthly expenditure on all non-housing goods and services about 33% higher in Jersey than in the UK and about 15% higher than in the UK’s most expensive region (London)45. 3.3.2. In 2013 the Jersey Statistics Unit found that price levels for consumer goods and services (excluding housing costs, health and education) in Jersey were 9% greater than the UK average and were marginally greater in Jersey than in London (by 2%).When housing, health and education was also taken into account the overall price level for consumer goods and services in Jersey was a fifth higher than the UK average. 3.3.3. This high cost of living is likely to be a result of the combined effect of Jersey’s geography and housing, and the impact of leisure offers for the financial sector.

3 National accounts: GVA and GDP, GOV.je 4 Jersey Household spending 2014/15 5 Family spending in the UK: financial year ending March 2016 RPI increase in Jersey was broadly comparable to that of the UK and London over the RPI publishing period of 2016-2018 so these 2014/15 figures for household spending are a sound proxy for current household spending.

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Political Context

4.1. Overview 4.1.1. The political context has a direct impact on the importance of the priority given to any key worker housing solution, and also the possibility of any solution being implemented by GoJ. This is particularly true where changes will require new primary legislation.

4.2. Political system and elections 4.2.1. The States of Jersey is Jersey’s parliament. The States Assembly comprises eight Senators, twenty-nine Deputies and twelve parish Connétables. These positions are decided by popular vote. Deputies and Connétables each represent a parish or in the case of larger parishes, a Deputy may represent an electoral district within a parish.6 This system acts to ensure the population is evenly represented and that political figures are accountable to their local jurisdictions. 4.2.2. Jersey currently has only one registered political party, Reform Jersey, who have five seats in the States Assembly. A majority of postholders in the States Assembly are independent. 4.2.3. The Council of Ministers contains the ministry lead for the government’s various departments. Each Minister is nominated by the Chief Minister and then appointed by the States. 4.2.4. In May 2018, the Jersey General Election led to changes in the ministerial team, including of most relevance to this work, the appointment of Senator Sam Mézec as the Minister of Housing in June 2018. In July 2018, the role was widened to become the Minister of Children and Housing. 4.2.5. This ministerial change came as the result of the government’s commitment to the outcomes of the 2017 Independent Jersey Care Inquiry (IJCI), which found systematic failings in the delivery of Children’s Services in Jersey from the post-war period to the present. A 2018 OFSTED inspection confirmed these findings.

4.3. Independent Jersey Care Inquiry 4.3.1. One of the recommendations from the Independent Jersey Care Inquiry (IJCI) report focused on building a sustainable workforce. As a result, recent government policies, such as £686,000 worth of government investment into on-island training programme for social workers7, have been implemented to develop a stable and skilled children’s service workforce and to reduce Jersey’s reliance on contract and other temporary staff. 4.3.2. Whilst the IJCI did not directly reference housing as a barrier to the recruitment and retention of a sustainable childcare workforce, qualitative evidence suggests access, availability and affordability of housing are inhibitors to both recruitment and retention.

6 States of Jersey States Assembly, GOV.je 7 “A new social work degree course for Jersey” from July 2018

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4.3.3. This assumption is in line with the government’s latest Housing Strategy, which sets out that a key priority for the Minister is the development of a definition of and a housing strategy for key workers, especially those in health and social work.

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Population Context

5.1. Overview 5.1.1. Jersey’s population policies, which control access to work and housing, act to preserve Jersey’s finite resources and the way of life for residents. A successful housing solution for key workers must work within the framework of these priorities.

5.2. Population Changes 5.2.1. Jersey’s resident population is approximately 105,500. During 2017, the resident population increased by 1,300 of which net-inward migration accounted for 1,200 and natural growth (the excess of births over deaths) accounted for 100. 5.2.2. Jersey has unique population demographics characterised by three distinct groups: ▪ Permanent residents ▪ Long-term temporary residents ▪ Seasonal residents 5.2.3. Each group has a different household and age profile.8 The age profile of the latter two population groups is markedly differently to the permanent resident population, with mainly working-age people, which makes it difficult for Jersey to model their future dependency ratio (the ratio of non-working age population to the working age population), and the accompanying effect on Jersey’s heath and care resources. This is further complicated by the non-standard ageing of Jersey’s permanent resident population, since as mentioned previously some of this group will move and return to Jersey or will not return at all. 5.2.4. However, despite these difficulties, it can be said that in line with other developed nations Jersey has an ageing population characterised by a low mortality rate and a high life expectancy. The crude mortality rate was 7.6 deaths per 1,000 population, which is a figure that has been falling over time. Moreover, the average (mean) age at death for Jersey residents was 79 years, which is an increase of 12 years since 1960.9 5.2.5. In addition to an ageing population, Jersey has recently experienced relatively high net-inward migration figures. In 2015, 1,500 individuals migrated to the island, a figure which rose from an estimated baseline of net-inward migration of 700 people per annum in 2013 and 2014,10 population growth caused by net-inward migration may have implications of the island’s resources and can impact residents’ quality of life.

5.3. Effect on work and housing 5.3.1. While anyone from the UK or the EEA can move to Jersey11, access to certain categories of housing and work is controlled. The purpose of the legislation is to

8 Oxera, What is the economic impact of Jersey’s aging population 9 Annual Mortality Statistics, GOV.je 10 Jersey population projections 2016 release 11 Control of Housing and Work (Jersey) Law 2012

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control overall population density of Jersey and protect the availability of work and housing to individuals from Jersey or who have close associations with Jersey. This is summarised in table 5, below. Table 5: Residential and employment statuses Housing market Status Definition Working rights access 10+ years Entitled continuous Can work anywhere Full access residence Employer needs Cannot access first Licensed ‘Essential employee’ permission to time buyer or social employ rented housing Can buy property jointly 5+ years residence, with an ‘entitled’ spouse or married to an Entitled for or civil partner. entitled, licensed or Can work anywhere Work Only Can only lease entitled for work ‘registered’ person accommodation. Employer needs Can only lease Registered Other persons permission to ‘registered’ employ accommodation. 5.3.2. The Government of Jersey limits migration by approving work applications which deliver the greatest social and economic value. The government will grant “Licensed” or “Registered” status to individuals who demonstrate economic and social value and where “Entitled” or “Entitled for Work” staff are unavailable. The government population policies limit the kind of housing that new arrivals to the island have access to. Currently, over four-fifths of the resident population possessed housing qualifications (enabling them to access all areas of the housing market), whereas one in eight (13%) people were not-locally qualified.12 5.3.3. Population policies also mandate who in a household can work. This is driven by the employment and residential status of the sponsored worker. Generally, family members of a sponsored worker will have no rights to employment. However, in January 2018, following the combined pressures of recruitment and retention difficulties faced by Health and Social Services and the recommendations made in the IJCI, it became law to exempt the co-habiting partner of a specified key worker from the maximum number of Registered individuals a business can employ, making it easier for the partners of key workers to work in Jersey.13 A similar law for the children of key workers aged under-25 is in draft. These policies are designed to reduce the burden on key workers whose partners and children have not been able to participate in Jersey’s job market openly prior to 2018. 5.3.4. The Housing and Work Advisory Group, which falls under the responsibility of the Chief Minister, is due to review the population strategy in Spring of 2019. One of the

12 2011 Census 13 Control of Housing and Work (Exemptions) (Jersey) Order 2013

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proposed changes includes a work permit system whereby employees are permitted to stay in Jersey for 10 months before re-applying for a further 10-month work permit. It is currently unknown if employees under this system would qualify for access to open market housing, or if these individuals would be able to accrue time to reach qualifications under the proposed system.

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Housing in Jersey

6.1. Overview 6.1.1. Housing affordability is a problem in both the rental and ownership markets in Jersey. For those moving to the island restrictions on access to accommodation can exacerbate this issue. Housing difficulties have been cited as a barrier to key worker recruitment, but any solution needs to be seen as fair to the wider population who are also facing housing stress.

6.2. The Housing Market: Ownership 6.2.1. Buying a home in Jersey is difficult for many. The overall housing affordability index has declined by 7% over the past 5-year period, making it increasingly more difficult for households to own a home. In 2017, a working household with a mean net income was not able to service a mortgage affordably on the purchase price of a median- priced house of any size, but they could afford to purchase a median priced two bedroom flat.14 For many, including key workers, home ownership in Jersey is out of reach at current prices. 6.2.2. New arrivals to the island who wish to purchase a home, have a six-month residential waiting period to qualify for a Jersey mortgage. This waiting period gives some newly- arrived key workers no choice but to enter into one- or two-year rental contracts in the private rental sector.

6.3. The Housing Market: Leasing 6.3.1. At the most recent census (2011) leasing accounted for 46% of housing tenure in Jersey. Residential leases are governed by the Residential Tenancy (Jersey) Law 2011. Leases are normally for a period of one or two years. Leases of more than 9 years are known as ‘contract leases’, while shorter leases are described as ‘paper leases’. As contract leases are required to be passed before the Royal Court leases of this length are uncommon in the residential leasing market. 6.3.2. The issue of housing affordability is also a challenge in the private leased sector. Based on the JHAI definition of accommodation being affordable at 30% of household income15, even a one-bedroom flat is likely to be unaffordable for the average FTE employee (based on 2018 average earnings of c. £3,200pm or c. £38,400 pa16). This is shown in table 6 below.

14 JHAI, 2017 15 JHAI definition of affordability 16Government of Jersey Index of Average Earnings from June 2018

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Table 6: Rental Affordability Calculations Required income to Bedroom Size Median monthly rental affordably rent 1-bedroom £1,200pm £48,000pa 2-bedroom £1,750pm £70,000pa 3-bedroom £2,375pm £95,000pa 6.3.3. A further analysis of affordability by government employee pay band is included in Appendix 3. 6.3.4. The quality of housing in the private rental sector is relatively poor. To address this, the government has recently passed legislation17 mandating that homes available for rent meet minimum standards for environmental health. This law in conjunction with GoJ’s Rent Safe landlord accreditation scheme may go some way to improve quality in privately leased accommodation.

6.4. Social and Affordable Housing 6.4.1. Jersey operates a social housing service via the Affordable Housing Gateway, a waiting list for those registered for social housing in Jersey. The Gateway contains six priority bands including a high-priority Band 1, a request for homeownership assistance Band 4, and an extra-care Band 6. Financial, medical and housing circumstances all affect which band someone is placed in.18 6.4.2. While GoJ operates the waiting list, placements are made in partnership with Andium Homes (“Andium”), Jersey’s largest affordable housing provider, and other affordable housing providers who allocate social units on the Gateway. Andium has a portfolio of c. 4,500 homes and four other providers have a combined c. 1,300 homes, totalling c. 5,800 social homes in Jersey. 6.4.3. Social housing rents are generally charged at about 90% of the market equivalent for each property type. Andium estimates this to approximately: ▪ £965 per month for a 1-bedroom flat ▪ £1,157 per month for a 2-bedroom flat ▪ £1,356 per month for a 3-bedroom flat ▪ £1,603 for a 3-bedroom house 6.4.4. Although these rents are set below the market rate, due to the high prices in the market, 90% of the market rate may still be unaffordable for many households. To address this issue, Andium’s Board has discussed replacing annual rent increases of 5% with increases of RPI +0.75%. However, it is important to note that rent levels are key to funding the delivery of new housing by Andium and it is likely any downward pressure on rents would require subsidy. 6.4.5. Andium also operates an affordable home ownership scheme through Andium HomeBuy, a programme which allows first time buyers to apply for a 25% deferred payment on a property sold by Andium. To qualify for the scheme, individuals must

17 Public Health and Safety (rented dwellings) Law 18 Affordable Housing Gateway, GOV.je

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apply to be registered to the Housing Gateway Band 5. As of September 2018, 1,169 individuals were registered at Band 5 however in 2017, Andium sold only 28 properties under the scheme. 6.4.6. While interest in the scheme is high there is conflict between the pressure of meeting first time buyer demand, and concerns that the sale of homes removes them from the pool of much-needed social stock. Andium have increased their sales target under the scheme to 40 existing homes per annum from 2018. Andium understands that selling existing stock is an inadequate solution and is keen to develop more homes to meet demand for the programme.

6.5. Key Worker Accommodation 6.5.1. Historically, key worker units owned by GoJ were managed by departments within GoJ. However, as part of the move to a more collaborative government administration, Jersey Property Holdings (JPH) has taken over the management of the portfolio of publicly-owned residential properties and is responsible for organising the long-term leasing of the units to government’s departments or private tenants. 6.5.2. Jersey Property Holdings manages c.224 homes of publicly-owned residential accommodation19. Current use of the stock includes: ▪ 124 units provided for Health and Social Services Departments or affiliated personnel ▪ 10 units provided for the Education Department of affiliated personnel ▪ 59 units provided for private tenants (41 of which have long leaseholds) ▪ 13 units provided for prison staff ▪ 14 units provided for etc. government and military purposes ▪ 4 units currently vacant 6.5.3. The majority of these homes are located near to schools, the hospital or the prison. 56 units are located at Westaway Court and 30 bedrooms are located at Peter Crill house, within the hospital site in St Helier. These properties are due to be demolished as part of the Future Hospital project. 6.5.4. Some of the accommodation lost through the demolition, will be replaced through the renovation of 48 two-bedroom and studio apartments at Convent Court (now Plaisant Court) made available for Health and Community Services & Children, Education, Young People and Skills staff. 6.5.5. Key workers’ access to government owned accommodation, and the rent they pay for the accommodation varies considerably from person-to-person and allocations are made in an ad-hoc manner. This may be due to historic decentralisation of the management of the properties, and different HR strategies pursued by departments, but has led to a sense of inequity amongst key workers, and lack of clarity over the entitlement of different groups.

19 2018 08 15 All FH & Flying FH Residential Units

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Section 2: Key Worker Definition

Overview This section addresses how the term key worker is used globally, and can be refined, to develop a definition that supports GoJ, in making policy interventions to address recruitment and retention difficulties it experiences in a number of its key public sector service areas.

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International use of the term ‘Key Worker’

7.1. Overview 7.1.1. Globally, the term ‘key worker’ is generally used to describe essential, usually public sector, workers and is linked to housing solutions. For policy purposes, this definition is traditionally used in conjunction with criteria to determine who qualifies for public financial assistance.

7.2. Why ‘Key Worker’? 7.2.1. The term ‘key worker’ is widely used in the UK and has also been adopted by the States of Guernsey, and to some extent in New Zealand and Australia. The term is specifically linked to housing solutions for particular employee groups where there are skills shortages, or their roles are seen as essential. Therefore, the concept of a ‘key worker’ is embedded in that of key worker housing. 7.2.2. The purpose of defining what it means to be a key worker is to enable policy interventions targeted at this group of workers. Therefore, any definition is partially driven by the need for policy interventions, with key workers usually being: ▪ Groups which are recognised as being essential (and often in public sector roles) ▪ Groups where there is a skills shortage, or other difficulties in recruitment and / or retention of staff ▪ Groups where their income from remuneration is insufficient to meet their housing costs, or there is a lack of availability of suitable housing (either due to location, market access, or prices)

7.3. The Government’s Needs for a Key Worker Definition 7.3.1. The government understands that prior to the development of key worker housing policy, they must first decide a flexible and measurable definition of the term ‘key worker’, that is able to drive policy interventions and adapt to the changing needs of the island. 7.3.2. We’ve noted in section 1 that as an island, Jersey has particular skills pressures, and may face larger obstacles in recruiting and retaining staff with essential skills that ensure the island’s health and wellbeing. For Jersey, defining key workers may act as a catalyst for policy intervention to ensure that these essential workers are recruited and retained on the island. 7.3.3. However, it is worth noting that a definition of key workers is unlikely to provide a ‘silver bullet’ for all skills shortages on the island, and residential and employee status will also need to be considered as part of the solution for both key worker and non- key worker skills gaps in Jersey.

7.4. Perspectives on Key Workers: Case Studies 7.4.1. As noted above there are different international approaches to the definition of a key worker, however in many nations different reward models mean that the term key

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worker or an equivalent is not used in policy, as those in employment receive remuneration at a sufficient level to meet their living costs, or alternative universal approaches to subsidising living costs are adopted. 7.4.2. Examples of some of the different definitions of key workers are provided in table 7 below. These show the four key factors that are often considered within a definition: ▪ The service that the key worker is involved in providing ▪ A skills shortage, or other recruitment difficulties ▪ The public sector as an employer ▪ Income threshold that determine qualification

Table 7: Example Uses Of the term ‘Key Worker’

Definition Essential Service Employer Skills shortage Income Example Delivery (Public Sector)

“who is “a public sector “with a household HomeBuy Service considered to employee” income below

(UK) provide an £60k p.a.” essential service”

“where there are “someone “in a statutory role serious employed by the Clarion Housing delivering an recruitment and public sector” Association (UK) essential public retention service” problems”

“where the “based on an Council analysis of London Borough understands the average key of Southwark key recruitment, worker salaries” (UK) issues are in the borough”

“employees that “are in receipt of “where the deliver a public incomes that do “employees that recruitment and service” not enable them Guernsey deliver a statutory retention of staff to afford to buy or service” has proven to be rent in the difficult” general housing market”

7.5. Implications for Jersey 7.5.1. The examples provided show the four components widely used in defining key workers, which Jersey may wish to adopt. The following section considers how a definition can be tailored to the needs of Jersey.

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Developing a Definition

8.1. Overview 8.1.1. A comparison of the global perspectives outlined in the previous section shows that a key worker definition can be broken down into four key areas of detail. These can be understood to form a ‘stepped’ approach to defining Jersey’s key workers.

8.2. Requirements of a Definition 8.2.1. The government needs a flexible definition that can be adapted over time, as the external context changes, but which also supports the use of interventions where required to enable GoJ to maintain its essential statutory workforce. 8.2.2. The definition should also be able to justify the use of public funds for interventions in the context of public sector fiscal constraint, and widespread affordability issues among the general population. As such it is important that the group to be defined as ‘key workers’ will have public and political support.

8.3. A Stepped Key Worker Definition 8.3.1. Drawing from the key factors highlighted in the previous section a stepped approach to defining key workers can be taken, where the definition becomes progressively narrower, as show in figure 8 below. Figure 8: Stepped key worker definition

Essential Service Delivery

Difficulties in recruitment / retention and / or skills shortage Employed in the public sector

Income below a threshold

8.3.2. The increasing narrowness of the definition helps limit the volume of people to which it applies, reducing the potential scale of financing required to provide an intervention, and may also act to allay public concern over any proposed intervention. 8.3.3. Each element of the definition is considered in more detail below.

8.4. Essential Service Delivery 8.4.1. It could be argued that any role that is important or essential to the functioning of Jersey’s economy and community, or alternatively essential to the health and

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wellbeing of the populace is a key worker. This approach could encompass the public, voluntary and private sectors. Given the focus of GoJ in developing key worker policy, and its role in providing for, and promoting the health and wellbeing of its citizens, we suggest that the focus of the definition should be on those employees essential or important to the health and wellbeing of the population of the island. 8.4.2. However, using this definition alone is so broad as to render it impractical for most policy purposes. Instead, places such as the UK use this basic definition alongside specific key criteria for policy purposes.

8.5. Difficulties in Recruitment / Retention and Skills Shortages 8.5.1. An additional layer of a definition is to include any role that meets the first criteria of being important or essential to the health and wellbeing of the people of Jersey, where there is a skills shortage or recruitment or retention difficulty. 8.5.2. While this approach may be more useful in a policy context (and particularly residential and employment status determinations), where it includes the private sector for state-funded interventions, it risks accusations of public subsidy of low private sector wages.

8.6. Employed in the Public Sector 8.6.1. Where the state is making interventions for example. by providing housing at a reduced cost or subsidising particular services a focus on public sector workers prevents public money being spent to offset a remuneration issue in the private sector (e.g. that the private sector is not able to recruit to roles because it does not pay sufficiently). 8.6.2. However, the breadth of the public sector may mean that this definition is not sufficiently narrow. One way that this has been overcome in other jurisdictions is to focus on ‘frontline’ roles. This can often garner wider public support as these tend to be seen as vital roles. However, defining ‘frontline’ can be difficult, for example would a manager of a team of frontline workers, who had little if any interaction with service users be considered frontline? What about a medical professional who primarily worked in testing samples or reviewing information rather than with patients? 8.6.3. Further, GoJ commissions a number of its public services from third parties, often voluntary organisations, whose provision and employees may still be essential to the health and wellbeing of Jersey. Such groups would be excluded from a definition focussing on public sector workers, or frontline public sector workers. 8.6.4. Therefore, based on work refining the concept of ‘public sector workers’ through engagement with a cross departmental workshop, rather than using a definition of ‘public sector employees’ we suggest that key workers be considered to be those who provide statutory services, or those akin to statutory services. This definition is wide enough to capture those non-public sector organisations acting on behalf of GoJ, while still being narrow enough to garner public support and be useful in terms of designing and implementing interventions.

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8.7. Income Below a Threshold 8.7.1. Within the public sector salaries can vary significantly. To ensure interventions (which are likely to have limited financing) can be targeted to those in greatest need, income thresholds are often used to limit eligibility. 8.7.2. This aspect of the definition may be flexible and used to limit access to certain interventions, but not to others depending on the purpose of the proposed scheme, and desired beneficiary group.

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Recommended Government of Jersey Key Worker Definition

9.1. Overview 9.1.1. The previous section has summarised the key elements of an approach to defining key workers. Focussing on the four key elements we propose a single definition, based on our research and stakeholder feedback.

9.2. Approach 9.2.1. Alongside the focus on key workers in this project, it has also been identified that there may be a need for policies that address recruitment difficulties or skills shortages in roles throughout the island’s workforce that support the economy, e.g. addressing the shortage of skilled chefs to resource the island’s hospitality sector. We recommend, however, that these policies should not act to subsidise issues of insufficient private sector remuneration or poor working conditions. 9.2.2. To address this concern GoJ may wish to adopt two categories of essential employees: ▪ An island workforce wide definition which will inform economic and population policy and strategy, based on statistically evidenced skills shortages, and recruitment difficulties in roles essential to the health and wellbeing of the island, where Jersey pay is below a threshold for affordability ▪ A ‘key worker’ definition which encompasses roles in statutory public sector services or those akin to statutory services, i.e. arms-length services or charitable services, where there is evidenced difficulty in recruiting and retaining staff and where the household income is below a minimum threshold 9.2.3. The first, broad, definition acknowledges that there may be positions that are hard to recruit to, necessary to Jersey’s health and wellbeing and where market level remuneration is insufficient to attract or retain staff. Out of scope to this project, other strategies may be required to ensure recruitment pressures for these roles are addressed. 9.2.4. For the purposes of this project, the second ‘key worker’ definition is designed to allow for the development and implementation of policies to support the recruitment and retention of staff who deliver essential statutory services either for or on behalf of GoJ. 9.2.5. By adopting two categories of essential employees, GoJ is better able to administer focused ‘key worker’ policies within their financial constraints.

9.3. Suggested Key Worker Definition 9.3.1. In developing a suggested definition, we have reflected the need to: 1. Enable policy interventions to address the recruitment and retention challenges faced by GoJ’s public services, 2. Warrant financial expenditure in a climate of fiscal constraint.

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9.3.2. We suggest that GoJ define key workers as those in (1) delivering statutory services or those akin to statutory services, where there is (2) evidenced difficulty in recruiting and retaining staff, who have a (3) household income below a minimum threshold. 9.3.3. Each element of the definition is explored in more detail in table 9 below. Table 9: Suggested key worker definition

Statutory or akin Desktop research of other key worker definitions suggests that statutory public sector roles are often classed as “key to statutory services workers”. Qualitative research from key government stakeholders suggests that key worker policy currently applies to statutory services such as nurses, teachers and social workers. In Jersey, arms-length bodies and charitable organisations also perform statutory services, and this should be included in the definition.

2. Evidenced difficulty Qualitative and quantitative research suggests that a in recruitment or number of statutory public sector positions do not face retention recruitment and retention difficulties. Intervention policies, therefore, would not improve the delivery of statutory services in such cases. Limiting the definition to posts where there are difficulties ensures public spending is justified.

3. Household income Some statutory public sector roles are remunerated at a is below a minimum level that mitigates barriers to recruitment and retention. threshold Intervention policies, therefore, would not improve the delivery of statutory public services in such cases. Limiting the definition to lower income posts ensures public spending is justified and also addresses the political acceptability of any proposal that may be seen as a ‘housing subsidy’. As noted in the previous section, GoJ may wish for the use of an income threshold to be flexible and only apply to some interventions.

9.4. Further Analysis Needed for Definition 9.4.1. For the suggested key worker definition to be adopted, Jersey will need to determine: ▪ Which roles are statutory or akin to statutory for the delivery of public services? These roles should include arms-length and charitable workers who deliver statutory services, commissioned on behalf of GoJ, or those services akin to statutory. ▪ Which roles are difficult to recruit to and retain staff in? For this to be determined (and to remain agile over time) data on long-term vacancies and staff churn will need to be maintained, which is not currently available. ▪ What should be the household income threshold? Depending on the focus of the intervention, maximum household income thresholds may be determined in

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relation to median costs of living, or to housing affordability. 9.4.2. To ensure this definition functions as a set of key criteria for the application of intervention policies, its three components should be measurable. This requires further data gathering and benchmarking. 9.4.3. However, based on data available currently, GoJ may wish to consider the elements set out in table 10. Table 10: Aspects of a key worker definition Statutory or akin Statutory services, are those GoJ have a legal duty to to statutory services provide, and will include sectors such as: ▪ Emergency services ▪ Education ▪ Health ▪ Social care (adults and children) ▪ Criminal justice / prisons

Evidenced difficulty in Evidence has been provided of difficulty recruiting to roles recruitment or including: retention ▪ STEM secondary school teachers ▪ Children’s social workers ▪ CAMHS workers

Household income is We suggest that long-term key worker housing be below a minimum restricted to a combined household income threshold of threshold three times the median housing cost for a two-bedroom property in the private rented sector (currently c. £68,000). The government will need to maintain housing affordability data to support this approach. Using a housing affordability metric supports the focus on housing embedded in this project, alternatively a cost of living approach may be taken.

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Section 3: Key Worker Situation and Drivers for Change

Overview The desire for an intervention to support the recruitment and retention of key workers, specifically a key worker housing offer is being driven by five key factors: 1. Anecdotal evidence of barriers to both recruitment and retention of key workers (explored in more detail in the following section) 2. Long term vacancies in key public sector roles 3. The outcome of the Independent Jersey Care Inquiry, and subsequent OFSTED inspections with the identified need to stabilise the children’s workforce 4. Changing island demographics including potential increasing future demands on the health and care system due to people living longer 5. Unstable workforce in several statutory public services and high costs associated with the use of locum and agency staff This section considers the key barriers to recruitment and retention based on primary desktop research of public sector remuneration, Jersey policies and legislation. Moreover, qualitative research gathered during key stakeholder interviews with key government administration and senior Health, Education and Social Care staff, as well as focus groups with Health, Education and Social Care key workers, have influenced the identification of factors in the recruitment and retention of key workers. This section provides evidence for the housing intervention policies suggested in sections 4 and 5 of this report.

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Recruitment

10.1. Overview 10.1.1. Attracting employees to the key worker sector is a key challenge in maintaining the workforce as is, and replacing those who exit to other locations, or retire. This section considers the key push and pull factors faced by Jersey when seeking to recruit key workers.

10.2. Recruitment Sources 10.2.1. In recruiting key workers there are four ‘pools’ of potential employees: ▪ Those already living in Jersey – who may require training to become a key worker ▪ Those living abroad who previously lived in Jersey – but may require an incentive to return ▪ Those living in the UK who have never lived in Jersey – who may require education and incentives to move ▪ Those living in other nations who have never lived in Jersey – who in addition to education and incentives, may have to manage more significant cultural or geographic barriers 10.2.2. While there are common pull factors and barriers in recruitment for these pools, some factors may be specific to the expectations and experiences of each group. Further, an individual’s circumstances (e.g. household composition, lifestyle preferences, culture and values) will influence the extent to which they experience the pull factors and barriers.

10.3. Recruitment Process 10.3.1. The government advertises key worker vacancies locally and, in the UK, including forming partnerships with particular institutions as a source of employees, and attending recruitment events. The government will pay travel costs for attendance at interviews and all key worker posts benefit from a financial moving package to incentivise those being recruited to relocate. 10.3.2. For ‘home-grown’ potential key workers funded training programmes are in place and GoJ has just launched a new social work training programme, to target those looking to work in Children’s Services.

10.4. Pull-Factors 10.4.1. Pull factors for key workers should be considered so that any intervention policies acknowledge why those from off-island, and those already living in Jersey choose to work as key workers in Jersey. We identified seven key factors: ▪ Funding for training ▪ Higher salaries ▪ Additional responsibilities ▪ Low tax regime

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▪ Similar culture to the UK ▪ Moving benefits ▪ Perceived lifestyle benefits 10.4.2. Each of these factors is explored in more detail below. 10.4.3. Funding for training: For those from Jersey, the opportunity to receive funding to train abroad is a pull-factor into certain key worker industries. Funding for training is seen by key workers and senior management in government departments as an opportunity to expand skill-sets and gain international experience. 10.4.4. Higher salaries: Key workers suggested that when compared to the UK equivalent of posts, many key workers are attracted to the salaries offered in Jersey. For many, these salaries are why they decided to move to Jersey. However, Jersey does maintain pay comparability with the UK and is operating fiscal restraint in its public sector pay offer, so this financial incentive may lessen over time. 10.4.5. Additional responsibilities: Some key workers described that the smaller nature of Jerseys key worker workforce, and employers meant that they were able to take on more seniority than they would be able to do in another jurisdiction. 10.4.6. Lower tax regime: Some key workers see a lower tax regime as an incentive to move to Jersey, with personal income tax at a maximum of 20% and social security contributions of 6% This compares to a system of tax bands in the UK where while basic rate income tax is at also 20%, higher rate (for those earning over £46,351) is 40%, and national insurance contributions are at 12%. 10.4.7. Similar culture to the UK: For many key workers coming from off-island, the move to Jersey is not perceived as “fully moving abroad”, many saw as positive that Jersey has a similar culture to the UK and that everyone in Jersey speaks English. For some key workers, this cultural component is comforting while still providing a sense of change or a “new start”. 10.4.8. Moving benefits: Key workers see GoJ-provided relocation allowance of c. £8,000 as a significant pull-factor. Most notably, individuals benefited from moving fees and deposit assistance. For some key workers, GoJ-provided estate fees made it easier for them to sell their home in the UK. 10.4.9. Perceived lifestyle benefits: Key workers, especially those with families or who are advanced in their career, are clear about their attraction to Jersey’s lifestyle offer. For these key workers, Jersey offers a slower pace of life with safety for their families, a beach and accessible outdoor pursuits, and excellent food and dining options.

10.5. Recruitment Barriers 10.5.1. However, despite the many pull factors to the island, we also identified five critical barriers to recruitment, that created concern or prevented people from taking up key worker posts in Jersey. These majority of these barriers applied only to those coming from off-island to take up roles: ▪ International skills shortages ▪ Significance of moving to Jersey

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▪ Employment, health and housing ▪ Difficulties in securing accommodation prior to moving ▪ Probation period 10.5.2. Each of these factors is explored in more detail below. 10.5.3. International skills shortages: Jersey is competing with other nations, including the UK to recruit key workers. This is particularly the case in health care, where demand for high-quality private and public healthcare in developed economies is not met by local, and sometimes international, supply. 10.5.4. Significance of moving to Jersey: While many key workers note the cultural benefits of moving to Jersey, moving to Jersey is still a significant action for many. The added difficulties of maintaining close relationships with families abroad, and the challenges related to travel and access are all challenges that make moving to Jersey a difficult choice for key workers. 10.5.5. Employment, health and housing status: Jersey has unique legislation related to employment, health and housing status of adults, such as the partners of key workers, or soon to be adults, such as the children of key workers. While sometimes these individuals do have the rights to work freely throughout Jersey, Jersey’s small economy may not contain positions partners or children of key workers wish to take. 10.5.6. Difficulties in securing accommodation prior to moving: While key workers see the benefits of a two-day accommodation visit, the pace of Jersey’s rental market meant for many key workers, the ability to secure accommodation within the two days was nearly impossible. While some key workers were able to stay with family or friends at the beginning of their move, many without local connections paid for additional accommodation visits or chose a property on-line prior to moving. For key workers looking to buy upon arrival in Jersey, a six-month probation landing period for securing a mortgage meant they had no choice but to enter a long-term rental agreement. 10.5.7. Probation period: The probationary period of six months for staff transferring to Jersey is not widely advertised and many key workers were not aware of it prior to accepting the job. However, it was mentioned by many as being seen as off-putting, and also creating difficulties with their accommodation. For workers transferring between jobs within the UK it is common for no probationary period to apply due to the amount of experience they have accrued in their roles. It was noted in discussion with stakeholders that the use of probation is discretionary, and this may be a barrier GoJ can easily rectify.

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Retention

11.1. Overview 11.1.1. Once Jersey has successfully recruited a key worker it needs to ensure that key worker stays in post to build a stable workforce for the future. This section explores the factors influencing GoJ’s ability to retain key workers.

11.2. Exit Routes 11.2.1. Once recruited there are two exit routes for key workers on the island: ▪ To exit the profession, but remain in Jersey – this option is primarily open to those with entitled status ▪ To leave Jersey, but remain in the profession – this option may be taken by those with entitled status, but anecdotally is more often taken by those who do not have entitled status 11.2.2. Overall, we found that while many key workers wished to stay in Jersey, they were unable to do so due to either one, or more often, a combination of ‘push factors’.

11.3. Retention Factors 11.3.1. Much like the pull-factors that originally bring key workers to Jersey, or into the key worker profession, there are a number of factors that mean key workers are keen to remain working in Jersey. Strengthening these areas will support the retention of key workers in critical roles: ▪ Provision of key worker accommodation (where this is available) ▪ ‘Settling’ of family members (particularly dependents) ▪ Lifestyle benefits ▪ Reported good work-life balance ▪ Better career progression opportunities 11.3.2. Each of these factors is explored in more detail below. 11.3.3. Provision of key worker accommodation (where this is available): For those key workers who were provided with accommodation by GoJ this was seen as a crucial part of enabling them to remain in employment in Jersey. 11.3.4. ‘Settling’ of family members (particularly dependents): For key workers with a family, them becoming settled on the island was important to why the key worker chose to stay. This was particularly true with children who were seen to be at a critical stage of their education (such as GCSEs or A-Levels). 11.3.5. Lifestyle benefits: As noted in the recruitment section above, many key workers described positively the benefits of living on an island, where you are always close to the beach and with a wide variety of entertainment and leisure activities. 11.3.6. Reported good work-life balance Those we spoke to also felt that they had a better work-life balance in Jersey than they would have done working in other locations.

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This helped support their commitment to their roles and desire to remain on the island. 11.3.7. Better career progression opportunities: Some key workers also felt that the relatively small island environment gave them better opportunities to develop their career than they would have in the UK, with the ability to take on broader roles or more responsibility.

11.4. Push-Factors 11.4.1. However, there were a number of reasons being identified as meaning that people were no longer willing or able to remain in Jersey. These applied only to those who had come from off-island to take up roles: ▪ Cost of living, particularly housing affordability ▪ Housing quality ▪ Lack of preparedness to make the move to Jersey ▪ Weaknesses in the on-boarding process ▪ Lack of clarity over employment and housing policy ▪ Sense of inequity between permanent and locum / agency staff 11.4.2. Each of these factors is explored in more detail below. 11.4.3. Cost of living, particularly housing affordability: As described in section 1 Jersey has a relatively high cost of living, and much accommodation is unaffordable. This can make it difficult for key workers to support themselves and/or their families in Jersey. Further population policies restrict access to affordable housing for key workers not from the island. 11.4.4. Housing quality: The low quality of accommodation in the private leased sector was described as a concern by many key workers, who felt it influenced their decision as to whether or not to stay in Jersey. 11.4.5. Lack of preparedness to make the move to Jersey: Some key workers underestimate the significance of moving to Jersey or are not prepared for the difference between living in Jersey and their previous location, and as a result choose to leave Jersey. 11.4.6. Weaknesses in the on-boarding process: On-boarding processes varied greatly between departments, and a coordinated centrally resourced approach has not been developed. For new key workers without links to the island difficulties in their initial employment experience may mean they choose to leave Jersey. 11.4.7. Lack of clarity over employment and housing policy: Many key workers were confused about both their entitlement and the entitlement of those in their family to housing and work. It was also reported that this confusion was mirrored by employers, making it more difficult for family members to find work. This may in part be as there have been a number of changes to the law recently. 11.4.8. Sense of inequity between permanent and locum / agency staff: Many key workers felt frustrated by what they saw as a lack of equity between the higher levels of remuneration, and the provision of accommodation to locum and agency staff, to perform the same roles that they were undertaking.

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Implications of Recruitment and Retention Challenges

12.1. Overview 12.1.1. The government has identified difficulties in the recruitment and retention of key worker staff. These difficulties have implications both in terms of the need to rely on short-term staff and increases in the cost of recruitment.

12.2. Short Term Staffing 12.2.1. While there will always be a requirement to have locum and agency staff as part of the workforce to provide short term cover, e.g. for sickness, the proportion of temporary workers in Jersey is significant, and can be linked to difficulties in recruitment and retention. 12.2.2. Short term staff have higher salary costs, and in many key worker departments have their accommodation costs fully or partially subsidised, so are more expensive than permanently employed staff. Short term workers often also stay in designated key worker accommodation, meaning that it is not available for permanent staff who may other wise benefit from these homes. 12.2.3. Further, short term staff have been identified as leading to reduced accountability and continuity of service in some cases, with implications for workforce sustainability, morale, quality of service delivery, and the relationships with service users. 12.2.4. As noted above the use of short-term staff leads to perceptions of inequity from permanent staff as to the ‘preferential’ treatment of short-term staff.

12.3. Costs of Recruitment 12.3.1. Where retention fails, GoJ have to undertake multiple recruitment exercises and bear the costs associated with this. This includes direct costs, such as: ▪ Costs of advertisement ▪ Costs of bringing people to interview ▪ Staff time in the recruitment process ▪ In addition, for key workers there are state funded relocation packages adding to the cost of recruitment. 12.3.2. Further, there are a number of indirect costs to recruiting new staff. New recruits are likely to be initially, less efficient than exiting employees, as they do not know the context or process of the new organisation, which will have a cost to GoJ. When a new key worker joins new and existing employee time is used in onboarding and training on processes and approaches, and new key workers may also have other training requirements

12.4. Drivers for Change 12.4.1. There is therefore a direct financial benefit to recruiting staff who are a good fit to key worker roles and putting in place a framework that enables them to stay in Jersey.

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Overall the desire for an intervention to support the recruitment and retention of key workers, specifically a key worker housing offer is being driven by five key factors: ▪ Anecdotal evidence of barriers to both recruitment and retention of key workers (explored in more detail in the following section) ▪ Long term vacancies in key public sector roles ▪ The outcome of the Independent Jersey Care Inquiry, and subsequent OFSTED inspections with the identified need to stabilise the children’s workforce ▪ Changing island demographics including potential increasing future demands on the health and care system due to people living longer ▪ Unstable workforce in a number of essential public services and high costs associated with the use of locum and agency staff

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Section 4: Key Worker Accommodation Options

Overview There are a number of different approaches that GoJ could take to addressing the provision of accommodation for key workers, including looking at different tenures and delivery options. This section considers the options available and assesses their suitability, feasibility and acceptability in Jersey’s context.

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Introduction to Key Worker Accommodation

13.1. What is “key worker accommodation”? 13.1.1. Key worker accommodation has been used in a number of countries, most notably the UK as a recruitment and retention strategy where high housing costs are a key factor in key worker cost of living. 13.1.2. Jersey fits this description and a key worker accommodation scheme or schemes could therefore form part of a recruitment and/or retention strategy. Jersey also has additional restrictions on access to the housing market which make housing a central concern for key workers. 13.1.3. Alternative approaches would be to review remuneration, or to review housing access arrangements for key workers, this is explored in more detail below.

13.2. Remuneration Review 13.2.1. A remuneration led approach to key workers would focus on ensuring key workers were paid sufficiently to afford the housing on offer in Jersey. 13.2.2. However, at a time of public sector pay constraint, and in the context of both equal pay for equal value and pay comparability with the local and UK market, higher remuneration may be politically and financially difficult for GoJ to implement. 13.2.3. Further, this is likely to be costlier to GoJ than an accommodation led solution, as wages spent on accommodation costs is effectively ‘lost’ into the private sector, whereas in a government led key worker solution this value may be retained.

13.3. Review of Housing Access 13.3.1. For Jersey, a key worker solution could look at reviewing housing access for key workers without developing any further key worker accommodation measures. 13.3.2. However, housing affordability is a problem across the island, not just for accommodation currently available to key workers, and it is not clear that increased housing access would improve housing affordability. Therefore, allowing key workers access to social rent property will reduce the supply available to other groups in need and any review of housing access is likely to be politically sensitive.

13.4. Key Worker Housing Solution 13.4.1. Given the difficulties of reviewing key worker remuneration of housing access, a key worker housing solution is an appropriate approach that can be taken to addressing the recruitment and retention factors based on housing quality, availability and affordability. This section considers approaches that have been used elsewhere and analyse a number of options for how Jersey could provide key worker accommodation.

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13.5. Global Approaches 13.5.1. Despite similarities between nations in the drivers for key worker housing offers, different approaches have developed, with some focussing on supporting ownership, while others look to providing a rental offer. This is summarised in table 11 below. Table 11: International approaches to key worker accommodation

United New Guernsey Australia USA Kingdom Zealand

Market Rental ● ● ● ● ●

Discounted Market Rental ● ● ● ● (e.g. affordable / social rent) Discounted Home ● ● ● Ownership

Rent to Buy ●

Shared Ownership / Shared ● ● ● Equity

Block Leasing ●

13.5.2. More detailed case studies of approaches can be found in Appendix 5.

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Options for Key Worker Accommodation

14.1. Overview 14.1.1. Based on the needs of GoJ, we have developed a number of options which take into account the tenure to be offered, and how the accommodation could be delivered.

14.2. Options 14.2.1. The government could offer key-workers one of four tenures: ▪ Short-term leasing ▪ Long-term leasing ▪ Part-ownership ▪ Full-ownership 14.2.2. With housing being delivered through: ▪ Development or refurbishment ▪ Block leasing ▪ Private sector subsidy 14.2.3. There is potential overlap between tenures in the delivery mechanisms, as illustrated in figure 12 below. Figure 12: Options for a key worker housing solution

14.2.4. Each of these options is described in more detail in the following sections, with an analysis of the suitability, feasibility and acceptability (SFA) of the option, and a description of the financial implications. 14.2.5. While each option is considered discretely for the purposes of analysis, none of the options outlined are exclusive and a combination of delivery routes could be implemented. A ‘hybrid solution’ would give key workers more choice and may suit different households at different times in their lives and careers. However, the more options pursued, the more complex the system will be to deliver and administer.

14.3. Financial Testing 14.3.1. To test the financial viability of each of the options at a high level, we have modelled a single two-bedroom unit, over a 30-year cashflow. This helps make a basic assessment of any subsidy likely to be required to support each option. A full list of the assumptions used in our financial modelling is provided in Appendix 4.

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14.4. Suitability, Feasibility and Acceptability (SFA) Analysis 14.4.1. For each of the options we have worked with government stakeholders to complete an SFA analysis. In an SFA analysis each option is given a score from 1 – 10 (with 10 being high) for its suitability, feasibility and acceptability, as shown in table 13. Table 13: SFA analysis

Factor Description Scoring

▪ To what extent does the option meet the Suitability 1 - 10 requirements of GoJ from a solution?

▪ Is the option financially viable? Feasibility ▪ How simple or complex would the option be to 1 – 10 implement?

▪ How acceptable is the option to key stakeholders e.g. Acceptability 1 – 10 Ministers, residents, and the key worker group?

14.4.2. Together this gives an overall score out of 30 for each option and allows each of the different options to be easily compared.

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Affordable Leasing

15.1. Overview 15.1.1. This section explores the approaches that GoJ could take to providing leased key worker housing, and the implications of these approaches.

15.2. Leased accommodation 15.2.1. Leased accommodation provides greater flexibility than ownership for residents, but therefore may be seen as less of a commitment to the island, and not support retention as well as ownership might. 15.2.2. For GoJ, a leasing programme would allow stock to be re-used for multiple key workers as required. However, there are ongoing management and maintenance responsibilities (and costs) for leased accommodation. 15.2.3. To professionalise and standardise the leasing offer we suggest all leased accommodation should be managed by a Social Housing Provider, rather than GoJ itself. This also will prevent concerns relating to accommodation linked to employment being a barrier to whistle blowing. 15.2.4. Accommodation could be leased to key workers on either a short-term or long-term basis.

15.3. Short-term Leasing Offer: ‘Landing Accommodation’ 15.3.1. ‘Landing accommodation’ could be offered to all key workers arriving from outside of Jersey (regardless of salary), for the first 6 – 9 months of their time in Jersey. 15.3.2. This accommodation would overcome the uncertainty of the 6-month probation period and would, also mean households will pass the 6-month residency period required to purchase a home in Jersey. During their time in short-term accommodation households new to Jersey would have time to identify alternative accommodation, whether in the private sector or a different key worker housing offer. 15.3.3. The rental rate for the landing accommodation could be set at either market rent or at 90% of market rent, and the rent level paid may be means tested (e.g. key workers with incomes below the threshold pay 90% of market rent, while other key workers pay the full rent). The best approach to rent should be considered during the next, more detailed design phase. 15.3.4. The offer of landing accommodation may also reduce need for an accommodation visit. However, for it to be successful there would always need to be landing accommodation available for new recruits, which may lead to a higher void rate than for other types of leasing offer. The higher void rates may mean it is less financially viable to offer a discounted rental rate, compared to the longer-term leasing where there are likely to be lower void costs.

15.4. Long-term Leasing Offer

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15.4.1. Longer leases could also be offered to key workers with a household income below the designated threshold, at the social rent rate. This could be made available to all key workers (whether from Jersey or elsewhere) and support these key workers for as long as their circumstances required it. 15.4.2. The leases should be for a sufficient term to provide security to the key worker household, but also end regularly enough to allow for a review of circumstances, with households no longer meeting the qualifying criteria asked to leave. We suggest a term of four years would balance these two considerations. 15.4.3. The long-term leasing scheme could be administered through the existing housing gateway although it is likely it would operate as a separate brand so as not to create tension with those seeking affordable rental housing through the gateway. 15.4.4. Overall, a long-term leasing offer could provide stability to key workers, enabling them to meet their housing costs, and may also support them to save for a deposit to move into home ownership at a later point in their careers.

15.5. Delivery routes 15.5.1. Leased accommodation could be delivered through: ▪ Development of new homes or refurbishment property ▪ Block leasing ▪ Providing a private sector subsidy (long-term leasing only) 15.5.2. These are explored in more detail below. 15.5.3. Development or refurbishment: New homes could be built, or existing accommodation refurbished and then the properties could be made available to lease by key workers. 15.5.4. Block leasing: The government could take on long-term leases from the private market and lease these to key workers (as either short term or long-term accommodation). The leases are likely to be for blocks but could be individual properties or groups of properties. The government may be able to negotiate to reduce rental price with the head landlord as a customer leasing in block, and as they would mitigate void risk, and could take on repairing and maintenance responsibilities. 15.5.5. Private sector subsidy: The government could provide a rental subsidy to key workers, or to their landlords to ‘top-up’ rent payments for those leasing on the private market.

15.6. Financial Implications 15.6.1. An illustration of the financial performance of a single two-bedroom unit under each option is provided in table 14 below. In calculating the landing accommodation performance, we have included savings made by the accommodation visit not being required and modelled landing accommodation at the full market rent rates.

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Table 14: Illustrative financial performance of the leasing options Household income Net Net Housing level at Initial NPV IRR operating operating cost as % which this OPTION capital (30 (30 income income of would investment years) years) per unit per unit household represent (year 1)* (year 6)* income 30% of housing costs Develop leased accommodation 244,570 587 5.6% (844) 1,623 16% 46,280 for long-term letting Develop leased accommodation 244,570 (23,538) 4.8% (1,964) 260 18% 51,422 for short-term ‘landing’ letting Block lease private accommodation 0 (65,342) n/a (3,034) (3,692) 16% 46,280 for long-term letting Block lease private accommodation 0 (88,902) n/a (4,129) (5,023) 18% 51,422 short-term ‘landing’ letting Private market 0 (51,601) n/a (2,456) (2,764) 24% 67,680 rental subsidy * after interest charges, for build schemes 15.6.2. None of the options have a positive year 1 cashflow, however developing long-term leased accommodation pays back over the life of the plan with a positive NPV. Short- term leasing has a negative NPV due to assumed higher void rates and refurbishment costs, however this may be able to be mitigated by also using the accommodation for agency or locum staff when it is not required as ‘landing accommodation’. 15.6.3. The block leasing always requires subsidy, as rental income is assumed to be insufficient to cover the market rent due to the head landlord and the ongoing management and maintenance costs of the property. 15.6.4. A private sector subsidy scheme will have a cost as there is no asset, and it is purely revenue expenditure.

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15.7. SFA Analysis: Short-Term Leasing 15.7.1. The suitability, feasibility and acceptability of short-term leasing for each of the identified delivery routes has been assessed with key stakeholders from the Government of Jersey, and is summarised in table 25, below. It is not possible to provide short-term landing accommodation through private sector subsidy, so this delivery route has not been considered Table 15: SFA analysis of short-term leasing

All delivery options

▪ Would form part of a recruitment offer, and ▪ Long lead in time may mean that a solution cannot

address concerns relating to the initial move to / be implemented quickly

Jersey for key workers. ▪ Government would have control of the offer, and ▪ However, it does not address long-term ment could build the type of accommodation it identified

retention challenges Refurb was needed

▪ Government of Jersey would be required to take Develop on management obligations, and would have to Score: 6 manage high levels of tenancy turnover

▪ Would be able to react quickly to need and be Suitability

flexible in the size of the accommodation portfolio

▪ But there may be a limited pool of property Score: 6 available

Block lease Block Score: 6 ▪ The approach is similar to the accommodation ▪ Government are already developing and

already managed / refurbishing properties and have the expertise and

▪ Allocations could be relatively straightforward to a financing approach in place manage using existing systems ment ▪ In this approach GoJ would hold the development

Refurb risk ▪ There is likely to be a financial cost to GoJ of a

short-term scheme due to higher void levels Develop ▪ Costs may be partially offset by replacing the Score: 8 accommodation visit (assuming key workers will

▪ Dependent on the availability of blocks to lease in

Feasibility secure alternative housing while living in landed the market, but these have previously been accommodation) available

▪ This approach is would come at a cost to the State

Block lease Block Score:8 Score: 7 ▪ Would be popular among newly-landed key ▪ May be open to the accusation that delivery workers who have experienced difficulty finding comes at the expense of affordable housing for

accommodation in the private sector ment islanders

▪ Would not be popular among existing key Refurb /

workers (from off and on island) if not Develop Score: 6 implemented in conjunction with non-temporary provisions ▪ The cost to GoJ inherent in this approach, and lack of control may be unpopular ▪ As a short-term solution this approach is

Acceptability unlikely to encounter public hostility, particularly if the rent is at market levels

lease Block Score: 5 Score:8

Total score: 22 Development / Refurb: 20 Block Leasing: 18

15.7.2. Overall short-term leasing through either development and/or refurbishment, or through block leasing was seen to be viable options to be taken forward.

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15.8. SFA Analysis: Long-Term Leasing 15.8.1. The suitability, feasibility and acceptability of long-term leasing for each of the identified delivery routes has been assessed with key stakeholders from the Government of Jersey, and is summarised in table 16, below. Table 16: SFA analysis of long-term leasing

All delivery options

▪ Would provide a flexible long-term ▪ Long lead in time may mean that a solution cannot

accommodation solution to support key workers / be implemented quickly

to stay on the island ▪ Government would have control of the offer, and ▪ Would provide security of tenure, and long-term ment could build the type of accommodation it identified

stability to key workers and their households Refurb was needed

▪ Could be an offer that attracts people to either Develop the key worker sector or to Jersey Score: 9 ▪ At 90% of the market it may still be unaffordable ▪ Shorter lead in time to begin program

for some key workers

▪ Would be able to react quickly to need and be

flexible in the size of the accommodation portfolio

▪ But there may be a limited pool of property

Score: 9 available Suitability Block lease Block Score: 8

▪ Key workers would have flexibility and the option to choose their own accommodation ▪ Would not address low quality standards or limited housing availability in the private market.

Privatesector Score: 5 ▪ Could be administered through the existing ▪ Government are already developing and

housing gateway to reduce set-up and / refurbishing properties and have the expertise and

administration a financing approach in place ▪ Would require clear processes for determining ment ▪ In this approach GoJ would hold the development

eligibility and assessing ongoing qualification for Refurb risk the scheme or regular review

Develop ▪ Would draw on the existing social housing Score: 8 model and expertise on the island

▪ Dependent on the availability of blocks to lease in

the market, but these have previously been available

Score: 9 ▪ This approach is would come at a cost to the State Feasibility

Block lease Block Score: 7

▪ This option would be very easy to implement and require little government involvement ▪ However, there would be a direct revenue cost to GoJ

Privatesector Score: 6 ▪ This approach may be seen as taking ▪ May be open to the accusation that delivery accommodation away from other people in need comes at the expense of affordable housing for who would otherwise have accessed it through ment islanders the Gateway

/ Refurb /

▪ Regular reviews of eligibility may allay concerns Develop Score: 6

by ensuring that only those who fit the key worker criteria access the housing ▪ The cost to GoJ inherent in this approach, and lack of control may be unpopular ▪ Would be very popular for key workers who have expressed concerns over current leasing

arrangements lease Block Score: 5 Acceptability ▪ Would likely act to inflate the private sector market where demand is already high and make it more Score: 7 difficult for non-key workers looking to rent

Privatesector Score: 2

Score: 25 Development / Refurb: 23 Block leasing: 20 Private sector subsidy: 13

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15.8.2. Overall long-term leasing through either development and/or refurbishment, or through block leasing were seen to be viable options to be taken forward, however private sector subsidy scored so poorly on acceptability as to mean it should not be pursued.

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Affordable Ownership

16.1. Overview 16.1.1. This section explores the approaches that GoJ could take to providing a route to home ownership for key workers, and the implications of these approaches.

16.2. Home Ownership 16.2.1. Home ownership for most people represents a long-term commitment to a place, and as such would support the long-term retention of key workers in Jersey. It is also the tenure many key workers would have (and may have previously had) if living in the UK and fits with a cultural desire in the UK and Jersey to own your own home. 16.2.2. For GoJ, a full-ownership model there would be no ongoing management, although depending on the approach there may be some management responsibilities in a part ownership scheme.

16.3. Partial Ownership Approaches 16.3.1. Andium currently offers a partial ownership product through ‘Andium HomeBuy’ for first time buyers where properties are sold at a discount, and the discount is retained on the home in perpetuity, so it is always kept as an affordable unit. 16.3.2. Alternatively, a model similar to the UK’s ‘shared ownership’ product with a key worker buying a proportion of the property and paying rent on the unowned share could be introduced. However, feasibility testing of a new partial ownership approach would need discussions with mortgage providers in Jersey, as the mortgagability of shared ownership was initially a challenge in the UK and given Jersey’s small mortgage market may represent a significant hurdle. 16.3.3. A partial ownership approach would reduce the amount of deposit and borrowing required by a key worker making it more affordable for them to purchase a home.

16.4. Full Ownership 16.4.1. The government could also make full ownership of a property affordable either through providing a deposit that the key worker would otherwise be unable to save or through reducing the overall cost of the property (e.g. selling at a discount). Other options for delivering full ownership include providing affordable mortgage finance or a ‘rent to buy model’ 16.4.2. Under this approach the key worker would own their home outright and be able to sell it on the open market.

16.5. Delivery Routes 16.5.1. A full or partial ownership offer delivered through: ▪ Development of new homes or refurbishment property

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▪ Providing a private sector subsidy to support purchase 16.5.2. These are explored in more detail below. 16.5.3. Development or refurbishment: New homes could be built, or existing accommodation refurbished and then the properties could be made available to buy (or part-buy) by key workers. 16.5.4. Private sector subsidy: The government could provide a subsidy to key workers to purchase properties on the open market, either just for new build properties (to provide an incentive to developers) or for all properties on the market

16.6. Financial Implications 16.6.1. An illustration of the financial performance of a single two-bedroom unit under each option is provided in table 17 below. Table 17: Illustrative financial performance of the ownership options Household income Net Net Housing level at Initial IRR operating operating cost as % which this NPV OPTION capital (30 income income of would (30 years) investment years) per unit per unit household represent (year 1)* (year 6)* income 30% of housing costs Shared equity with rent due 330,121 4,349 6.0% (9,620) (8,323) 21% 59,813 (Partial ownership) Discounted Sale (Partial 244,570 15,491 n/a 0 0 19% 51,481 ownership) _ Equity loan (Full 82,400 (37,834) n/a 0 1,090 24% 67,093 ownership) * after interest charges, for build schemes 16.6.2. Partial ownership options require a significant upfront capital investment, as it is assumed in the modelling that these are developed by GoJ, whereas an equity loan requires less investment. 16.6.3. Both approaches to partial ownership have a positive NPV and depending on the price point of the sale could be delivered without subsidy.

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16.7. SFA Analysis: Partial Ownership 16.7.1. The suitability, feasibility and acceptability of partial ownership for the two of the identified delivery routes has been assessed with key stakeholders from the Government of Jersey, and is summarised in table 18, below. Table 18: SFA analysis of partial ownership

All delivery options

▪ Would be an attractive recruitment offer to key ▪ Long lead in time may mean that a solution cannot

workers / be implemented quickly

▪ Would support key workers to feel that they had ▪ Government would have control of the offer, and

a stake in the island and be less likely to leave ment could build the type of accommodation it identified

▪ Would provide long-term stability and security Refurb was needed

▪ A partial ownership offer may not be considered Develop as good as full ownership Score: 9

Suitability ▪ Could be implemented immediately ▪ Offers the greatest choice and flexibility to key Score: 9 workers

PrivateSector Score: 9

▪ Could mirror existing partial ownership schemes ▪ Depending on the level of discount could be / / that are delivered on behalf of GoJ for first time delivered without subsidy buyers ment ▪ Government maintain ownership over a portion of

▪ If homes are discounted in perpetuity, they the assets developed Refurb could recycle through the scheme ▪ May struggle to offer sufficient scale to make a Develop Score: 7 significant difference to key workers ▪ Would offer the most choice and flexibility to key

Feasibility workers

▪ Depending on the model may require subsidy Score: 7

PrivateSector Score: 6

▪ May be seen as inequitable by ineligible part of ▪ May be accused of taking social housing provider

the population seeking home ownership me stock away from other groups in need

▪ Would be very attractive to key workers Refurb / nt nt ▪ The retention of a discount in perpetuity may Develop Score: 4

make the scheme more acceptable as it will ▪ Would likely act to inflate the private sector market have more beneficiaries where demand is already high and make it more

Acceptability difficult for non-key workers looking to purchase

Score: 4 PrivateSector Score: 2

Total Score: 20 Development / Refurbishment: 20 Private Sector Subsidy: 17

16.7.2. As with long-term leasing overall, the likely market distorting effect of a private sector subsidy means that this is not a viable option, however the delivery of a partial ownership solution through development and/or refurbishment was considered worth exploring further.

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16.8. SFA Analysis: Full Ownership 16.8.1. The suitability, feasibility and acceptability of approaches to supporting full-ownership for each of the identified delivery routes has been assessed with key stakeholders from the Government of Jersey, and is summarised in table 19, below. Table 19: SFA analysis of full ownership

All delivery options

▪ Would be an attractive recruitment offer to key ▪ Long lead in time may mean that a solution cannot

workers be implemented quickly

▪ Would support key workers to feel that they had ▪ Government would have control of the offer, and a stake in the island and be less likely to leave could build the type of accommodation it identified

▪ Would provide long-term stability and security /Refurb was needed

▪ Government may be able to use sale to cross- ment subsidise other delivery

▪ Single time solution with a loss of the asset for the Score: 10

future Develop

Suitability Score: 8

▪ Could be implemented immediately ▪ Offers the greatest choice and flexibility to key workers

PrivateSector Score: 9 ▪ Depending on the model taken it is likely that a ▪ Depending on the level of discount could be

discounted ownership scheme would be / delivered without subsidy

financially viable ▪ Providers on the island have development ▪ However, there is no comparable offer on the ment experience and could deliver homes for purchase

island and it may be complex to set-up and Refurb ▪ No long-term income stream created

administer Develop

Score: 6

▪ Would offer the most choice and flexibility to key Score: 6

workers Feasibility ▪ Would be easy to implement as it relies on existing stock, or stock already being built by private developers ▪ Depending on the model may require subsidy PrivateSector Score: 6

▪ Would likely be seen as inequitable by ineligible ▪ May be accused of taking stock away from other / / part of the population seeking home ownership, groups in need particularly as there is not a comparable ment ▪ Likely politically unpopular due to no comparable

scheme for non-key worker groups scheme on offer to islanders Refurb

▪ Would be very attractive to key workers

Develop Score: 2

▪ May be seen as unfair as if it increases key Score: 2 workers ability to purchase property relative to islanders

Acceptability ▪ Would likely act to inflate the private sector market where demand is already high and make it more difficult for non-key workers looking to purchase

PrivateSector ▪ Doesn’t address wider issues of housing supply

Score: 1

Total Score: 18 Development / Refurbishment: 16 Private Sector Subsidy: 16

16.8.2. Overall, it was felt the acceptability of a full ownership scheme scored too poorly in terms of acceptability for this option to be taken forward.

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Section 5: Recommendations

Overview Based on the options analysis carried out in section 4 we have developed an outline approach that Jersey could take forward to deliver a key worker housing solution. This model is outlined in the following sections.

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Options Appraisal

17.1. Overview 17.1.1. This section summarises the outcome of the SFA assessment to identify those approaches which should be taken forward as part of a hybrid solution to deliver a key worker accommodation offer.

17.2. SFA Summary Table 20: Summary of SFA for key worker options

Short-term leased ‘landing Long-term leased accommodation Partial ownership Full ownership accommodation’

Development Block Development Block Private Development Private Development Private / refurb leasing / refurb leasing sector / refurb sector / refurb sector

Suitability 6 6 9 8 5 9 9 8 9

Feasibility 8 7 8 7 6 7 6 6 6

Acceptability 6 5 6 5 2 4 2 2 1

Total: 20 18 23 20 13 20 17 16 16

Rank =2 5 1 =2 9 =2 6 =7 =7

17.2.1. For all options the assessed acceptability to stakeholders is weak, with no options scoring higher than 6. This is as all key worker interventions may be seen to benefit a particular group of people, many of whom come from off-island at the expense of islanders.

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17.2.2. In all cases private sector delivery also scores poorly, as it came at a cost to GoJ and was likely to have market distorting effects that would be unacceptable to local residents. 17.2.3. For the leasing options, the relative financial cost of block leasing compared to a development or refurbishment approach means it has scored less highly on feasibility, however despite this block leasing would likely be able to be implemented more quickly than development / refurbishment. 17.2.4. Overall, the options to be taken forward are: ▪ Short-term leased ‘landing’ accommodation (Development / Refurbishment led, with block leasing as required) ▪ Long-term leased accommodation (Development / Refurbishment led, with block leasing as required) ▪ Partial ownership (through Development / Refurbishment) 17.2.5. These three options and how they may work together are explored in more detail in the following section.

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Suggested Approach

18.1. Overview 18.1.1. To flexibly address the needs of key workers across the whole of their careers on the island, and to encourage recruitment and support long-term retention a solution that encompasses a range of accommodation offers is proposed. This is explored in more detail in this section.

18.2. A Hybrid Approach 18.2.1. None of the options outlined in the previous section are exclusive and a combination of offers has been identified as being the best approach to meeting the varied requirements of key workers. More options will give key workers more choice, and may suit different households at different times in their lives and careers 18.2.2. However, the more options pursued, the more complex the system will be to deliver and administer, and GoJ will need to manage this additional complexity. To support this, as much as possible each scheme should be similar in terms of the mechanisms by which it is allocated, so as to reduce potential confusion.

18.3. Example Key Worker Journey 18.3.1. Figure 21 below highlights the different routes a key worker may take in and out of the different accommodation options throughout their career. Figure 21: Key worker journey

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18.3.2. Throughout their career, as their circumstances change key workers are likely to move between different types of key worker accommodation and accommodation in the private sector, whether leased or owned.

18.4. Administering the System 18.4.1. While it is for GoJ to determine how best to administer the key worker housing offer, an easy solution may be to operate through the existing housing gateway, although it is likely that GoJ would want to use different branding, to separate out clearly the key worker offer, from the island wide affordable housing offer. In addition, it is possible that a separate band under the Affordable Housing Gateway banding system would need to be established specifically for key workers.

18.5. Short-Term Leased ‘landing’ Accommodation 18.5.1. While the nature of the offer will need further refinement and testing, we suggest that the key features of this accommodation are likely to be: ▪ Available to key workers of any income: as it is not let below the market rate, and all key workers struggle with initial accommodation regardless of income ▪ Term of tenancy of 6 – 9 months: to allow time for key workers to settle but to ensure the accommodation remains a temporary solution ▪ Rent at the market rate: so that the accommodation is not financially more attractive than other options (such as renting in the private sector) ▪ Furnished or option of furniture packages: as key workers may arrive without furniture

18.6. Long-Tern Leased Accommodation 18.6.1. For long-term leased accommodation, we suggest that the offer should be: ▪ A maximum income threshold to be applied: so that the scheme is targeted at those in need. ▪ Tenancy term of 3 or 4 years: to balance the need to provide security of tenure with the need to keep the circumstances and eligibility of households under review ▪ Rent at the social rent rate (currently 90% of market): So that key workers receive a more affordable rent, but do not benefit more than other groups on the island.

18.7. Partial Ownership 18.7.1. The partial ownership offer will need to be developed in more detail to ensure it is financially viable for GoJ, and that it does not create legacy difficulties (for example in administering the discount in perpetuity provisions), however we suggest key features should be: ▪ A maximum income threshold to be applied: so that the scheme is targeted at those in need. ▪ Discount to be applied in perpetuity: so that when a key worker household moves on into alternative accommodation the discount home can help another key worker household

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18.8. Delivery 18.8.1. All of the options would be primarily provided through the development or refurbishment of homes on the behalf of GoJ. However, the leasing offers could also be provided through block leasing to enable greater responsiveness and flexibility. Any block leasing would need to be balanced against the likely cost of this delivery route.

18.9. Demand Analysis 18.9.1. All of the options presented (i.e. landed, long-term leased and partial ownership) were described in our qualitative research by key worker as attractive accommodation offers. Key workers are particularly interested in affordable leased housing, however some key workers, usually those in later stages of their career are attracted to a home ownership option. Therefore, for our initial demand analysis we have assumed, that uptake for key worker housing will be high across all options. 18.9.2. The demand analysis is based on approximate assumed uptake of the three options using high level recruitment and budget data for: secondary school teachers, allied health professionals, nurses and midwives and doctors and consultants. It should be noted that lack of historic vacancy figures, family structure and income data and housing data for present and future key workers means that the demand analysis is an estimate, which will require further refinement work at a later stage. While this means that the numbers provided are a rough base estimate, we felt it important that an estimate be provided at this stage to frame discussions. We recommend further demand analysis be completed once criteria for eligibility are established and further data is available. 18.9.3. Table 22 includes figures for all budgeted key workers who are assumed to be eligible for each relevant housing option, based on an income threshold of £68,000. The table shows an estimated total figure of eligible budgeted staff numbers. Table 22: Demand Analysis of Three Housing Options

Estimated Eligible Demand Analysis Assumed Uptake Households

Landed Accommodation20 90 81 homes (Demand in 9-month recruitment period)

Leased Accommodation 363 homes 604 Partial Ownership Accommodation 121 homes

Total 694 565 homes

20 Assumed no income threshold for eligibility and a recruitment rate ratio to budgeted positions of 5%, and a 75% off-island recruitment rate in all Health, Social Services and Education departments in a 9- month period.

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18.9.4. Overall, our estimates indicate substantial potential demand for a key worker product, however this may be reduced by restricting eligibility criteria (e.g. reducing the number of roles to which the scheme applies or changing the income thresholds).

18.10. Unit Type 18.10.1. While we have not reviewed data on key worker household composition, the last Jersey census (2011) included information on family structure for the general population of Jersey (excluding pensioners). Assuming that the composition of key worker households is broadly similar to that of the rest of the island, the unit mix of the 565 units would need to be split between one-bedroom, and family size (two or three- bedroom) homes as set out in table 23, below. Table 23: Unit mix required for key worker accommodation based on census data

Unit Type Proportion Homes

One-Bedroom 37% 209

Two-Bedroom or Three-Bedroom 63% 356

Total 565 Homes

18.10.2. It should be noted that the younger ager group likely to qualify for key worker housing, may often be at the earlier stages of their career and therefore have a higher requirement for family sized accommodation. Many of the key workers we spoke to indicated that they required two- or three- bedroom accommodation.

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Financial Implications

19.1. Overview 19.1.1. We have developed a high-level financial model that considered the provision of all three types of accommodation: ▪ Landing accommodation ▪ Long-term leased accommodating ▪ Partial ownership 19.1.2. The financial modelling assumptions are provided in Appendix 4.

19.2. Financial Model 19.2.1. We modelled a mixed key worker offer, with delivery staggered over three years from 2020 – 2022, to allow for development time, as set out in table 24, below. Table 24: Assumed delivery of Key Worker Accommodation

Unit type 2020 2021 2022 Total

Develop leased (rental) accommodation for 40 40 40 120 long-term letting Develop leased (rental) accommodation for 16 17 17 50 temporary "landing" letting Partial Ownership 10 10 10 30 Totals 66 67 67 200 19.2.2. We also considered financial performance if the units were acquired under a block leasing arrangement rather than developed by GoJ. As block leasing represents an ongoing cost to GoJ, it performs poorly over a business plan period (figure 25), and we have not considered in further detail the financial performance of the block leasing delivery approach. Figure 25: Annual Surplus for Block Leasing and Development approaches

ANNUAL SURPLUS 5,000 4,000 3,000 2,000 1,000

Annual Surplus Annual 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 -1,000

-2,000 Years Build to rent option Lease to rent option

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19.3. Business Plan Performance Dashboard 19.3.1. We assessed business plan performance over a 30-year cashflow, for operating the three recommended key worker offers, based on a development or refurbishment delivery model. This model does not include the development financing and development period but runs from when the first properties are assumed to be operational in 2020. 19.3.2. Over the life of the plan there is an operating surplus generated each year, however in years 3 – 10 interest cover is less than 110%. The overall debt performance, and key financial ratios for the plan are shown in table 26. Table 26: Business plan debt and financial ratios Min Min Max EBITDA Year net Interest Net Peak Peak Gearing MRI Max Debt debt Cover debt £m debt year (target < (SHL) per unit repaid (target 50%) interest >120%) cover £43m 2023 2048 102% 100% 91% £215,600

19.3.3. The charts below show performance against key lending covenants across the life of the business plan. Figure 27: Interest Cover

250% 230% 210% 190% 170% 150% 130% 110% 90% 70% Interest Cover Ratio % Ratio Cover Interest 50% Years 1 3 5 7 9 11 13Years15 17 19 21 23 25 27 29 Figure 28: Debt per Unit

250,000

200,000

150,000

100,000

Debt £ per per Unit £ Debt 50,000

1 3 5 7 9 11 13 15 17 19 21 23 25 Years

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Figure 29: Net Debt

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000

Total Loan Debt Loan Total 10,000 5,000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Years Figure 30: Operating Costs per Unit excluding inflation

6,000

5,000

4,000

3,000

2,000 Cost £ per per Unit £ Cost 1,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Years 19.3.4. The debt is high at the beginning of the business plan to finance the acquisition of the units and then reduces through the life of the plan as the income generated by the units is used to pay off the debt.

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Recommendations and Next Steps

20.1. Recommendations 20.1.1. Based on the findings of this report we recommend that GoJ: ▪ adopt the key worker definition: ‘those in (1) delivering statutory services or those akin to statutory services, where there is (2) evidenced difficulty in recruiting and retaining staff, who have a (3) household income is below a minimum threshold. ▪ review employment practices, such as the use of probations and other non- accommodation barriers to recruitment and retention which it has control over ▪ develops key worker accommodation provision made up of three offers: • Short-term ‘landing’ accommodation for new arrivals • Long-term leased accommodation • Partial ownership

20.2. Next Steps 20.2.1. To implement the recommendation GoJ, need to: 1. Agree how the minimum income threshold will be calculated to inform further key worker accommodation research. 2. Obtain or collect more detailed data on skills shortages, and vacancies to evidence those roles that will fit within the key worker definition, and to more detailed inform demand analysis. 3. Undertake more detailed financial modelling to establish the likely level of subsidy required to deliver the scheme, but also to quantify likely savings in recruitment costs and the use of short-term staff. 4. Consult more widely on the proposed approach to further test the suggested offer with stakeholders, and potentially key workers as the target market. 5. Seek approval of the newly formed Housing Policy Development Board and incorporate the approach into relevant strategic documents. 6. Make any required changes in legislation to facilitate the delivery of the key worker accommodation solution.

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Document Review List

# Document requested Document received

1 Structure charts showing housing, Final structure chart with appointments planning, and social care functions in the 13/09/2018 government. 2 Current housing and planning strategies 2016 Jersey Housing Strategy – adopted or developing 3 Current affordable housing policies Social Housing Eligibility Criteria including any grant or low-cost borrowing provided by the government for Datasheet: 2018 08 15 All FH & Flying affordable housing FH Residential Units 4 Current salary structures for occupations https://www.gov.je/Working/WorkingForT in the potential definition for key worker heStates/Pages/CivilServicePayscales.a housing spx 5 Any special relationship information for https://www.gov.je/lifeevents/movingtojer immigration between Jersey and other sey/Pages/index.aspx countries inside and outside of the EU (i.e. immigration rules for EU and non-EU countries, including the United Kingdom after Britain’s departure from the EU) 6 Current figures for other living costs https://www.gov.je/Government/JerseyIn across Jersey (i.e. transport, essential Figures/Pages/index.aspx goods, leisure, etc) 7 Any current housing and economic Application for Rent Abatement Form policies for key workers, even if they are 20160819 not by the name “key worker” but within https://www.gov.je/news/2018/pages/Ne them contain mention of key industries wHomesForKeyworkers.aspx (i.e. tourism)

8 Land availability and land costs for Completions 1986-2020 (est) private developers and government, or government-owned land holdings that Viability Assessment for review of may be used for housing (particularly Developer Contributions (May 2017) around places of business related to key Report worker housing) and if the land has been Viability Assessment (May 2017) zoned for development or been granted Appendices planning permission

9 Government releases on issues related 20180718 New Improvement Plan for to key workers including the recruitment Children and Young People and retention of any key personnel in any particular industries SoJ Improvement Plan for Children's Services 20180724 New Social Work Degree Course

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# Document requested Document received

20180906 EMBARGOED News Release Government Pledge to Children in Jersey FINAL Jersey Care Commission Putting Children First The Pledge September 2018.doc

10 Policies on immigration (including the JSY Immigration Rules 01.01.18. rules for visa status) WORK PERMITS GUIDANCE 301017

11 Information relating to staffing for Copy of Key Worker and Vacancy potential key worker industries, including: Analysis - August 2018 ▪ Total people employed One Voice Surveys (Education and Health and Social Services) ▪ Number of vacancies ▪ Average time to fill vacancies ▪ Staff turnover ▪ Staff satisfaction / survey results

12 Tenure split in Jersey (owner occupied, 2011 Census Chapter 3: Households and PRS and social housing) and further housing tenure splits with social housing (forms of rental and low-cost home ownership schemes, etc)

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Interviewees and Focus Groups

Job Title

Group Director for Financial Strategy

Principal Surveyor - Estates Management

Chief Executive for Government of Jersey

HR Business Partner for Health and Community Services

Head of Communications and Specialised Services - Andium Homes

Director Education Department

Director of Planning

Welcome Jersey Programme Manager

Chief Nurse

HR Operations Manager

Minister for Children and Housing

Director Environmental Health

HR Business Partner for Education and Children's Services

Director of Children’s Services

Housing Control Manager, Population Office

Director General of Strategic Policy & Connétable Len Norman, Minister for Home Affairs

Secondary school teachers & lecturers

Nurses and Health Staff

Children’s social workers and CAMHS professionals

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Affordability Calculations

Key

Monthly Housing Costs are more than 50% of earnings

Monthly Housing Costs are more than 30% and less than or equal to 50% of earnings

Monthly Housing Costs are less than or equal to 30% of earnings

Single Earner Affordability

Mortgages Rent Housing Affordability Calculations (Single 1BR 2BR 2BR 3BR 4BR Earner) Flat Flat House House House 1BR 2BR 3BR 4-5BR Nurses and Gross Salary Monthly Salary £996 £1,590 £1,706 £2,188 £3,407 £1,200 £1,750 £2,375 £2,483 Midwives Grade 1 £25,673 £2,139 47% 74% 80% 102% 159% 56% 82% 111% 116% Grade 2 £29,523 £2,460 40% 65% 69% 89% 138% 49% 71% 97% 101% Grade 3 £33,622 £2,802 36% 57% 61% 78% 122% 43% 62% 85% 89% Grade 4 £39,995 £3,333 30% 48% 51% 66% 102% 36% 53% 71% 75% Grade 5 £46,550 £3,879 26% 41% 44% 56% 88% 31% 45% 61% 64% Grade 6 £54,283 £4,524 22% 35% 38% 48% 75% 27% 39% 53% 55% Grade 7 £59,346 £4,946 20% 32% 34% 44% 69% 24% 35% 48% 50% Grade 8 £71,582 £5,965 17% 27% 29% 37% 57% 20% 29% 40% 42% Teachers Pay Average Monthly Salary unqualified £31,019 £2,585 39% 62% 66% 85% 132% 46% 68% 92% 96% Grade 1 £34,578 £2,882 35% 55% 59% 76% 118% 42% 61% 82% 86%

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Mortgages Rent Housing Affordability Calculations (Single 1BR 2BR 2BR 3BR 4BR Earner) Flat Flat House House House 1BR 2BR 3BR 4-5BR Grade 2 £36,819 £3,068 32% 52% 56% 71% 111% 39% 57% 77% 81% Grade 3 £39,062 £3,255 31% 49% 52% 67% 105% 37% 54% 73% 76% Grade 4 £40,206 £3,351 30% 47% 51% 65% 102% 36% 52% 71% 74% Grade 5 £41,357 £3,446 29% 46% 50% 63% 99% 35% 51% 69% 72% Grade 6 £42,509 £3,542 28% 45% 48% 62% 96% 34% 49% 67% 70% Grade 7 £43,658 £3,638 27% 44% 47% 60% 94% 33% 48% 65% 68% Grade 8 £44,805 £3,734 27% 43% 46% 59% 91% 32% 47% 64% 67% Grade 9 £45,956 £3,830 26% 42% 45% 57% 89% 31% 46% 62% 65% U1 £47,088 £3,924 25% 41% 43% 56% 87% 31% 45% 61% 63% U2 £48,073 £4,006 25% 40% 43% 55% 85% 30% 44% 59% 62% U3 £49,051 £4,088 24% 39% 42% 54% 83% 29% 43% 58% 61% U4 £50,036 £4,170 24% 38% 41% 52% 82% 29% 42% 57% 60% U5 £51,017 £4,251 23% 37% 40% 51% 80% 28% 41% 56% 58% Junior Doctors Pay Average Monthly Salary F1 £28,192 £2,349 42% 68% 73% 93% 145% 51% 74% 101% 106% F2 £32,936 £2,745 36% 58% 62% 80% 124% 44% 64% 87% 90% Specialty £37,350 £3,113 32% 51% 55% 70% 109% 39% 56% 76% 80% Residential Childcare Officers, Youth Pay Average Monthly Salary Service, Family Support Workers A £20,761 £1,730 58% 92% 99% 126% 197% 69% 101% 137% 144% B £25,744 £2,145 46% 74% 80% 102% 159% 56% 82% 111% 116% C £31,225 £2,602 38% 61% 66% 84% 131% 46% 67% 91% 95% D £36,671 £3,056 33% 52% 56% 72% 111% 39% 57% 78% 81% E £43,117 £3,593 28% 44% 47% 61% 95% 33% 49% 66% 69% F £49,829 £4,152 24% 38% 41% 53% 82% 29% 42% 57% 60% G £57,201 £4,767 21% 33% 36% 46% 71% 25% 37% 50% 52% H £64,799 £5,400 18% 29% 32% 41% 63% 22% 32% 44% 46% I £73,289 £6,107 16% 26% 28% 36% 56% 20% 29% 39% 41%

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Mortgages Rent Housing Affordability Calculations (Single 1BR 2BR 2BR 3BR 4BR Earner) Flat Flat House House House 1BR 2BR 3BR 4-5BR J £84,557 £7,046 14% 23% 24% 31% 48% 17% 25% 34% 35%

Dual Earner Affordability

Housing Affordability Calculations (2 Earners) Mortgages Rent 1BR 2BR 2BR 3BR 4BR Flat Flat House House House 1BR 2BR 3BR 4-5BR Nurses and Monthly Salary Pay Average £996 £1,590 £1,706 £2,188 £3,407 £1,200 £1,750 £2,375 £2,483 Midwives (x2) Grade 1 £51,345 £4,279 23% 37% 40% 51% 80% 28% 41% 56% 58% Grade 2 £59,046 £4,921 20% 32% 35% 44% 69% 24% 36% 48% 50% Grade 3 £67,244 £5,604 18% 28% 30% 39% 61% 21% 31% 42% 44% Grade 4 £79,989 £6,666 15% 24% 26% 33% 51% 18% 26% 36% 37% Grade 5 £93,100 £7,758 13% 20% 22% 28% 44% 15% 23% 31% 32% Grade 6 £108,565 £9,047 11% 18% 19% 24% 38% 13% 19% 26% 27% Grade 7 £118,692 £9,891 10% 16% 17% 22% 34% 12% 18% 24% 25% Grade 8 £143,163 £11,930 8% 13% 14% 18% 29% 10% 15% 20% 21% Monthly Salary Teachers Pay Average (x2) unqualified £62,038 £5,170 19% 31% 33% 42% 66% 23% 34% 46% 48% Grade 1 £69,156 £5,763 17% 28% 30% 38% 59% 21% 30% 41% 43% Grade 2 £73,638 £6,137 16% 26% 28% 36% 56% 20% 29% 39% 40% Grade 3 £78,124 £6,510 15% 24% 26% 34% 52% 18% 27% 36% 38% Grade 4 £80,412 £6,701 15% 24% 25% 33% 51% 18% 26% 35% 37% Grade 5 £82,714 £6,893 14% 23% 25% 32% 49% 17% 25% 34% 36% Grade 6 £85,018 £7,085 14% 22% 24% 31% 48% 17% 25% 34% 35% Grade 7 £87,316 £7,276 14% 22% 23% 30% 47% 16% 24% 33% 34% Grade 8 £89,610 £7,468 13% 21% 23% 29% 46% 16% 23% 32% 33% Grade 9 £91,912 £7,659 13% 21% 22% 29% 44% 16% 23% 31% 32%

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Housing Affordability Calculations (2 Earners) Mortgages Rent 1BR 2BR 2BR 3BR 4BR Flat Flat House House House 1BR 2BR 3BR 4-5BR Nurses and Monthly Salary Pay Average £996 £1,590 £1,706 £2,188 £3,407 £1,200 £1,750 £2,375 £2,483 Midwives (x2) U1 £94,176 £7,848 13% 20% 22% 28% 43% 15% 22% 30% 32% U2 £96,146 £8,012 12% 20% 21% 27% 43% 15% 22% 30% 31% U3 £98,102 £8,175 12% 19% 21% 27% 42% 15% 21% 29% 30% U4 £100,072 £8,339 12% 19% 20% 26% 41% 14% 21% 28% 30% U5 £102,034 £8,503 12% 19% 20% 26% 40% 14% 21% 28% 29% Monthly Salary Junior Doctors Pay Average (x2) F1 £56,384 £4,699 21% 34% 36% 47% 73% 26% 37% 51% 53% F2 £65,872 £5,489 18% 29% 31% 40% 62% 22% 32% 43% 45% Specialty £74,700 £6,225 16% 26% 27% 35% 55% 19% 28% 38% 40% Residential Childcare Monthly Salary Officers, Youth Pay Average Service, Family (x2) Support Workers A £41,522 £3,460 29% 46% 49% 63% 98% 35% 51% 69% 72% B £51,487 £4,291 23% 37% 40% 51% 79% 28% 41% 55% 58% C £62,450 £5,204 19% 31% 33% 42% 65% 23% 34% 46% 48% D £73,342 £6,112 16% 26% 28% 36% 56% 20% 29% 39% 41% E £86,233 £7,186 14% 22% 24% 30% 47% 17% 24% 33% 35% F £99,657 £8,305 12% 19% 21% 26% 41% 14% 21% 29% 30% G £114,401 £9,533 10% 17% 18% 23% 36% 13% 18% 25% 26% H £129,597 £10,800 9% 15% 16% 20% 32% 11% 16% 22% 23% I £146,577 £12,215 8% 13% 14% 18% 28% 10% 14% 19% 20% J £169,113 £14,093 7% 11% 12% 16% 24% 9% 12% 17% 18%

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Financial Assumptions

The assumptions used for the illustrative financial modelling of each options are provided in the table below. Table 31: Assumptions for illustrative modelling of options

States of Jersey Key Worker Housing - Option Assumptions Summary

Temporary Leased Lease Block lease (build to (build to private Temporary Partial rent) rent) accomm Block lease Ownership

Market rent - 2 bed flat £pcm 1,286 1,286 1,286 1,286 Affordable rent set at % of market rent 90% 100% 90% 100% Sub-market rent charged £pcm 1,157 1,286 1,157 1,286 Occupancy rate 100% 80% 100% 80% Annual rent received 13,884 12,341 13,884 12,341

Less: Costs % of rent Rent paid to landlords (14,655) (14,655) Management costs 5.00% (694) (771) (694) (771) Additional overhead - property sourcing team 0 0 Total repair costs 8.50% (1,180) (1,311) (1,180) (1,311) Repair costs passed on to landlords 236 262 Furniture package (300) (300) Accommodation visit costs saved 1,000 1,000 Bad debts & voids 1.50% (208) (231) (208) (231) Service costs 3.00% (417) (463) (417) (463) Total Costs (2,499) (2,077) (16,918) (16,470) 0

Operating Surplus 11,385 10,265 (3,034) (4,129)

Interest on borrowing (12,229) (12,229)

Operating Deficit in year 1 (844) (1,964) (3,034) (4,129)

Total Development Cost per unit (244,570) (244,570) (244,570) Lease Premium 0 0

Total Open Market Value per unit 350,000 Equity purchased% 1 Purchase price 262,500 Less: legal fees (2,000)

(Borrowing requirement)/cash surplus (244,570) (244,570) 0 0 15,930

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The assumptions used in the 30-year business plan for a mixed model (e.g. implementing landing accommodation, long-term leasing and partial ownership) are provided in the table below. Table 32: Base assumptions for financial modelling Base Assumptions

Rent increase 4.00% to 3.05% Average Interest Rate 5.00% RPI 3.3% to 2.3% Real Inflation Rate 0.70% to 0.75% Real Earnings Inflation 0.70% to 0.75% Real Lease Charges Inflation 0.70% to 0.75% Real Management Charge Income Inflation 0.70% to 0.75% Real Repairs And Maintenance Inflation 0.70% to 0.75% Real Building Costs Inflation 0.70% to 0.75% Real Land Costs Inflation 0.70% to 0.75% Real Property Inflation 0.70% to 0.75%

In addition, we assumed: Development costs per 2 bed unit: £225k plus development period interest of £11k giving a total unit cost of £236k. Open market value for the 2 bed flats: £360k with a 75% share being sold under the ‘partial ownership’ model. Market rent per month to £1,286 (to match Andium’s rents for 2 bed properties based on 90% of that figure.) Operating costs: 18% of rent (5% management, 8.5% repairs, 1.5% voids, and 3% for service costs). (Based on Andium assumptions) RPI assumption used for cost and rent inflation: 3.3% until 2025 and 2.3% from 2026. Rent increases: 4% per year until 2025 (based on 3.3% RPI + 0.75% with a 4% cap) and 3.15% from 2026 (based on 2.3% RPI +0.75%).

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Best Practice Case Studies

Metropolitan Thames Valley, UK Housing Association: Surrey Key Worker Accommodation There are 24 properties in the Surrey Metropolitan Thames Valley key worker scheme: ▪ 6x one-bedroom flats, ▪ 4 x one-bedroom houses, ▪ 3 x two-bedroom maisonettes, ▪ 6 x three-bedroom houses, ▪ 5 x four-bedroom houses The homes are dispersed in the local area, near to two Surrey hospitals. Properties are let unfurnished. Staff from the two local hospitals and the regions primary care trust are eligible to be allocated the homes which are let at a discounted market rent, with rent paid via payroll deductions for NHS Trust employees

UK Government: Help to Buy – Shared Ownership Scheme A general shared ownership product targeting a wider group of people has replaced a specific key worker product (under the Keyworker Living Programme) that existed from 2004 – 2014. However, in many areas key workers receive priority for allocations of housing. Properties are provided by housing associations and developers across the country, including under planning obligations relating to affordable housing. The homes are available to first time buyers, with a household income less than £80,000 pa (£90,000 pa in London) Under the scheme individuals purchase a share of their home (usually between 25% and 75%) and pay rent on the rest of the property. The rent is set at 2.75% of the value and is increased annually by CPI+1%. Residents have the option to purchase further shares in the property up to 100%.

Chicago: Public Safety Officer Home Buyer Assistance Program In 2017 Chicago launched a three-year pilot providing loans to first responders to allow them to purchase properties in designated target areas. The loans can be used to purchase any single-family or two-unit home available on the open market. In target areas. Once purchased the first responder must live in the property for at least ten years. To qualify for the scheme participants must be City of Chicago non-probationary, full-time, sworn first responders (police officers, fire officers and paramedics) with an income no more than 150% of the area median income, which is varied for household size. The loan received is a $30,000, 10 year, no interest, forgivable loan to purchase their primary residence.

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New South Wales, Australia: teacher Housing Services Teachers in rural and remote areas are able to apply for rental accommodation provided by the government, in their area of work. A rental subsidy scheme is also in operation where property is not available to let to the teachers. The properties are a mix of unfurnished houses and furnished ‘villa’ units. New schemes have included ‘flexible’ units that can be converted between two- and four-bedroom apartments. In terms of allocating the units, teachers receive priority, then support staff, and other education staff. Priority is given to full time over part time staff. The properties are let at market rent, with rent paid via payroll deductions. Rental subsidies are offered for teachers at certain schools.

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Technical Annex: Housing Demand Analysis

Introduction This annex sets out how the housing demand analysis for key worker housing accommodation was calculated. As noted in the report the exact eligibility group for any key worker scheme has yet to be defined. Further there is a paucity of data on historic vacancy rates. This means that the demand analysis can at this stage only be an estimate and further analysis should be undertaken as the project progresses to the detailed design stage.

Base Data To calculate estimated demand figures, we drew on the following data sources provided by GoJ: ▪ Key Worker and Vacancy Analysis – August 2018 ▪ Education Teacher Recruitment Analysis - 2012 - 2017 – SUMMARY ▪ 2011 Census – Chapter 3 – Households and housing

Approach Landed Accommodation: Assumptions: ▪ 5% vacancy rate over a 9-month period (based on Education figures) ▪ 75% of recruitment from off island ▪ Total uptake assumed at 90% ▪ Total budgeted Education and Health & Social Services roles: 2,209 ▪ Landing accommodation requirement of 81 properties

Long-term Accommodation (Leased and Partial Ownership) Eligibility assumptions: ▪ Household income threshold of £68,000 ▪ Budget figures for Allied Health, Doctors and Consultants, Nurses and Midwives, and Teachers and Lecturers posts to establish post numbers and income levels. ▪ Assumed all households where one key worker earns less than half of the threshold (£34,000) and half of key workers with an income between £34,000 and £68,000 have an overall household income below the threshold ▪ Assumed 35% of secondary school teachers would be key workers

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▪ Total of 604 eligible posts (172 Allied Health, 40 Doctors and Consultants, 353 Nurses and Midwives, 38 Teachers)

Leased assumptions: ▪ Assumed 60% uptake from eligible key workers ▪ Leased accommodation requirement of 363 homes

Ownership assumptions: ▪ Assumed 20% uptake of eligible key workers (noting that deposit requirements may make this scheme inaccessible for many key workers) ▪ Partial ownership accommodation requirement of 121 homes

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