The housing czar is pulling out all the stops to provide more affordable rented accommodation for healthcare workers. But will it be enough, when people want to be home owners? Andrew Cole reports

Many reputations are riding on the success of East Central House, the new purpose-built block of flats in the City of London that has opened its doors to 240 nurses and other key health workers.

The accommodation, officially opened in February with much ministerial fanfare, is the first step in housing 'czar' John Yates's well-publicised initiative to create 2,000 more housing units for health workers in the capital over the next three years.

It is a world away from the traditional NHS nurses' home. The top floor has been turned into hotel-style rooms, which will be let out on a short-term basis at£35 a night to health staff who need a roof over their heads for a few nights. Meanwhile, the 216 single, double and studio flats on the other four floors are fitted with a host of mod cons not normally associated with NHS accommodation, such as en-suite bathrooms, Internet access, state-of-theart security and a 24-hour 'customer helpline'.

Even so, given a housing and staffing shortage that is reaching crisis proportions, many would suggest it is too little, too late. A Greater London Authority report earlier this year pointed out that much private housing and rented accommodation in London was now out of the range of health workers earning under£25,000. And the problems are not confined to the capital. Throughout large parts of the South East, housing costs are rising more steeply than average earnings.

Unison's London regional officer, Michael Walker, says the situation in the capital has reached 'breaking point'. 'In many areas people are having to travel further and further distances from outside London. And if you're in a job That is in great demand such as nursing or the professions allied to medicine then you're going to consider relocating. '

Partly as a result of the growing problems the government has expanded its accommodation pledge to include an additional 2,000 places for key health workers in the South East.

Housing co-ordinator John Yates has been trying to turn these promises into reality over the past year, and is now confident the targets will be achieved. Within London, he says, NHS Estates has already signed contracts to provide 450 units of accommodation - or nearly a quarter of the total. A number of other schemes in the pipeline will deliver a further 1,000 places.

Plans for outside London are not so advanced, but Mr Yates says he is close to several deals. He pinpoints the areas of greatest need as Oxford, South Buckinghamshire, Southampton, Brighton, Reading and the M4 corridor, and Surrey and the M3 corridor.

As we go to press, East Central House in London is the only fruit of all this behind-the-scenes work, but other housing is set to follow later this year. First on the list will be Pentland House, due to open in the summer with 117 units for health staff from Greenwich and Lewisham.

Rents for the new accommodation will be 30-40 per cent below the market level, says Mr Yates, and are likely to be about£60-100 per person per week. The homes will be aimed not at students but at qualified staff on modest incomes, which Mr Yates defines as being anything under£30-35,000.

Normal tenancies will be for six months, with the option to renew at the end of that time.

But perhaps the most intriguing element of the new arrangement is the relationship between the NHS and the housing contractors.

'The housing organisation owns the building and is responsible for the upkeep and maintenance of that building, ' says Mr Yates. 'We are responsible for providing staff to utilise that facility. '

The NHS has full nomination rights. If it cannot provide the numbers it has promised, then it will have to make up the shortfall but that risk is being shared by all London trusts.

This risk is further minimised by the fact that health staff can be nominated, via the NHS accommodation bureau, from any trust in London. There is scope for other public-sector workers to be housed if the health service cannot fulfil the demand.

The leases the contractor signs up to vary in length but most are for 25-30 years with a break clause after 15 years allowing either party to withdraw from the agreement following a specified period of notice.

Although many of the deals in the pipeline are with housing associations, the private sector is also closely involved. In fact, Peabody Unite, the organisation managing both East Central House and Pentland House, is a private joint venture formed from housing developers Unite and the Peabody Trust housing association.

The organisation already manages around 1,000 units of accommodation for individual London trusts and, according to head of NHS business Steve Logie, is close to agreeing further housing for a trust in South London - although it is still undecided whether NHS Estates or the individual trust will have overall responsibility.

His experience underlines why this new housing is unlikely to be available overnight. Negotiations over East Central House, for instance, took more than six months to hammer out.

Meanwhile Pentland House's opening was delayed for a year after it was decided it needed more refurbishment work than originally planned.

Although these negotiations become easier once the templates have been established, each deal is slightly different from the one before, says Mr Logie. 'Each deal will have a different amount of risk share, ' he explains. 'That in turn has an effect on rent levels. ' The more risk the partner is prepared to take, the lower the rent that can be agreed.

Another big player in this field is Paddington Churches Housing Association (PCHA), which already manages homes on behalf of Bournewood Community and Mental Health trust in Surrey and Great Ormond Street Hospital for Children, and which will shortly take on a massive contract to manage over 1,200 homes for University College of London Hospitals.

NHS housing services manager Bill Gibbons confirms that PCHA is also talking to John Yates about managing an NHS Estatessponsored scheme but says it is too early to provide details.

One obvious obstacle to the NHS's housing strategy is the shortage of locations in many parts of London and the South East. Another is that the new initiative is starting from an extremely low base following decades of cuts in hospital accommodation.

But perhaps the biggest headache for ministers is the sheer scale of the problem. Mr Yates himself has estimated that around 350,000 health staff are on salaries that prevent them buying or renting housing in London and the South East. Given those numbers, a target of 4,000 extra units in three years' time seems little more than a drop in the ocean.

Even more critically, it seems the NHS may be aiming at the wrong target. The Greater London Authority survey makes it clear the central problem is the lack of reasonably priced houses to buy rather than the shortage of rented accommodation.

The stark fact is, it says, that many key workers will only remain in London if they can buy their own home.

Although ministers have not yet publicly acknowledged this as an issue, it seems that behind the scenes the wheels are in motion. Mr Yates' team has been working very closely with the Department of the Environment, Transport and the Regions and the Housing Corporation to see if this gap in affordability might be bridged through the Starter Home initiative - which allows people to get a foot on the property ladder through partial ownership.

This idea is being pursued within the South East, he says, and it could be extended to London. He admits plans are at an early stage and 'the devil is in the detail'.

He insists that the new rented accommodation will have a major impact on recruitment and retention.

But he also acknowledges: 'Looking at the longer-term, the ability to facilitate staff to own their own home will have an even bigger impact because many more staff would benefit from that. '