Reporter 17/7/02: Report of the Council on the introduction of an equity share scheme: Notice

Report of the Council on the introduction of an equity share scheme: Notice

15 July 2002

The Council have considered the remarks made in the Discussion on 12 February 2002 (Reporter, p. 555) on this Report and have agreed to comment as follows:

Dr Evans remarked on the small number of individuals who might benefit. However, the Report recognized that the problem of affordable housing affected all staff groups and indicated that, if the scheme is successful, the Council intend to investigate the scope for extending it more widely throughout the University.

Dr Szreter and Professor McMullen referred to problems which might arise in respect of the periodic payments of scheme participants if house prices rise sharply, as they have recently. Such variations, like sharp increases in mortgage rates, might indeed have an adverse effect. Prospective participants must weigh those matters in considering whether to enter the scheme, and are advised to take legal advice before doing so.

Dr Szreter also commented on the rule restricting the employee's commitment to no more than 33% of gross family income. While this rule would be applied at the time of the initial house purchase, a scheme participant would have security of tenure thereafter and it is not therefore practicable to apply this throughout a participant's career in the University. Also Dr Szreter suggested that an individual would always be committed at this upper limit. However, the value of the property an individual wants to acquire is a matter for personal choice and family income is just as likely to rise over time without a concomitant increase in expenditure.

Mr Collett-Fenson proposed that the 33% should be limited to the employee's income, with no account being taken of the spouse or partner or wider family income. The normal practice of building societies is to take account of a spouse or partner's income. The Council have agreed that this practice be followed and that the detail of the scheme be amended so that the income of the employee and the spouse or partner is taken into account but the income of other family members is not. This may also serve to allay some of Dr Szreter's concerns.

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