Fire-fighters and bus drivers next in line for help to buy homes

Help for low-paid public service workers to buy homes in areas where they cannot afford house prices could be extended to fire-fighters, bus drivers and other government employees.

Help for low-paid public service workers to buy homes in areas where they cannot afford house prices could be extended to fire-fighters, bus drivers and other government employees.

Nurses, policemen and teachers will be the first to be helped by the £250m "starter homes" scheme, details of which will be announced this week. But Whitehall sources have confirmed that, in the long term, it could be extended to other groups.

The workers could be helped to buy their own homes with repayable, interest-free loans or cash incentives, or be given development grants to refurbish properties, or other projects which they suggest.

The money will be paid directly by John Prescott's Department of the Environment, Transport and the Regions to the recognised housing bodies, such as councils or housing associations. Developers could also qualify by offering to build or refurbish homes for key workers in partnership with social landlords.

The lack of homes at affordable prices has led to a shortage of police officers and other staff in public services in London and the Home Counties.

The programme will also extend to other areas, such as Cheshire, where hospitals and other services are short of staff because of high local prices. "We are inviting innovative proposals from registered social landlords and others," said a source. "It is not going to pay for executive homes in Surrey. It will only pay for the lowest quarter of the housing market. We don't want to skew the housing market, but it will provide real help to tackle a growing problem in public services."

It is part of a wider plan by ministers to tackle the housing shortage for public sector workers. The Home Secretary, Jack Straw, has restored a £4,000-per-year housing subsidy for officers in the Metropolitan Police - which was withdrawn in 1984 by the Tories - to help stop a growing exodus of officers to other forces.

The Home Office has been studying the possibility of restoring police houses owned by forces, particularly in some rural areas, where house prices can be prohibitive. However, it believes the cash subsidies are a better solution.

The housing crisis was among the issues discussed by DETR ministers at an away day with the Deputy Prime Minister in Kingston-upon-Thames on Friday. "Housing is the next big issue on Prescott's radar. He is going to work up more schemes for the manifesto," said the source.