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Public Policy: Using Market-Based Approaches SEGREGATION Segregation may increase either as a direct result of the exercise of choice by individuals of the same ethnic/working/educational background or as an indirect result of any increase in inequality. This problem is of particular concern to the fostering stable communities agenda, as housing segregation by ethnic group is thought to have been a contributing factor to the 2001 Northern town riots. 132 Controlling for segregation The House of Commons ODPM Select Committee report on Social Cohesion (2004) recommended that CBL policy include the encouragement of greater integration of communities by offering support to tenants moving into areas where they might be in a minority. ODPM has also set up a Black and Minority Ethnic Housing Group to assist with a race impact assessment of CBL policy. In addition, addressing potential inequality problems through methods outlined previously is likely to have the indirect effect of limiting increases in segregation. Performance in practice There is no evidence of increased segregation to date from either local evaluations or ODPM-commissioned national evaluations. The issue of segregation and community cohesion will continue to be monitored through the current ODPM research, which is looking into the longer-term effects of CBL. Applicants’ views are also currently being sought on issues including whether CBL would lead them to consider moving to areas with a different ethnic profile to their own and will be published as part of the longer-term evaluation report. Results will be available in 2006. 133 INFORMATION Participants in a user choice scheme must be able to make rational decisions in order for the scheme to generate positive outcomes. Rational decision making requires that the supply-side of the market provide sufficient relevant information in a language and format all users can understand. It also requires that users are willing and able to bear the costs of collecting this information and assessing alternatives to arrive at their decision. Informational failures arising on either side of the market could have significant consequences in a CBL context as they may prevent local authorities from housing those in the greatest housing need. Such failures could arise if registered households bid for inappropriate properties or do not bid at all, or if households in housing need do not even register in the first place. 132 See Perri (2003) ‘Giving users of British public services more choice: what can be learned from recent history?’ , Journal of Social Policy 32(2), pp.239-270. 133 From the ODPM research specification ‘Applicants’ longer term perspectives on choice based lettings’. 134
Controlling for information problems The provision of sufficient information was ensured through the measures outlined above to limit inequality. In addition, local authorities made information as easy to access as possible and offered support in analysing information if requested to reduce the burden of choice on the user. Performance in practice 134 If insufficient information was available or the burden of choice too great for rational choices to be made, we would expect to see this reflected in a lack of searching and bidding behaviour. Available evidence on consumers’ willingness to bear search costs is positive, with one pilot surveying applicants and finding that 85 per cent of respondents were looking in the paper every week for adverts. However, most pilots that examined the issue suggest that whilst many participants were actively searching for properties, bidding was relatively infrequent. For example, one pilot analysed bidding behaviour over 15 cycles and determined that the majority of people bid infrequently. Out of a maximum of 30 possible bids, it found that only 7 per cent bid more than 20 times and more than 25 per cent bid only once or twice. Most pilots reported that between 25 and 50 per cent of applicants were bidding at any one time. However, this could have been a result of lack of suitable properties rather than an unwillingness to bear the costs of bidding per se. Outcome of market mechanism BENEFITS Section 10 – Choice-Based Letting in Social Housing Theory suggests that introducing choice could have the effect of increasing efficiency through both the demand and supply sides of the market. As noted in Part III, there are three main types of efficiency relevant to our analysis of user choice, namely allocative, productive and dynamic efficiency. The first of these, allocative efficiency, refers to a situation in which scarce resources are allocated to the use that society values higher than all other alternative uses. In other words, resources are allocated in a way that maximises social welfare. In this situation, no one member of society can be made better off by re-allocating resources without making another worse off. Productive efficiency is a precondition for allocative efficiency, and is achieved when a specific outcome or level of output is obtained using the most cost-effective method. Dynamic efficiency refers to the efficient allocation of resources over time. Introducing user choice can also lead to increases in social welfare, both by improving efficiency and by empowering users. Reducing the dependency of users on housing officials can be beneficial in its own rights, and can improve customer satisfaction by conferring on users a sense of ownership of the 134 All data in this paragraph taken from Marsh et al (2004), Op.Cit., p.136. 135
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DTI ECONOMICS PAPER NO.14 Public Po
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DTI ECONOMICS PAPER NO.14 Public Po
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Contents Acknowledgements vi Forewo
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Contents Section 11 Emissions Tradi
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Foreword There is increasing intere
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SECTION 1 Introduction and summary
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Public Policy: Using Market-Based A
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SECTION 2 Using market mechanisms U
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SECTION 3 Lessons for the design an
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SECTION 4 Introduction This part of
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SECTION 7 Market-Based Mechanisms W
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SECTION 8 Framework for assessing m
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Part IV Case Studies 73
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● the Green and White papers behi
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A prison failing to deliver on its
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Table 9.3 Companies providing priso
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Section 9 - Competitive Tendering o
Page 91 and 92: detect any deviation from a collusi
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Page 95 and 96: (e.g. lighting). This impact could
Page 97 and 98: MARKET POWER The full benefits of c
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Page 101 and 102: on competition is uncertain. The ab
Page 103 and 104: Controlling for problems of asymmet
Page 105 and 106: Procurement process design One way
Page 107 and 108: however, financial deductions are m
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Page 111 and 112: The Independent Monitoring Board at
Page 113 and 114: Figure 9.1: Difference between the
Page 115 and 116: ‘While there were staff in the pu
Page 117 and 118: design the invitation to tender and
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Page 121 and 122: and demand conditions. Second, we d
Page 123 and 124: DEMAND Anyone can apply to a local
Page 125 and 126: ● Rent deposit guarantee by the l
Page 127 and 128: The Green Paper stated the Governme
Page 129 and 130: It was not an objective of ODPM or
Page 131 and 132: DESCRIPTION OF MARKET MECHANISM The
Page 133 and 134: Once the outcome is determined, fee
Page 135 and 136: DEVELOPMENTS OVER TIME The major mo
Page 137 and 138: Concerns about capacity constraints
Page 139 and 140: from those already located within t
Page 141: In several areas, registrations by
Page 145 and 146: extent though, it was competition b
Page 147 and 148: Section 10 - Choice-Based Letting i
Page 149 and 150: levels are reducing and new tenants
Page 151 and 152: desired effect of limiting points-c
Page 153 and 154: efficiency savings in some areas. T
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Page 161 and 162: A more detailed and diagrammatic de
Page 163 and 164: The costs of monitoring and reporti
Page 165 and 166: INITIAL ALLOCATION OF PROPERTY RIGH
Page 167 and 168: only 242 in the second year. The di
Page 169 and 170: COST-EFFICIENT EMISSIONS REDUCTIONS
Page 171 and 172: consultants to Defra of £11 per to
Page 173 and 174: Participation has helped us to rais
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