Public Policy: Using Market-Based Approaches - Department for ...

Public Policy: Using Market-Based Approaches
decision. This sense of ownership can also encourage households to take more
responsibility for outcomes, by actively participating in the bidding process and
contributing positively to community life once they have secured a property.
CBL pilots appear to have realised all of these potential benefits, although
performance has varied between localities. An example of outcomes from
different schemes is provided in Table 10.9 at the end of this section.
As discussed above, many of the departmental objectives for CBL can be viewed
as specific examples of the more general benefits predicted by theory. The
performance of the pilot schemes against these objectives is included in the
following discussion. The objectives identified as being in addition to the
theoretical benefits of choice, however, are not discussed in detail here. They are
not the outcome of a market mechanism per se and, being specific to the
implementation of CBL, do not provide guidance for other policy areas wishing
to introduce user choice.
Supply-side benefits
Allocative, productive and dynamic efficiency benefits may be realised through
the supply side if introducing choice fosters performance-enhancing
competition between social landlords and provides incentives for authorities to
run a more consumer-responsive service. As noted previously, it was not an
objective of ODPM or of CBL schemes to encourage competition between social
landlords. However, one objective of CBL was to raise the profile of social
housing in low demand areas, particularly of local authority housing. Raising the
profile of social housing may have stimulated competition between social
landlords involved in CBL and private landlords operating outside the scheme,
leading to sharper incentives for quality, efficiency and innovation, although this
was not a direct intention of the scheme. The objective of encouraging
geographical mobility could also theoretically lead to competition for applicants
between different local authorities, with similar effects on incentives.
No studies have been conducted to see whether user choice has stimulated
competition between social and private landlords. There is some indirect
evidence of this though: lower demand areas have seen an increased interest in
social housing and higher demand areas have seen a greater willingness of
customers to consider other housing options, including the private sector. 135 It is
unlikely that this competition was sufficient to deliver any of the observed
improvements in productive efficiency, however. The sources of these efficiency
improvements are discussed under administration costs.
Because joint working was an objective of CBL, competition within individual
schemes was minimal. In fact, one officer is reported as commenting that one
benefit of CBL was that it had ‘taken the competition out of lettings’. 136 To some
135 Frances Walker, ODPM.
136 See, Marsh et al (2004), Op.Cit., p.132.
136