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

Public Policy: Using Market-Based Approaches
Schemes were established on the understanding that local authorities would
meet ongoing running costs out of their own budgets. A minority of pilots
designed schemes to operate within their previous budget and used ODPM
funding for capital investment only. To some extent there was a trade-off
between up-front and ongoing costs, with the set-up costs of an automated
approach being higher than those of a paper-based approach but its running
costs lower. Schemes using a property shop, for example, faced considerably
higher ongoing costs than those that did not.
The main cost of running CBL relative to the traditional allocation mechanism is
advertising. Advertising costs have varied greatly as a result of:
● different abilities of local authorities to negotiate terms;
● geography. Pilots located in urban and southern areas generally faced higher
costs because there was more demand for advertising space;
● frequency of advertising. Pilots operating weekly cycles incurred higher costs
than those running fortnightly cycles;
● level of detail provided in advert; and
● size of borough. Smaller authorities could find £15,000 per annum to be a
burden whilst larger authorities may face bills of £60,000 per annum. 149 For
example, Camden had a budget of £30,000 for advertising in 2004/05. 150
Where CBL resulted in an increased number of applications, there were also
additional staff costs to be met.
The savings associated with CBL are currently being investigated by the ODPM
in their longer-term evaluation projects, but are likely to stem from:
● households staying in properties longer, giving rise to taxpayer benefits and
consumer satisfaction;
● reductions in refusal rates; and
● improvements in turnaround time.
Improving the match of households and properties could be expected to lead to
better housing performance measures. Reducing refusals rates, in particular, is
then likely to increase the efficiency and speed of the allocation process because
it implies less time spent finding a household who will accept the property being
offered. Reduced void rates may also offset some costs in the short run by
reducing rent loss.
CBL may free up resources that could be re-deployed elsewhere, keeping
additional staff costs to a minimum. For example, if CBL schemes have the
149 Marsh et al (2004), Op.Cit., p.46.
150 Home Connections, Camden Council.
142