Best value, cost-effectiveness and local housing policies

Abstract

This article illustrates and evaluates the use of the cost-effectiveness concept in local housing policy. It addresses this task by examining its application to two contemporary housing policy innovations in England – choice-based lettings (CBL) and homelessness prevention. The research assesses the costs and benefits to local public agencies of these policies through the use of the case-study method. It demonstrates that increased public expenditure to prevent homelessness or introduce CBL can be cost-effective. This finding supports the ‘Best Value’ agenda but the article demonstrates that the simple principle can be difficult to apply. The article offers a major contribution to the application of cost-effectiveness analysis within this context in elucidating the research processes and data required. We illustrate how the assessment of cost-effectiveness poses challenges in terms of both data availability and theoretical issues. Whereas the balance of costs and benefits may be clear, conclusions are often conditional or dependent on local circumstances. Major analytical constraints include the paucity of activity-based costing for social landlords, combined with the lack of a national protocol on cost accounting. Additionally, given that the measurement of potential benefits can be dependent on assumptions about long-term (market) outcomes there is a case for post-evaluation as well as pre-evaluation.