New Deal for Communities (NDC) is a 10 year Area Based Initiative (ABI) spending £400 per household per year in 39 of the most deprived areas of the country. I think that new evidence on its impact to date is disappointing.
According to the summary: "NDC areas are experiencing positive change, some of which is over and above that occurring in the comparator areas." However, "once individual-level socio-demographic factors and also starting position are taken into account, those in NDC areas saw significantly greater improvement than those in comparator areas for only one indicator: thinking the area has improved in the last two years." What the summary doesn't tell you but the full report does (see p.91) is that (controlling for socio-demographic factors) individuals in NDC areas did worse on somewhere between 2/15 and 7/15 indicators (depending on the time period).
What I take from this is the following: Based on the best evidence that we have available a reasonably well funded ABI has not, on average, improved individual outcomes in targeted areas.
The report gives supporters of ABI wriggle room. Perhaps there are ABI's going on in the comparison areas that are just as successful (although it seems unlikely that they could be as costly as NDC so we should be doing whatever they are doing instead of NDC). Alternatively "There can be no assumption that 'success' is best measured in relation to what happens to individuals as opposed to what happens to these areas over time". I find that argument simply baffling (I thought 'no place left behind' was means to an end - i.e. helping poor people - not an end in itself). Next, 'it's still early days'. Fair enough, although the research suggests that the largest gains came first. Finally, ABI's might be good delivery vehicles. I think this last one has legs, but raises questions about whether the holistic nature of NDC fits with the need to target spatial concentrations of particular problems.
As the report says "assessing the success of neighbourhood level interventions is contested territory" but my feeling is that for the moment the evidence emerging from NDC is more negative than positive.
CEP Urban and Spatial Programme Blog (formerly SERC)
Thursday, 29 October 2009
Tuesday, 27 October 2009
The educational divide
Catching up with news after a long period of unexpected leave. The first thing I came across was a story about the educational divide: "Britain is becoming increasingly divided along educational lines with degree blackspots springing up in the poorest areas of the country as graduates flock to the capital" according to the Guardian reporting on research from the lecturer's union UCU.
The analysis involves looking at the proportion of working age population with degrees in every parliamentary constituency. What it tells us is that graduates choose to live in some areas (Richmond Park 63% graduates) and not others (Hodge Hill, Birmingham 9.9%). Whatever the newspapers say, it doesn't tell us anything about widening participation (that is about flows into education, not location decisions afterwards) and on whether this pattern is a good or bad thing for people who do not graduate.
The analysis involves looking at the proportion of working age population with degrees in every parliamentary constituency. What it tells us is that graduates choose to live in some areas (Richmond Park 63% graduates) and not others (Hodge Hill, Birmingham 9.9%). Whatever the newspapers say, it doesn't tell us anything about widening participation (that is about flows into education, not location decisions afterwards) and on whether this pattern is a good or bad thing for people who do not graduate.
Thursday, 3 September 2009
High Speed Rail
Last week Network Rail made its business case for a new high speed line. Greengauge 21 will follow shortly, while HS2 will report next year.
Here is what I think we will know after these exercises. The direct user benefits (i.e. the benefits to people making journeys) are potentially quite large. Unfortunately, so are the costs. Both costs and benefits are highly uncertain. The wider benefits - e.g. 'regenerating the north' - are even more uncertain. I suspect the only thing we can say with any certainty is that they are likely to be overstated (there's a long history of this in terms of 'transformative' transport schemes).
Two things where we have a bit more certainty. First, the environmental impacts are not large and could well be negative. Most of the journeys on high speed rail will be additional (or transfers from other lines). Extra/faster journeys generally require more energy not less. You get some savings on car trips and air trips (offset if you use freed up slots for other flights; or if you make getting to Heathrow easier and so generate additional numbers on other routes). The overall impact will depend on what you assume about how electricity is generated. Expect to see generous assumptions using average, not marginal, carbon figures. The second certainty is that any new route will not be commercially viable and will need large government subsidies.
A final thought. Congestion charging has fairly certain costs that are outweighed by clear and certain benefits (the social costs of congestion are very high; and it also helps with carbon). Road pricing has more uncertainty over costs but the benefits are also fairly clear. Yet the strong political support from all three parties is for high speed rail not road or congestion charging. Go figure ...
Here is what I think we will know after these exercises. The direct user benefits (i.e. the benefits to people making journeys) are potentially quite large. Unfortunately, so are the costs. Both costs and benefits are highly uncertain. The wider benefits - e.g. 'regenerating the north' - are even more uncertain. I suspect the only thing we can say with any certainty is that they are likely to be overstated (there's a long history of this in terms of 'transformative' transport schemes).
Two things where we have a bit more certainty. First, the environmental impacts are not large and could well be negative. Most of the journeys on high speed rail will be additional (or transfers from other lines). Extra/faster journeys generally require more energy not less. You get some savings on car trips and air trips (offset if you use freed up slots for other flights; or if you make getting to Heathrow easier and so generate additional numbers on other routes). The overall impact will depend on what you assume about how electricity is generated. Expect to see generous assumptions using average, not marginal, carbon figures. The second certainty is that any new route will not be commercially viable and will need large government subsidies.
A final thought. Congestion charging has fairly certain costs that are outweighed by clear and certain benefits (the social costs of congestion are very high; and it also helps with carbon). Road pricing has more uncertainty over costs but the benefits are also fairly clear. Yet the strong political support from all three parties is for high speed rail not road or congestion charging. Go figure ...
Monday, 17 August 2009
New homes are too small
CABE are talking about new homes. According to a new survey they are too small and CABE are suggesting that it is all the fault of developers: "Housebuilders often protest that people won’t be able to afford houses with more space. In fact, the barrier is the profit margin that publicly limited companies feel obliged to make. By building the smallest homes in Europe, they’re not giving people the choice. Homebuyers deserve well designed homes that allow them to choose how they live."
The solution, according to CABE chief executive Richard Simmons?: "We need local planning authorities to ensure much higher space standards before giving developments the go-ahead"
I am completely baffled by this. We have a planning system that strongly restricts the supply of land for housing (especially in places where people want to live). This drives up land prices - upwards of £8m per hectare in the most popular parts of the South East - which, in turn, tends to reduce the size of houses (because you have to buy the land before you can build on it). Additional land use regulation - in the form of density requirements and brownfield restrictions further compound this effect (the former directly; the latter because remediation costs mean that you need to get a higher return per unit than if you build on greenfield). In other words, our land use planning system unintentionally generates huge incentives to build small houses with small gardens. [i.e. "Rabbit hutches on postage stamps"]
And somehow the solution to this is to have yet another piece of the planning apparatus which refuses planning permission unless developers build houses of a minimum size? It clearly won't solve the problem. But, if even partially implemented, it would presumably mean less houses and higher house prices. Not sure that this will help in meeting government objectives on "affordability" ...
The solution, according to CABE chief executive Richard Simmons?: "We need local planning authorities to ensure much higher space standards before giving developments the go-ahead"
I am completely baffled by this. We have a planning system that strongly restricts the supply of land for housing (especially in places where people want to live). This drives up land prices - upwards of £8m per hectare in the most popular parts of the South East - which, in turn, tends to reduce the size of houses (because you have to buy the land before you can build on it). Additional land use regulation - in the form of density requirements and brownfield restrictions further compound this effect (the former directly; the latter because remediation costs mean that you need to get a higher return per unit than if you build on greenfield). In other words, our land use planning system unintentionally generates huge incentives to build small houses with small gardens. [i.e. "Rabbit hutches on postage stamps"]
And somehow the solution to this is to have yet another piece of the planning apparatus which refuses planning permission unless developers build houses of a minimum size? It clearly won't solve the problem. But, if even partially implemented, it would presumably mean less houses and higher house prices. Not sure that this will help in meeting government objectives on "affordability" ...
Friday, 14 August 2009
Devolving public expenditure cuts
I see that my colleague Tony Travers, writing with Simon Jenkins, is calling for greater devolution to local authorities as a way of effectively implementing cuts to public expenditure.
They suggest two principles. The first concerns true delegation of responsibility which they argue leads to experimentation at the margin. What they don't point out is that it also leads to greater competition amongst local authorities, something which economists generally argue is a good thing.
The second principle is that devolution must not disadvantage poor areas. They argue that this can be achieved through redistribution of local revenue. Unfortunately, this is a very narrow interpretation of "must not disadvantage poor areas". If, however, you take a broader definition this leads down a long slippery slope to opposing any differences across places because "postcode lotteries" are unfair.
Focusing instead on poor people helps avoid this problem. My local authority might decide to increase local taxes rather than, say, cut funding to my local art gallery. My love of art and my vast disposable income (this is a hypothetical example) mean I can live with this. In the neighbouring authority poorer households decide they would rather forgo the art and prefer to see their taxes cut.
More generally, when expenditure is devolved the overall pattern more closely represents local preferences. In turn, this closer link between preferences and local expenditure increases the incentives of people to live with others who share their preferences. As these preferences are likely highly correlated with income or education we get more segregation. We end up with some local authorities housing mainly poorer households and providing the kind of local services that they want. Other communities are richer and provide more (or maybe less) local services. These differences make all individuals better off, but you might never guess this by looking at the effect on poor areas.
They suggest two principles. The first concerns true delegation of responsibility which they argue leads to experimentation at the margin. What they don't point out is that it also leads to greater competition amongst local authorities, something which economists generally argue is a good thing.
The second principle is that devolution must not disadvantage poor areas. They argue that this can be achieved through redistribution of local revenue. Unfortunately, this is a very narrow interpretation of "must not disadvantage poor areas". If, however, you take a broader definition this leads down a long slippery slope to opposing any differences across places because "postcode lotteries" are unfair.
Focusing instead on poor people helps avoid this problem. My local authority might decide to increase local taxes rather than, say, cut funding to my local art gallery. My love of art and my vast disposable income (this is a hypothetical example) mean I can live with this. In the neighbouring authority poorer households decide they would rather forgo the art and prefer to see their taxes cut.
More generally, when expenditure is devolved the overall pattern more closely represents local preferences. In turn, this closer link between preferences and local expenditure increases the incentives of people to live with others who share their preferences. As these preferences are likely highly correlated with income or education we get more segregation. We end up with some local authorities housing mainly poorer households and providing the kind of local services that they want. Other communities are richer and provide more (or maybe less) local services. These differences make all individuals better off, but you might never guess this by looking at the effect on poor areas.
Wednesday, 5 August 2009
Community Cohesion
CLG has been talking about the economic benefits of community cohesion. It is suggested that new figures show that increasing cohesion by 1 per cent across the country can potentially save up to £530m in reduced crime.
This figure is arrived at by pulling together two numbers. One is on the costs of crime (I haven't looked at this in detail). The other is on the correlation between crime and some measures of cohesion. The correlation comes from data on 20 areas (effectively 40 wards out of England's approximately 8,000). Crucial assumption number one is therefore that these areas are representative. A 0.5% sample is unlikely to achieve this. That aside, the crucial thing is whether or not these numbers capture a causal relationship from cohesion to crime.
Concluding that the relationship was causal would require us to rule out the possibility that the correlation was not just picking up some other characteristics of neighbourhoods that are correlated with both crime and measured cohesion (say, for example, the income level of the neighbourhood). At the very least, we would want to rule out some of the more obvious possibilities. Unfortunately, the original research didn't do this so we have no way of knowing what causes this relationship. Research that is more careful suggests that it is very difficult to attribute any differences in outcomes that we care about to the causal impact of these kind of community variables.
Cohesion is a bit like motherhood and apple pie. What reasonable person could be against it? Spending public money to achieve it may well be a good thing. But, whatever the claim, this research doesn't help improve our understanding of the wider economic benefits of doing so.
This figure is arrived at by pulling together two numbers. One is on the costs of crime (I haven't looked at this in detail). The other is on the correlation between crime and some measures of cohesion. The correlation comes from data on 20 areas (effectively 40 wards out of England's approximately 8,000). Crucial assumption number one is therefore that these areas are representative. A 0.5% sample is unlikely to achieve this. That aside, the crucial thing is whether or not these numbers capture a causal relationship from cohesion to crime.
Concluding that the relationship was causal would require us to rule out the possibility that the correlation was not just picking up some other characteristics of neighbourhoods that are correlated with both crime and measured cohesion (say, for example, the income level of the neighbourhood). At the very least, we would want to rule out some of the more obvious possibilities. Unfortunately, the original research didn't do this so we have no way of knowing what causes this relationship. Research that is more careful suggests that it is very difficult to attribute any differences in outcomes that we care about to the causal impact of these kind of community variables.
Cohesion is a bit like motherhood and apple pie. What reasonable person could be against it? Spending public money to achieve it may well be a good thing. But, whatever the claim, this research doesn't help improve our understanding of the wider economic benefits of doing so.
Monday, 27 July 2009
Housing Numbers part 3
I see that CLG have announced the short listing for the first round of Kick Start.
At the end of June, the HCA press release around Building Britain's Future said: "Up to £500 million to kickstart stalled housing and regeneration schemes [...] In view of the new funding, and the high level of bids already received, the Agency anticipates taking forward more than £400 million worth of schemes from the initial bidding round"
They certainly seem to have managed to do that as they are now talking about spending £925m on the first round alone. The fact that this is more than the £900m allocated in June is explained by the fact that Kick Start accounts for £156m of the £0.6bn that will be spent in 2011/12 (CLG report the split as £572m / £332m / £156m in each of the next three years).
I think it is fair to say that how all of this is funded is still a little unclear.
At the end of June, the HCA press release around Building Britain's Future said: "Up to £500 million to kickstart stalled housing and regeneration schemes [...] In view of the new funding, and the high level of bids already received, the Agency anticipates taking forward more than £400 million worth of schemes from the initial bidding round"
They certainly seem to have managed to do that as they are now talking about spending £925m on the first round alone. The fact that this is more than the £900m allocated in June is explained by the fact that Kick Start accounts for £156m of the £0.6bn that will be spent in 2011/12 (CLG report the split as £572m / £332m / £156m in each of the next three years).
I think it is fair to say that how all of this is funded is still a little unclear.
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