APPENDIX C
PUBLIC EXPENDITURE IMPLICATIONS OF LAWN MOVES
INTRODUCTION
This note sets out to estimate the public expenditure
saving coming from moving a social tenant through a LAWN move
from London to a low demand area.
GENERAL ASSUMPTIONS
The basic assumption made is that temporary
accommodation numbers will directly or indirectly go down for
a % of LAWN moves. Given the urgent need of almost all London
boroughs to reduce temporary accommodation numbers, that is more
than plausible.
Given the bedroom size profile of an average
LAWN move, temporary accommodation costs savings will be around
£175 per week or £9,000 per annum for one less average
temporary accommodation dwelling continuing for each move assuming
that only some LAWN moves result directly or indirectly in fewer
in temporary accommodation.
It is also assumed that a LAWN mover is more
likely to find work (and hence reduce the HB cost of their housing)
than a homeless person left in very high rent temporary housing.
[This reflects the opportunity that a LAWN moves brings, but it
is not critical for the results.]
The final basic assumption is that filling a
home in a low demand area does not lead to major costs such as
more temporary accommodation. Such areas usually will have many
voids.
POLICY DIMENSION
The primary constraint on the level of LAWN
moves is the willingness of the receiving landlords to facilitate
these moves. The priority given to the LAWN-type service by the
contractor will also be important. Paying a dowry of £4,000
to receiving landlords to address the supply shortfall and an
incentive of £500 to the LAWN service provider for each move
would increase the numbers of moves. These incentives are small
compared to the savings, as the analysis shows, especially given
that savings recur and the incentives are one-off.
RESULTS
The Present Value (PV) impact over 30 years
of one LAWN move per year is £1.73 million. Even if Government
pays a one-off dowry of £4,000 to the receiving landlord
and an incentive of £500 to the LAWN service provider, net
public expenditure saving is still of the order of £1.66
million (PV) for one LAWN move a year.
If we achieve 1,000 LAWN moves a year, not very
much more than the present rate, the PV of the comparable net
public expenditure saving would be £1,670 million.
The PV gives savings over 30 years. With 60,000
London households in temporary accommodation in London (rising
by 5,000 pa), it is very unlikely, that the backlog would be cleared
within 30 years. If nonetheless it is cleared in say, 15 years,
net savings over 15 years would be £661 million in PV terms,
given 1,000 moves per year.
CONCLUSION
There is an clear case in public expenditure
terms to maximise LAWN moves.
Peter O'Kane
Association of London Government
August 2003
| 
