PRICING PUBLIC-HOUSING SERVICES - MIRRORING THE MARKET

This paper is concerned with the determination of rents in the local a uthority sector. It concentrates on the determination of relative rent s ill particular. Local authorities in England have traditionally had autonomy in determining the rents for individual dwellings in their ho using stock, but the 1989 Local Government and Housing Act introduced the requirement that the relativities in rite public sector should be dt determined with reference to those obtaining in the local private r ented sector. This policy, which still remains in force tinder the new government, is intended to price public housing move efficiently and links to long standing concerns with issues such? as under-occupation, The paper critically examines the rationale behind this policy. It ad vances the argument that not only are the price differentials in the p rivate sector not necessarily a good guide for efficient pricing in th e public sector, brit also that the conditions in the public sector ar e unlikely to ensure that changing rent differentials will achieve the policy objectives. Even so, the policy raises important issues of pri nciple in pricing in the public sector which require further investiga tion.