Wednesday, 20 May 2015

So, just how inefficient is local authority housing administration?

I can't find national statistics, so I will use the figures provided by my local council, which I guess is a reasonably good guide to the average.

The accounts include two different profit and loss accounts for their council housing, on pages vi and 38; total income is around £34 million and real cash expenses are around £18 million, including employee costs of £3.7 million. So unless more than half their income is from Housing Benefit, that's a nice little profit for the taxpayer.

It doesn't say how many people work in their housing department, but let's guess each employee costs £30,000 a year, so that's 125 employees. Neither does it say how many units of housing they look after, but let's call it 7,000 (£34 million divided by £100 a week rent).

So that means it one council employee looks after fifty-six homes. That includes managing the waiting list and allocating vacant ones; sorting out the repairs; collecting the rent and council tax; and administering housing-related benefits etc.

Ho hum.
How does that compare with the 'private' sector?

According to the ONS there are 422,000 estate and letting agents (construction is a quite separate category) and [as Mombers points out in the comments] around 1.5 million private landlords.

There are 1,285,000 people working in finance and insurance, let's assume that half of those working in finance and insurance are involved with mortgages and home insurance, this means that there are 3 million people making a living from/looking after 22 million or so privately owned homes.

That means on average, in the private sector, one worker looks after about seven homes.

Going by that simple measure, local authorities are eight times as efficient as the private sector.


mombers said...

MW, add in the fabled army of private landlords... 1.5 at last count, only half of which are registered with HMRC. But that's another story altogether.

Bayard said...

How can you have half a landlord? Was that supposed to be 1.5M?

Mark, I think you need to recast your argument. A lot of the work in looking after the rented property is done by the landlord. I know some landlords get estate agents to do everything, but there are a fair number who would only use an agent to find a new tenant.

However, there is no way that a private landlord could look after 56 homes without getting some professional help, so, whichever way you look at it the public sector is more efficient.

Thanks also for putting figures into nailing the lie that social housing is subsidised, BTW.

Mark Wadsworth said...

M - excellent point - thanks.

B, whether or not private landlords do a lot of work, would you agree that should be added to the total? Meaning that one such person only 'looks after' seven homes.

As to the social hosting income/cost figures, I've done these before, you can actually get the answer by applying common sense.

Worst case it's a break even, so costs the taxpayer - i.e. thee and me - absolutely nothing.

Chuck said...

'It doesn't say how many people work in their housing department,'

About half, I'd say.

Mark Wadsworth said...

Ch, all right then, that makes the half that do work sixteen times as efficient as the private sector.

L fairfax said...

Aren't you assuming that social housing never outsource any work like glazing etc?
It also assumes that social houses last a long as private ones.
Considering the number of council flats that have been knocked in South London in the last few years I doubt that very much.

L fairfax said...

PS I think you also ignore the fact that the housing department might be supported by workers from other departments, IT,finance etc.
Who handles rents etc?

The Stigler said...

But you also have to consider how many people at the council are doing housing things, but not in the housing department. Does the IT function that collects the direct debit, or the staff collecting cash payments get included? Is the call centre included?

I used to work for a building society in the mortgage area and we managed about 1m mortgages with less than 1,000 staff. Even if you included the investment side and all the branch staff, you're not even at 10,000 staff.

And a lot of landlords are part-time. My neighbour has a job and also a BTL.