As regular readers of this column will know, I believe that choice is extremely important in both social and market housing.

Individuals have extremely heterogeneous preferences over the sort of housing that they like, so choice-based lettings are extremely popular.

Previously, the popularity of CBL was demonstrated by looking at satisfaction ratings from tenants. This survey evidence is unambiguously in favour, but such evidence is good only in so far as it goes. Economists such as myself always prefer to find evidence in people’s actual behaviour. As the old saying goes, actions speak louder than words.

And that evidence was brought out unambiguously in Inside Housing’s article ‘Why everyone wants to be sent to Coventry’ (13 March). The number of people on the social housing waiting list has trebled since Coventry Council introduced an easy to access choice-based lettings system. In 2007 there were 6,493 people on the waiting list. A year later that number had reached 19,912 and it continues to grow.

No doubt some of this is as a result of the downturn in the economy, but the article also reports that between 2000 and 2004 the number of people on waiting lists in areas adopting CBL rose twice as quickly as in other areas.

This shows very starkly the cost of not allowing people a choice. In Coventry it appears that there were around 13,000 people who were eligible to apply for social housing but did not, presumably because they expected the house they would be offered would be so unsuited to their needs and preferences that they would rather stay in the private rented sector. This is really quite remarkable.

Rents in the social sector are significantly lower, and objective measures of housing standards are higher than in the private rented sector.
And yet before the advent of CBL, 13,000 people in Coventry preferred to live in housing that was apparently worse and more expensive.

It is, of course, open to those who oppose CBL to claim that the people of Coventry’s failure to apply for social housing before shows that they are foolish or ignorant.

I think the reverse. I think people in Coventry knew that the housing that they would be offered, while suitable on paper, was not actually suitable in practice. So they didn’t apply.

In the light of this sort of evidence, coupled with the evidence on greater satisfaction, councils and housing associations that do not embrace CBL with enthusiasm and vigour should hang their heads in shame, for these organisations are manifestly failing the people they are supposed to be helping.

But perhaps we can go further. The same article notes that more than half of the people on social housing waiting lists do not meet the legal definition of being in ‘housing need’.

The introduction of CBL improves the quality of housing that we are offering to many people who are not in urgent need of a home.

Perhaps it is time for a new bargain with this group of people. By implementing a CBL system we have given them access to a quality product that they would not otherwise have access to: a house at social rents that suits them.

And very often when companies offer a better quality product they charge a higher price. Perhaps it is time therefore to charge people who do not meet the legal definition of housing need a higher rent, in exchange for greater choice of property. If they prefer the lower rent, they can remain in the old, unsatisfactory system in which they are allocated a house. I bet very few do.

A modest rent supplement of, say, £4 a week, would generate approximately £3.5 million in Coventry alone over the next five years - and ever bigger amounts in the future, as more people come under the system. That in turn would allow an extra 50 social houses to be built. Not a large number but, as another saying goes, every little helps.

At a national level, and in the fullness of time, perhaps 40 per cent of houses would be on such tenancies, raising around £400 million a year - enough to build 5,000 extra social houses every year. Even 5,000 is not that large a number, but if the scheme had been running nationwide
since World War II it would have added up to a further 300,000 social houses.

No doubt many people will oppose such an idea. They will come up with lots of reasons why it couldn’t work or wouldn’t work or shouldn’t work. But I wonder how many of those people also thought that CBL wouldn’t work?

The social housing sector, like all sectors of the government, is going to need to become a lot more ingenious over the next few years. The harsh reality is that the government has run out of money, and the likely implication of this is that every part of the government is going to be asked to find savings and develop new revenue streams.

If we are serious about building more social housing for people in genuine housing need we will need to use all the ingenuity that we can muster.

Do not rush to dismiss this idea, or any other idea that could generate more money to build more houses to help more people in need.

Dr Tim Leunig is an academic in the department of economic history at the London School of Economics