BORIS Johnson wants to give the residents of London’s boroughs more say in how their neighbourhoods are policed. Boards of residents will suggest improvements to local police, monitor complaints from victims and oversee community payback schemes.
If only Johnson did not share his party’s general aversion to the price mechanism, this could be the basis of a great idea. Rather than telling the police how to do its job – which the members of these boards will be unqualified to do – they should specify prices for crimes and decide on bids for policing contracts. Here’s my alternative proposal.
Before accepting bids from private policing firms, Camden’s resident board would publish a schedule of “crime tariffs”. These represent what the people of Camden are willing to pay to avoid various crimes. Suppose they were £1m for a murder, £100,000 for a serious assault and £10,000 for a theft (for simplicity, pretend these are the only crimes).
Companies would compete for the contract by bidding a total annual policing fee. At the end of the year, whoever won the contract would be paid this fee less the value of all the crimes committed. The company’s revenue would depend on its success in preventing crime.
Suppose Virgin Coppers won the contract by bidding the lowest annual fee of £50m and that there were ten murders, 100 assaults and 1,000 thefts during the first year. The crime tariff deductions for the year would total £30m and Camden would pay £20m. Assuming its operating costs to be £15m, Virgin Coppers would make a £5m profit.
As a commercial enterprise, Virgin Coppers would strive to achieve the maximum revenue – that is, tariff-weighted crime prevention – for each pound of operating expense. So would other policing companies in other regions. Those that found the most efficient ways of reducing crime could undercut their rivals. Competition between policing companies would drive down the price of crime prevention.
To influence the police, Camden’s residents need only set their crime tariffs. These determine how much is spent on fighting crime. The higher the weighted-average tariff, the greater the annual fee required for Virgin Coppers to make a profit and the more resources it would devote to eliminating crimes.
The relative level of the tariffs for different crimes would determine how the police allocates resources. If the tariff for a murder were 100 times the tariff for a robbery, it would put 100 times the effort into reducing the murder rate. Fine-tuning police priorities would need none of today’s bureaucratic meddling, merely a change in crime tariffs. It would even allow local residents to effectively decriminalise a crime, by setting its tariff to zero.
Policing in Britain is expensive and unresponsive to citizens’ preferences. Without profit motive, competition and prices, inefficiency is inevitable. Johnson’s reform of policing does not introduce these missing elements. Mine does.
Jamie Whyte is senior fellow of the Cobden Centre.