Police Station Closures in the UK

The net costs of reducing police stations include the direct savings to the government and any resulting fiscal externalities.

The mechanical savings to the government from the station closures is assumed to be the entire £600M reported in a November 2017 bulletin from the Mayor of London.

The paper estimates 3 types of fiscal externalities, each of which incorporates changes in different types of crime, the probability of that type of crime, and estimated changes in deterrence, often incorporating estimates from Heeks et al (2018).

The first is savings from lower clearance (where the clearance rate is the fraction of crimes recorded where a charge is made). The paper estimates a lower clearance rate resulted in savings as a result of fewer cases being tried. The estimated savings are £10,099,210 to the criminal justice system, £21,246,306 to the police, and £1,805,686 due to prison and probation administration.

The second fiscal externality comes from the increased costs of incarceration that result from the increased incidence of crime. For each type of crime, the paper estimates the total additional years of incarceration by multiplying the estimated additional crimes committed by the pre-closure probability of that type of crime led to incarceration by average sentence length for that type of crime and the cost per incarceration year, both provided by the Ministry of Justice (Source: sentence length, cost per year).). The total additional cost of incarceration is £562,779,812.

The third fiscal externality is the result of reduced revenue from stamp duty given the estimated reduction in the sale price of houses £7,934,133.

The total net cost = (-£600,000,000) + (-£21,246,306 – £1,805,686 – £10,099,210) + (£562,779,812) + (£7,934,133)= -£62,437,258.

The estimated MVPF of a reduction in police stations is then -£447,879,487/-£62,437,258 = 7.17.

In one alternative specification, the paper excludes the total loss in home sale price from the willingness to pay and the corresponding reduced stamp duty land tax from the net cost. This exclusion yields an MVPF of 2.61.

In a second alternative specification, the paper both excludes the changes in home sale prices and includes the impact on worsened labor market prospects for incarcerated individuals (as a result of increased estimated incarceration) and the corresponding foregone income tax revenue. This results in an MVPF of 2.97.