A roadmap to the economic evaluation of the activities of the Newhaven Community Development Association

NCDA provides a range of services to the local community with the general aim of supporting regeneration in the Newhaven area. We were asked to provide an economic evaluation of NCDA’s services and we chose to focus on a subset of those activities where the better quality data are available. These are the nursery, the family learning programme and the youth service. These three accounted for 20% of the costs of all services provided by NCDA (another 31% goes to the government-sponsored Work Programme). The paucity of good quality data meant that it proved difficult to obtain solid evidence on the benefits of the services provided (e.g. youths abstaining from drug abuse). We therefore had to look at research evidence from similar activities elsewhere, such as pre-school programmes in the USA or the Families and Schools Together (FAST) programme, which runs in several countries. These programmes are likely to provide benefit-cost ratios (BCRs) and rates of return which suggest such activities are worthwhile investments. Investment in pre school typically has BCRs of around 2; the FAST programme has a ratio of around 3. For the youth service, evidence from research gives a wide range of results, from a BCR of 1.2 all the way up to 13. In the literature we surveyed, small projects seem to have higher rates of return: there are diminishing returns to such activities. Using these research findings we have estimated the potential economic benefits of the NCDA activities, assuming that both the delivery of the interventions by NCDA and the characteristics of their client groups are identical to these programmes. If this holds true, the annual cost of the nursery of £240,000 could yield benefits in the order of £635,000, while the benefit-cost ratio of the youth service could be positive or negative depending on which existing programme is used as the basis of the estimation. There are many shortcomings with this approach. While similar programmes appear to have substantial benefits relative to theirs costs, Newhaven’s programmes need to be evaluated in their own right to be certain that they are realising the same benefits. We suggest some simple measures, which NCDA might like to take to improve the quality of the data they have and the use of it for analysis of their work.