Supporting Older
People Conference
PC1: Welfare benefit reform – a practical guide to
meeting the challenge
Speakers: Julie VickersDirector of Business Support, New Charter Housing
Martin FrostDeputy Chief Executive, New Charter Housing
Jahanara HussainFinancial Inclusion Manager, The Hyde Group
Chair: Sue RamsdenPolicy Leader, National Housing Federation
NHF FINANCE CONFERENCE
WELFARE BENEFIT REFORM
A PRACTICAL GUIDE TO MEETING THE CHALLENGE
21st March 2012
Martin Frost – Deputy Chief Executive
Julie Vickers – Director of Business Support
TODAY WE’LL COVER
• Knowing the impact on the business
• Knowing the impact on the customer
• Knowing where the problems are
• How we can meet the challenge?
A FIRST THOUGHT
ADDRESSING WELFARE BENEFIT REFORM
Mutually exclusive or complementary?
BUSINESS VIABILITY CUSTOMER SUPPORT
REMINDER
The DIRECT issues:
• Increase in Non-dependant deductions 2011
• Property Size HB reduction April 2013
• Universal Credit - Benefit Direct October 2013
THE BUSINESS IMPACT - UNDER-OCCUPANCY
Underoccupied by No. % of Stock
1 Room 1,255 6.8%
2 Rooms 695 3.8%
3 Rooms 76 0.4%
4 Rooms 17 0.1%
5+ Rooms 0 0.0%
2,043 11.1%
UNDER-OCCUPANCY SUMMARY
THE BUSINESS IMPACT - BENEFIT REDUCTIONS
Average Rent (October 2011) £80.13
1 bedroom reduction per week - 14% £11.22
2 bedroom or above reduction per week - 25% £20.03
THE BUSINESS IMPACT - BENEFIT REDUCTIONS
2011.12 2012.13 2013.14
Non-Dependant Deductions £286,185 £652,262 £1,048,510
Size Restrictions £0 £0 £846,709
TOTAL £286,185 £652,262 £1,895,219
THE BUSINESS IMPACT – DIRECT PAYMENTS
• 62% of income received “automatically” will now have to be recovered, (£43m)
• At best, cash flow will be compromised
• More likely, arrears will rise (eg 3% = £1.3m)
• Even if the “8 week rule applies” the Business Plan potentially compromised
THE BUSINESS IMPACT – RECOVERY COSTS
• Currently benefit receipts have a negligible collection cost
• Payment direct will potentially mean:
• Increased cashiering costs (£ 20k) Increased number of arrears/support staff (£197k)
• Increased Court costs }
} (£325k)
• Increased eviction and void costs }
BUSINESS PLAN – FUNDING PROFILENON RECOVERY
0
50
100
150
200
250
300
350
400
2011.12 2016.17 2021.22 2026.27 2031.32 2036.37
Base (98% collection)
0
50
100
150
200
250
300
350
400
2011.12 2016.17 2021.22 2026.27 2031.32 2036.37
Base (98% collection)
95% Collection
THE BUSINESS IMPACT – WHAT IT MEANS
SERVICE DELIVERY– AN EXAMPLE
• A collection rate of 95% will demand savings of £1.6m pa to ensure Business Plan compliance
• This would mean:
• 14 less new build units pa, or
• 640 less new heating systems , or
• 10% staff reductions; or .............
Source: Save the Children Fund
£1,2889% of disposable income
THE CUSTOMER IMPACT – STARTING FROM
CLOSER TO HOME ... TENANTS IN THE TAMESIDE AREA
33% use an
overdraft
27% have loans /
long term debt
20% use licensed doorstep lenders 4% use
loan sharks
48% have money worries
19% haven’t enough
to manage
52% have no HCI
21% don’t know where
advice is
68% have no
savings
57% don’t know
what a CU is
WELFARE REFORM – A HUGE IMPACT
TENANTS
Reduced Income
Money Management problems
Average tenant debt -£7,500
BUSINESS
62% of rent comes from benefit
Business Plan potentially compromised
Additional costs
WE’REDOOMED
ONE WAY OF LOOKING AT THINGS
..... AND ANOTHER
BUT WE SHOULD TREAT IT ASA CHALLENGE .... AND AN OPPORTUNITY
OUR ORGANISATIONAL BELIEF
SUSTAINABLE COMMUNITY
&
VIABLE BUSINESS
Customer Needs
Financial Viability
CREATIVELY ADDRESSING
WELFARE REFORM
WHAT DOESN’T WORK
• TENANCY
• ARREARS
• ACTION
• EVICTION
• VOID
Transient unsustained
tenancies
High Void rates
Increased repairs costs
Moving problems on
Fragmented communities
ADDRESSING RENT ARREARS
AND CUSTOMER NEEDS ISSUES REACTIVELY..
........
....NOT PROACTIVELY
WHAT DOES WORK
3.00%
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
2004.05 2006.07 2008.09 2010.11
ARREARS AS % OF DEBIT
99.2%
99.6%
100.0%
100.4%
100.8%
101.2%
2004.05 2006.07 2008.09 2010.11
ANNUAL COLLECTION PERFORMANCE
OUR STRATEGY
A
B
C
D
E
ADVICE
BASIC BANK ACCOUNTS
CREDIT (Access to affordable credit)
DEPOSITS (Savings)
EDUCATION
•Door to Door Collection
•Payment Facilities
•Home Contents Ins.
•Hardship Fund
•Leaseholders
•Payment Arrangements
•Eviction Reduction
•Regular Statements
•Post Court Support
• Personal Acc. Mngr
•Pre – Tenancy Support
•Welfare Benefits Advice
•Debt Advice
•Money Advice
•MiNT
•Policies & Procedures
Corporate Debt Policy
Creditors & Payments
Housing Benefit Admin
Rent Control
FINANCIAL INCLUSION
DELIVERING VIABILITY AND
SUSTAINABILITY
ENH
AN
CIN
G A
CC
ESS
TO S
ERV
ICES
FAC
ILIT
ATI
NG
TEN
AN
CY
MA
NA
GEM
ENT
SYSTEMS BASED APPROACH
BUSINESS
FRAMEWORK
FINANCIAL ADVICE AND
SUPPORT
TENANCY
SUPPORT
PERSONAL
SERVICES
Source: Save the Children Fund
Catastrophe Cover; weekly payment through rent
Insulation; efficient systems; education
Free cashing service; cash-loaded cards
Great Opportunities programme; HCIS
White Goods scheme; training
MEETING THE WELFARE REFORM CHALLENGE
• Build on what works for you now – continually improve
• Recognise that the customer / business relationship is fundamental
• Think creatively
thinking BIGBenefits and Income Generation
MOVING FORWARD
• A positive approach demands organisation wide thinking – this is not just “credit control”
© New Charter Housing Trust Group
TAMESIDEBENEFIT INCIDENCE
60% 61% 62%
Ashton
Audenshaw
Denton
Droylsden
Dukinfield
Hyde
Longdendale
Mossley
Stalybridge
TENANTS CURRENT ON HB
DO YOU KNOW WHERE HB RELATED ISSUES WILL OCCUR
A “one size fits all” approach may not be appropriate
Resources to address the challenge may be limited – be prepared to target these to key areas
Be prepared to think “out of the box” – a huge challenge demands an innovative approach
• How is your stock distributed
• Levels of HB incidence by location / town
• Underlying issues with tenants on Benefit
BENEFIT INCIDENCE
ASHTON under LYNE
IDENTIFYING THE ISSUES – LOOKING MORE SPECIFICALLY
• 26% of the total stock
• 62% of tenants on HB
• 23% of tenants on benefit already have arrears
• 85% of tenants pay their rent by cash
• Arrears levels are 6% lower than the rest of the stock ...........
This and any other profiling information will inform a targetted approach which addresses both tenant needs and business efficiency
• Pre-application affordability checks
• Matching HB and allocations criteria
• Lodgers and legal sub-letting
• “Sharing” pilot schemes
thinking BIG ........ ALLOCATIONS
• Enhanced Welfare Benefit advice
• Enhanced Debt advice
• Enhanced Hardship Fund
• Mandatory pre-tenancy support “Key to the
Door”
• Credit Union enhancement
thinking BIG ........ TENANT
SUPPORT
• “Access all areas”
• “Wiser working”
• “Money In ... Evictions Out”
• “I’ve got the power”
thinking BIG ........ WORKING
PRACTICES
• Financial Inclusion Survey
• New tenancy analysis – identifying barriers
to sustainability
• End of tenancy data
• Enhanced profiling
thinking BIG ........ IDENTIFYING
ISSUES
• Innovation and creativity
• Organisation wide issue demands
organisation wide “buy in”
• Support from Boards downwards
• Investment
thinking BIG ........ CULTURE CHANGE
SUMMARY
• Reform is happening – its not going away
• Identify the impact .... on your business and your customers
• Build on what works now
• Be creative in developing new solutions
• Get organisation wide “buy in”
• And treat it as .....
A CHALLENGE .... AND AN OPPORTUNITY
For any further information please contact:
[email protected] 0161 331 2127
[email protected] 0161 331 2020
Does Debt Advice Pay:
A Business Case for Social
Landlords
21 March 2012
Background
• Partnership relationships
• Previous work-Money Guidance Evaluation
• Need to demonstrate value for money in changing economic
climate
• Sustainable services for customers
• Funding opportunity
Partners:
Internal needs and external pressures
• Welfare Reform-looming implications on landlords and
residents
• A fifth of working age adults in the lowest income group are in
arrears with one or more bills – three times the rate for those
on average incomes.
• „Rental arrears‟ and „bad debts‟ are financial downturn key
risks.
• 84% social landlords experienced a rising demand for
counselling and debt advice amongst tenants and residents.
• The level of rent arrears reflects effective rent collection and
management process not just the amount owed.
• The CAB dealt with over 73,000 rent arrears cases (2010).
› 36,500 were housing association tenants
› 36,600 were local authority / ALMO tenants
• Driver: So how do we address this as a sector?
Why social landlords?
Of the poorest 10% of UK householders, over half live in social rented housing
41
61% of social households have no-one working
81% have no savings account
91% have no insurance cover
20% have used doorstep lenders
83% fail to plan for their financial future
94% make poor financial product choices
Twice as many social rented tenants use Citizens Advice
SH tenants earn on average half as much as private renters with a median annual income of £10,900
Existing arrangements across partnership
• What debt advice provisions worked best? Contracts,
signposting, telephone or in-house
• How to find make an objective assessment
• Key driver was to provide a business case to our own
organisations to continue or change our FI services
• FIC commissioned to evaluate the effectiveness of debt and
money advices provided by seven lead housing associations
and provides a business case for investment in debt advice
services.
Debt Advice Intervention Models
• Telephone advice
• Outsourced F2F advice
• In-house Advice
• Control Group-ad-hoc signposting to local agencies or no
referrals
• Qualitative evaluation like this had never been done to
understand business benefits before-off-setting debt advice
costs against income recovery cost.
• Business Model - Arrear Action Cost Calculator can be
applied by all SHPS of all sizes, locations and structures to
assess whether they should be investing in debt advice.
Key Findings andOutputs
• Early intervention
• Timely and effective debt and money advice can help reduce
rent arrears and evictions.
• It sets out financial benefits for social landlords of investing in
effective debt advice and offers practical steps to
commissioning and delivering it.
• Every £100 invested in debt advice interventions brings
financial return of £122 (a return of 22%) in the form of
reduced arrears and associated costs.
• Not providing debt advice to indebted customers will see a
rise in arrears by around 8% over the next 12 months.
• There is a strong rationale for social landlords to intervene
when arrears levels reach £600 or more given the cost-
benefit trade-off.
Gains for residents
• Rent arrears fell by 37% for tenants following referral to
debt advice.
• 71% of tenants who used the service claimed that their
rent arrears had reduced following debt advice
• 36% of those said that their arrears levels are „a lot lower‟.
• Nearly 50% surveyed service customers said that debt
advice helped them to avoid eviction and a similar
proportion was helped to avoid court proceedings.
• An average of £240 is gained for every indebted tenant
supported by debt advice.
• In-house debt advice is the most effective method of
reducing arrears.
• Outsourced debt advice is the most effective way to
reduce overall arrears and associated costs.
• Early debt advice and intervention brings the greatest
benefits.
Impact
•Chart 1: 2 year trend analysis
• Chart 1 shows the average levels of arrears for the debt advice
group fell much further over the period compared to control
group. The green line is the important indicator as it shows the
relative performance of debt advice group. When the line falls
below 100, it means that debt advice is performing better.
Analysis-to current (September 2011)
• Chart 2 shows that the debt advice group performed
significantly better than the control group over the period from
September 2010 to now. This is shown by the trend in the
green line.
Teaser findings – Impact to rent arrears
• average levels of arrears for the debt advice group fell much further over the period
compared to control group.
• The green line is the important indicator as it shows the relative performance of debt
advice group
• When the line falls below 100, it means that debt advice is performing better.
The social gains-Residents perspectives
• “So useful, we wouldn't have got through without the advice we were
given.”
• “It's very good that the landlord has this in place now.”
• “I think the service should be a more positive, pre-emptory measure
rather than reactionary.”
Report findings:
• Simply signposting residents in the direction of support has a no
additional benefit to either party
• Early intervention is key: two thirds of surveyed residents believe they
would have benefited more by earlier access to debt advice
• 79% of supported resident‟s rate housing association debt advice
„good‟ or above
• 71% of supported resident‟s claim rent arrears dropped after receiving
debt advice
• Over 12 months a rent arrears reduction of up to £550 per resident
Next Steps
• Spreading the message
• Costs calculator- a real tool to assess gains
• Business case-for all social landlords
• Early and effective intervention
• Organisational ethos embrace FI principles to get real value for
money and make a difference
• Questions?
Contact:
Jahanara Hussain
Financial Inclusion Programme Manager
Hyde Plus
Hollingsworth House
181 Lewisham High Street
London
SE13 6AA
Tel: 020 8297 7587
Email: [email protected]
www.hyde-housing.co.uk
51