www.curo-group.co.uk

Universal Credit – impact on Landlords and their customers

Sarah Seeger

Roll out detail for Curo:

• Live since Feb 2014 – single out of work claimants with no illness and no children

• Couples introduced in the summer with same criteria

• Families introduced from end of January

• “knock out questions” have limited new claim numbers, though some now removed.

UC: Our story so far in numbers

• Rent arrears performance overall is median c.2.4%

• Don’t panic! It’s a slow burn:

• Only 60 customers are on UC (that we know about).

• Likely to get worse before it gets better, as per DPDP

• 1/3 are on managed payments - arrears

• Management of accounts is intensive and customers are finding the transition very difficult

UC: the story so far in numbers

UC: Our story so far in numbers

• UC arrears are 13.84% - was higher (18%) DHP helping

• 50/60 UC customers are in rent arrears

• 29 have a possession order or proceedings underway

• Same cohort had arrears of 7.61% (15.5k) pre UC

Curo UC Arrears caseload

£0.00

£250.00

£500.00

£750.00

£1,000.00

£1,250.00

£1,500.00

£1,750.00

£2,000.00

£2,250.00

£2,500.00

£2,750.00

£3,000.00

£3,250.00

£3,500.00

UC Arrears Cases

How it works (at the moment)

Our experience

Our experience

• Access to service centre can be difficult and is expensive for customers

• Alternative payment arrangements and third party deductions inconsistent.

• Minimal take-up of budget support offer. Now lies with work coach so may improve

• IT still very simplistic and that’s why it works so well – no online access other than claim form – all phone based

• Service centres are located in North of England, Scotland and Wales– no local access – loss of relationship

Our experience continued

• Customers don’t always understand that their UC includes payment for their rent

• APA & 3rd party payment notification letters lack essential information

• APA payments manual process and not paid monthly (yet)

• 3rd party deductions automated process and paid 4 weekly

• Assessment period timeline – when is best to claim?

Were you told you need to use UC to pay your rent?

Claimants - challenges

• Sanctions now key – claimants personal allowance cut when sanctioned

• If not on a managed payment likely to use housing costs money to “heat and eat”

• Need to ensure customers understand what to do and can access information if they want to appeal.

Have had a benefit sanction since being on UC?

Survival mode - Debt and sanctions; a barrier to work?

“Seven tenants looking for work were sanctioned by the Jobcentre in the past year. The most common reasons for the sanctions were missed appointment or incomplete paper work. Four tenants successfully appealed their sanction and received their benefits in arrears at a later date.”

(London School of Economics)

Ensure colleagues are able to give advice when this happens

Shift of focus to basic needs – hard to engage about rent and work

Think about how you can support or signpost re basic needs so customer better able to deal with rent and work-search

“Tenants emphasized that sanctions shifted their focus away from their job search and toward survival. Tenants needed to find alternative ways to pay for food, shelter and utilities and in some cases they had to find money to provide for children. Sanctions introduced a level of hardship and struggle that made looking for work unfeasible.”

The assessment period:

Change of circumstances #1

Change of circumstances #2

Moving forward:

Age of Curo UC claimants

Where did you claim?

How do you prefer to pay your rent?

Customers don’t like DD – less control?

Do you live alone?

Size of home – some bed tax to look out for…

How did you find the UC claim process?

A curve is to be expected – possible to predict who will struggle?

Were you told how long it would take to process your UC claim?

Customers are keen to have this sort of information

Was your claim processed on time?

Help customers plan for the wait time – really tough

Were you paid the right amount of UC?

Ensure customers have the right information to hand

Are you paid the same amount each month?

We need to think about how we can predict entitlement

Are you paid on the same date each month?

If payment date falls on a weekend or bank holiday payment is made early – check when setting DD date

Did the job centre explain that you would get a single monthly payment?

Were you told you could get an advance?

Feedback shows that claimants want more information

If you were offered an advance, did you take it?

The ones that don’t are worried about paying it back

Were you offered help with budgeting?

This process is changing – may take a while to bed in

Did you need help with budgeting?

What are your local arrangements, can you influence this? Some RP’s commissioned to do the work in their area.

Did you go without any of the following while waiting for your first UC payment?

Did this affect your health?

This does impact on customers ability to engage well – need to be persistent

What customers say about the 5 week wait for UC:

“I had to live with friends”

“No heating, electric or food and my debts mounted up

causing stress”

“I have a history of depression and all of the above

impacted on my mental wellbeing”

“I worried about the arrears accruing for rent”

“ I was freezing & had a chest infection, was starving &

lost weight. I had to go to court for various bills and got

threatening letters”

What customers say about the 5 week wait for UC:

“ I struggled and contemplated suicide – I had to see my GP. I Really struggled”

“It was stressful. I was malnourished and cold”

“There was a mental and physical impact- I was going through detox from prescription drugs. I

had to attend a soup kitchen”

“I suffer from depression and the stress of increasing arrears and mounting bills made me

unwell”

“I had to reassess the food I ate due to being diabetic”

“Not paying rent has caused a lot of stress. This resulted in health problems such as skin

problems”

Have you borrowed money since being on UC?

Particularly bad for weekly paid claimants who lose their job

Who did you borrow from?

Consider giving JC colleagues an “information for tenants” sheet to hand out

Do you know the balance on your rent account?

Send monthly statements or text, especially if no on-line access

Have you worked since being on UC?

Feedback is claimants prefer the new rules, but still want to be able to predict entitlement in order to budget. Only one appears to have full time & perm work.

Future UC claimant awards:

Digital Service Claimants: If a claimant on UC goes into work and off of UC they will need to save any earnings above their UC cut off +£300 in case they go back out of work Example: George is single and currently unemployed. He rents a room in a house share for £282 per month. He is currently claiming UC and is looking for work. His circumstances entitle him to a maximum UC award of £597 per month. He receives this amount at the end of the first month of his UC claim. In month 2 he starts a job on a temporary four month contract. This will pay £1,700 in net earnings per month. These earnings are high enough to take him off UC and to start accumulating “surplus earnings” (he’s expected to save these up). At the end of month 2 he accumulates £370 of “surplus earnings”. In month 5 he receives his final pay and his temporary contract ends. Over the four months he has been in work he has accumulated £1,481 of “surplus earnings”. In month 6 George is unemployed and has £1,481 of surplus earnings. At the end of month 6 his surplus earnings are added into the UC calculation. As the amount of surplus earnings exceeds his ‘no UC threshold’ of £1,030 he receives no UC at all for his first MONTH of unemployment. In month 7 George continues to be unemployed and has £152 of surplus earnings remaining. These are added into the UC calculation resulting in a UC award of £571 – leaving George £289 after his rent is paid From Month 8 he has no surplus earnings left and continues to be unemployed. He now receives his maximum UC entitlement of £597. Comparison of total income: • Over the period George earns £6,800 from employment and receives £4,153 in UC; a total income of £10,953. • If he had not taken the temporary job then his total income from UC would have been £7,165. • By taking the temporary work George is £3,788 better off.

Future UC claimant awards

Did you close your claim or leave it open?

Remind claimant there is no 5 week wait if they go back out of work

What do you like about UC?

Hopefully claimants will like it more as they grow accustomed to UC. Some are now picking up on potential benefits.

Nothing 65%

Don’t Know 15%

Better for work 10%

Better non-dep rule 5%

Monthly payment 5%

What are the top 3 things we can do to help:

What are the top three things you would change about UC?

Anything else you can tell us?

“Its hard adjusting from weekly wages to monthly UC” "I am only able to manage on UC as my girlfriend is very supportive and helps me. I do not have a landline and therefore getting through to UC is sometimes difficult and I cannot afford broadband so dependant on her to update my claim”. “My payments are different every month and I don’t understand why this is. I don’t know how much I should be receiving for council tax“ “The process was relatively easier whilst I was well and working however since going sick, my payments have been delayed as they keep losing my sick notes” “Introduction is far too long and the system is too long; telephone system is too expensive, takes too long to answer queries. Everything takes too long” “It has just messed it all up just when my money was under control” “I would have liked the choice for my rent to be paid straight to Curo from the start. When you’re low on electric & food and not expecting another payment for a month its hard not to take it from the rent. I would be better off in the long run not to have that temptation”

Anything else you can tell us?

“I Don't think Curo can do anything; up to people to get work and get off Universal Credit. Curo already understanding and supportive”. “I need more information on needing to pay council tax; its not clear” “Payment once a month makes it difficult; I’m just paying back debts that I borrowed the previous month” “The system is unrealistic; initial payment time is too long and causes debt. The phone numbers also cost a fortune to ring."

Have you worked since being in UC?

Positives

• Claimants “really like it” when they find work – some have done p/t hours and temping without needed to amend claim.

• Like not having to sign off/on

• JCP not dealing with payments – atmosphere transformed

• 98% of 18-25’s on JSA<12 months in Bath

UC winners

• Working claimants – no 16 hour rule • Working claimants with children – no

“minimum hours” • 70% of childcare costs covered (up to a

maximum). This will increase to 85% from April 2016.

• Households with non-dependant children/family members over 21 years old – a flat rate of £68.68 deducted per calendar month, regardless of income

• Claimants subject to bedroom tax who take in a lodger – lodger income disregarded

• Single parents with no housing costs – earnings ignored are £734 per month compared to £263 per month if they have housing costs

UC losers

• Claimants with liability on 2 homes – notice period will not be covered under UC

• Absence from home changes – down from 52 weeks to 6 months (except for domestic abuse cases)

• Disabled household with a delay moving in due to adaptation work needed – 1 month max payment made

• No payment for delay moving in due to welfare support application for essential furniture

• Bedroom tax changes under UC

Claimant Commitment:

• Coaching type relationship • Claimant commitment – 35 hours

per week • Sanctions! Need to “ring in” sick • Some will be on daily visits to

JCP if not engaging or put on community work placements

• Up to 15 hours p/w voluntary or work experience ok

• If sanction appealed, claim still paid if sanctions applied (unlike JSA)

• Will be looking at part-time workers (more hours) and single parents (more hours depending on age of children).

Making work pay

Helping customers find work:

• 60 accredited work placements per year

• Curo colleague doing JCP drop-in

• National Careers Service drop-in

• New enterprise taster days

• Interview technique & application form training

• CSCS card delivery partner

• Apprentice programme

The challenge

The solution:

Changes to policy - allocations

Affordability check – we will say:

• “yes”

• “yes with conditions”

• “no, not now – come back when you have….”

• or “no, not this property”

• Credit Check as standard

• Use of Rental Exchange (Experian) & DPS

Changes to policy - income

• Will use SC 21 on all tenure types that allow for this (keyworker, intermediate rent, market rent)

• No starter tenancy conversions with any debt outstanding.

• Ground 8 for any customer with a DRO who runs up further arrears (support offer will be there).

• Greater focus on tackling worklessness and discussing work as a solution to arrears.

• Kept it simple:

The competition for Credit, Curo HB customers:

• 14.6% have at least one county court judgement

• 7.5% are bankrupt • 34% have 3 or more credit

accounts are not up to date Propensity to pay scores:

• 14% low propensity to pay • 24% medium • 40% good • 21% insufficient digital footprint

(likely to use post office acct and cash)

Passport to Housing & Success Plans

The passport - How it works

• LA provide data from Housing Register.

• Highest Risk targeted first (supported move-on, under 25’s, young parents, previous eviction, irregular employment etc.).

• Assessment, action plan, support referral, review when bid succeeds, decision.

• Tracking of progress once a customer.

• Activities in success plan added to workflows

The Passport - what it does

Passport to Housing in Numbers

• Slow start due to political resistance, now gaining traction

• 110 Clients seen, 21 with appointments pending

• Working with customers in TA & step-down

• 2 self referral calls per day

• £202k of personal debt recorded

• Of customers in debt, this is an average of £4.2k

• We will compete with these creditors under UC

• Lots of quick wins with under-claimed benefits and energy tariff’s

Wins:

• 21 onto a cheaper utility tariff

• £6k of energy debt written off

• 6 customers started banking for the first time

• 49 customers now have an active debt management plan

• 18k in one-off payments – either charity payment, debt

written off or benefit overpayment written off.

• Potentially 1/3 to qualify for help with moving costs

• £49k per year back in customers pockets due to increased

benefit entitlement or reduced creditor payments

What customers say about passport to housing:

• “Household budget manageability” score went

from 7 to 8.7

• Confidence about moving score went from 6.3

to 8.3

• 77% say their rent will be more affordable as a

result of passport

• NPS is 57.2

Passport to Housing outcomes

Couple with dependants - £152 better off per week due to increased benefit.

Recent widow - £37 better off per week due to increased disability benefit.

Single person - £61 better off per week due to increased disability benefit.

Single with three children - £69 better off per week due to increased disability benefit.

Married with three children - £67 better off per week due to disability benefit for daughter.

Single person - £52 better off per week due to increased disability benefit.

Single person helped with removal costs of £240.

Single with dependant – Discretionary housing payment granted to clear arrears and money for school uniforms totalling £492.

Couple - £2000 housing benefit overpayment written off.

Single with dependant – charity payment granted for £1000.

Single person – Energy Company wrote off £800 debt.

Single person – pay day loan written off for £355.

Building resilience in our communities

• The investment is transformational, not transactional. It increases our customer acquisition cost, but this pays out over the life of the tenancy.

• Under passport 38 customers have moved. Just 2 cases of arrears – one customer cleared with a one off payment, and the other has a Discretionary Housing Payment pending to clear the debt in full.

• Community capacity to cope with austerity will be inadequate if we are reactive, not proactive

Building resilience in our communities

• Lower rent will mean less HB/UC for many customers, but no real “money in pockets” for this cohort

• Improving financial capability, affordable warmth, and help finding work are the three main activities that will make customers better off & should be the core of our anti-poverty strategy

• Investment in places will not realise its potential without investment in customers

• Investment in customers will build trust & challenge preconceptions about our “commercialisation”

• Can we afford not to?