welfare reform and business strategies pdfs/presentations... · • performance rises after first...

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Welfare reform and business strategies

Sam Lister, Policy & Practice Officer, CIH

Learn with us. Improve with us. Influence with us | www.cih.org 2

• Your costs will go up

• Your arrears will go up

• Don’t expect that Government will:

Scrap UC as it is too difficult or IT wont work

Change the basic assumption about payment

Provide funding to compensate landlords for costs

Cave-in if we just lobby harder

Reality check


XYZ Housing Association: universal credit steady state • Estimated annual loss to tenants in HB £538,000 • Number of losers 1 bed under 658 • Number of losers 2 bed under 165 • Average weekly loss 1 bed under £11 • Average weekly loss 2 bed under £23

• If 10% uncollectable £54,000

Impact model: size criteria


XYZ Housing Association current • Total rent roll £18.72 million • Tenant payments as % rent roll 40% • Rent roll covered by HB direct £11.23 million

XYZ Housing Association: universal credit steady state • Tenant payments as % of rent roll 70% • Rent roll covered by HB direct (30% vulnerable) £5.62 million

Impact model: direct payments


• Understand what’s going on (scope, timetable)

• Set long-term vision

• Create headroom (up your game on arrears)

• Use time the time to be creative

• Find your partners (e.g. banking products)

• Consult

• Test and refine

Tasks


Staying positive

• Start with your vision

How will the service look in ten years time?

How might a service look in when everyone pays?

What is your role in helping tenants into work?

• Look to what you can control

• Use the time to be strategic

• Driven from the top


Current benefits & tax credits

0

100

200

300

400

500

600

Net

pay,

ben

efi

ts a

nd

tax c

red

its

Weekly gross pay

Net pay Child benefit Jobseekeer's allowance Working tax credit Child tax credit Housing benefit Localised CTRS

Couple, two children, one earner, rent £75.00, council tax £23.00


Universal credit

£0.00

£100.00

£200.00

£300.00

£400.00

£500.00

£600.00

Net

pay a

nd

ben

efi

ts

Weekly gross pay

Net pay Child benefit Universal credit Localised CTRS



Current & UC compared

£0.00

£100.00

£200.00

£300.00

£400.00

£500.00

£600.00

Weekly

net

earn

ing

s &

ben

efi

ts (

ex C

TR

)

Gross weekly pay (£)

Earnings plusbasic benefits(excluding CTRS)HB/WTC/CTC

Earnings plusbasic benefits(excluding CTRS)UC



Demonstration project findings


Common findings

• Poor customer knowledge

• Vulnerability is a weak predictor of payment behaviour

Some difficult cases managing well with support

• 80/20 contact rule of thumb

• Performance rises after first payment

• Vast majority referred decline support

• Take up of jam-jars scarce

General lessons


Observations - Southwark

• Arrears will increase

• Administrative costs will increase

Income Officer ‘patch’ was 900 households is now 500, only half of whom are actually on DP

Many more payments to process

• Support is resource intensive

Getting people to engage takes time and effort

People prefer face to face contact and ‘one to one’ advice

Drop in advice sessions / open days not always a success

• Switchback process has revealed more support needs where people have found themselves struggling to manage

• Customer relationships and knowledge are becoming key


• After period four Collection rate - 92%

6220 tenants, 308 (5%) switchback

• After period eight Collection rate - 94%

6327 tenants, 1098 (18%) switchback

• Comparison collection rate ranges Demonstration project range 91%-97%

Current sector wide range 95%-96%

• Raising collection rates Highly resource intensive

Required resource tends to level off over time

Rent collection


• Hard-core of around 20% that do not respond

• Early clear communication works best

• A preference for personal contact

• A mix of methods works best – different demographics have different preferences

• Significant increase in cost (more than banking)

Communication


Social sector size criteria


Staying put

• Support to find lodgers

– Nottingham City Homes

• Promoting DHPs

– Solihull Community Housing

– Radian’s hardship fund

• Supporting tenants into training and work

– Wolverhampton Homes LEAP

– Connect Housing pre-employment money advice


Moving on

• Changing/reviewing allocations policies

Prioritising under-occupiers

Preventing under-occupation

Transfers with arrears

• Mutual exchanges

Matching events – Salford, Nottingham and Luton

Wolverhampton Homes ‘house-doctoring’

Dacorum Council’s ‘Summer of Swaps’

One Vision Housing’s matching officer


Making it fit?

• Re-designating size of homes

Knowsley Housing Trust

But beware!

• Re-framing development programme to increase focus on smaller units

Halton Housing Trust


Getting in shape for UC


• Be visible

• Telescope process

• Say it, do it

• Do it differently

• Offer a range of payment methods

• Chase small debts

• Support for can’t pay (money and benefits advice)

• Realistic repayments

• Corporate priority

Rent arrears good practice


Getting in shape

• Getting accounts in credit (payment in arrears)

• Ability to check balance on-line

• Offering payment via a smartphone app

• Set up appointments to open basic account

• Pay account fee for first year with credit union


Testing and targeting support

• Mystery shopping for basic bank accounts

• Targeted financial awareness training (18-25 year olds) sign-up or pre-tenancy


Promoting bank accounts

• You can promote basic banking products

• Transactional bank account is not a regulated product (c.f. insurance, investments, credit)

• Important to offer choice but can signpost or refer to one specific bank or branch

• FSA guidance for social housing providers

http://www.fsa.gov.uk/pubs/guidance/guidance9.pdf




What’s out there?

• Pre-payment cards

• Consumer reward schemes

• Bulk purchase

• Tenant products

• Consumer bundles


Community Housing Group

• Partner with credit union (Six Towns)

• Credit union provides on-line banking platform

• Tenant agrees rent element set aside

• Landlord pays account fee for first year of using product (£1.00 per week)

• Time to see benefit of inclusion


Pre-payment cards

Debit Card “Open Loop”

Prepaid Card “Restricted Loop”

Reloadable

Prepaid Card “Open Loop” Reloadable


Pre-paid potential advantages

• Not a credit card – no credit checks (identity checks)

• Difficult to get into debt as money loaded up-front.

• Cheaper transaction charges (cash, cheque or credit cards)

• Familiar – debit cards overtook cash 2010

• Tested technology – already developed by finance industry

• Inclusive – no need for a bank account

• Exposure limited to what is on the card (lost/stolen quickly disabled)

• Potential “wallet” facility helps customers manage household budgets

• Customer intelligence

• Combine with reward schemes

• Potentially attractive for unbanked or under-banked


Utility bulk purchase

How it works

No obligation registration with intermediary

Attain critical mass of customers

Reverse auction

Which? / 38 Degrees

287,000 registered, 37,000 switched

Average saving £223 per year

Manchester Councils

Ten local councils

15,000 signed up in two weeks

www.gmfairenegy.com

http://www.gmfairenegy.com/


Reward schemes

• Closed loop – has value to retailers

• Incentives (positive payment culture)

Tenants

Employee rewards packages

• A way of collecting customer intelligence

• Individual or community benefits

• Can contribute towards charges


Consumer bundles

How it might look

• Co-op Bank: payment card and bank account

• Co-op store reward scheme

• Negotiated discount with local co-op stores

• CIS home contents insurance

• Co-op bulk buy fuel

• Community reward scheme


Payment technology


It’s changing – be part of it

• Don’t accept – ‘take it or leave it’

£2 per transaction – get lost!

• Technology companies are now investing in solutions for the under-banked

Opportunity to shape what is out there

With scale comes cheaper charges

• Vocalink

The national grid for payments

Piloting intelligent direct debits


Beware redundancy

New technology

• Fixed or flexible?

• Plastic card or mobile?


Learn and share


www.cih.org/directpaymentslearningnetwork

[email protected] [email protected]

CIH learning network


Working together

Strengthening and/or developing partnerships:

• West Midlands Best Use of Stock Partnership


Are you really the first?

• Many councils already use pre-payment cards

Leicestershire

Birmingham, Dudley, Herefordshire, Sandwell, Solihull, Staffordshire, Telford, Warwickshire, Wolverhampton and Worcestershire

37


Summary


Summary

• Use the time you have been given • Set a vision of where you want to be in ten years • There are some tried and tested approaches • Innovate… • Use and share the knowledge that is already out

there • Adopt technology rather than self build • Co-operate and use your bulk power • Look to what you can control

welfare reform and business strategies pdfs/presentations... · • performance rises after first...

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