Universal credit update Sam Lister, Policy & Practice Officer, - - PowerPoint PPT Presentation

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Universal credit update Sam Lister, Policy & Practice Officer, - - PowerPoint PPT Presentation

May 29, 2023 257 likes •684 views

Universal credit update Sam Lister, Policy & Practice Officer, CIH Learn with us. Improve with us. Influence with us | www.cih.org Aims What is universal credit Policy development and timetable Understanding the jargon

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Universal credit update

Sam Lister, Policy & Practice Officer, CIH

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  • What is universal credit
  • Policy development and timetable
  • Understanding the jargon
  • Demonstration project findings
  • Early preparation (good practice)
  • Innovation in tenant payment
  • A summary of the day

Aims

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Universal credit – what’s it about?

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  • Better off in-work
  • Keep more as you earn more
  • Smoother transition in and out of work
  • Single combined benefit
  • Payment to tenant
  • Centralised administration

Universal credit main features

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Current benefits & tax credits

100 200 300 400 500 600 Net pay, benefits and tax credits 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

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Universal credit

£0.00 £100.00 £200.00 £300.00 £400.00 £500.00 £600.00 Net pay and benefits Weekly gross pay Net pay Child benefit Universal credit Localised CTRS

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

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Current & UC compared

£0.00 £100.00 £200.00 £300.00 £400.00 £500.00 £600.00 Weekly net earnings & benefits (ex CTR) Gross weekly pay (£) Earnings plus basic benefits (excluding CTRS) HB/WTC/CTC Earnings plus basic benefits (excluding CTRS) UC

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

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Policy development

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Revised UC timetable?

  • Pilots (April 2013)
  • Non-HC only? Selected areas (October 2013)
  • Gradual HC start - Selected areas? (April 2014)
  • Increase to 10,000’s by end of year (?)
  • HB end date remains the same (October 2017)

The shifting timetable

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  • Led by UC Personal Budgeting Support
  • Support Exceptions Working Group (SEWG)

Landlords Group

  • Extended landlord group (You?)
  • Local Delivery Partnerships
  • 37 DWP Districts
  • 380 Local authorities
  • LDP announcement later this month?

Policy sources

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  • PBS comprises
  • Alternative Payment Arrangements
  • Budgeting Support (banking products)
  • Money Advice
  • Alternative Payment Arrangements
  • Housing costs exception (landlord direct)
  • Frequency payment (twice a month)
  • Split payments (e.g. domestic violence)
  • Assumption APAs are time limited

Personal Budgeting Support

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  • Overall ethos to move towards no support
  • PBS questioning done by local authority (?)
  • Support at two levels
  • Tier 1: One–off support
  • Tier 2: More substantial on-going support
  • Triggers for APAs
  • Rent arrears trigger to limit risk
  • Budgeting advances (?)
  • Variation for ESA support group (?)

Identifying support

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Demonstration project findings

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Common findings

  • Poor customer knowledge
  • Tenant vulnerability is a weak/moderate

predictor of payment behaviour

  • Some least vulnerable are least reliable
  • Some most vulnerable are most reliable
  • 80/20 contact rule of thumb
  • Performance rises after first payment

General lessons

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  • 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

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  • 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

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Getting in shape

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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
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  • 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

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  • 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

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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
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Targeting support systems

  • Mystery shopping for basic bank accounts
  • Targeted financial awareness training (18-25

year olds) sign-up or pre-tenancy

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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
  • ne specific bank or branch
  • FSA guidance for social housing providers

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

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Direct debit limitations

  • Difficult to judge current budget
  • Inflexible payment dates
  • Not enough in = zero payment (not partial)
  • Bank charges
  • Nine million in UK with bank account but do not use

it – nine times more than the unbanked

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Credit unions

  • As varied as social housing providers
  • Capacity (scale/ speed)
  • Quality of management
  • Cost of products
  • Don’t judge by the label
  • Does it deliver what you want it to?
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Some new ideas

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A chance to innovate

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What’s out there?

  • Pre-payment cards
  • Consumer reward schemes
  • Bulk purchase
  • Tenant products
  • Consumer bundles
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Pre-payment cards

Debit Card “Open Loop” Prepaid Card “Restricted Loop” Reloadable Prepaid Card “Open Loop” Reloadable

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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
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Pre-paid drawbacks?

  • Not a bank account (not favoured by UC for payment)
  • Mistrust, fear, misunderstanding
  • Current commercial products expensive (transaction costs)
  • Cards replaced by mobile?
  • It has a sort code and account number (DWP cannot differentiate)
  • Consultation, education, information
  • Costs are high because current commercial uses do not have scale
  • Most card issuers will have flexibility built in
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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
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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
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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
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Learn and share

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36 www.cih.org/directpaymentslearningnetwork david.pipe@cih.org laura.shimili@cih.org

CIH learning network

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Are you really the first?

  • Many councils already use pre-payment cards
  • School meals service (e.g.Highland Council)
  • Social care payments
  • Familiar with card features and problems with

use

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Conclusions

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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
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Universal credit update

Sam Lister, Policy & Practice Officer, CIH

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Segmentation model

Able

(budget well on all 3 questions)

Mainly able

(does not budget well on 1 question)

Unable

(does not budget well on 2 or 3 questions)

Not worried

(not worried about any aspect of changes)

  • 1. Ready & able
  • 2. Ready &

mainly able

  • 7. Not worried &

unable

Worried

(worried about 1 aspect)

  • 3. Worried but able
  • 4. Worried & mainly

able

  • 8. Worried & unable

Very worried

(worried about 2 or 3 aspects)

  • 5. Very worried but

able

  • 6. Very worried &

mainly able

  • 9. Very worried &

unable

NOTE - ‘Ability’ dimension defined at three levels: Able – if regularly budget, do not run out of money all/most times, have not borrowed if they have run out Mainly able – if they score poorly on one of the above aspects Unable – if they score poorly on two or all three of the above NOTE - ‘Worried’ dimension defined at three levels: Not worried – if none of the changes will make it harder to budget Worried – if one of the changes will make it harder Very worried – if two or three of changes will make it harder

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Support by group segmentation

Segment 1 – 4 Capable Segment 5 - 6 Some Capability Segment 7 – 9 Less capable Financial Product

Current high street provision likely to be adequate. No change needed May benefit from a new UC budgeting account Will benefit from a new UC budgeting account

Budgeting Support

Any support needs they have can be met through on-line provision May need support to get new account established Support needs likely to be transitory Will need support to get new account established Support needs likely to be

  • ngoing

Payment Exception

Housing costs & frequency unlikely to be needed Split payment – low volumes, based on circumstance Housing costs & frequency unlikely to be needed Split payment – low volumes, based on circumstance Housing costs & frequency will be needed by a percentage Split payment – low volumes, based on circumstance

Channel

Mainly on-line Some on-line Some telephony Some face to face Mainly face to face