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 • Demonstration project findings • Early preparation (good practice) • Innovation in tenant payment • A summary of the day 2 Learn with us. Improve with us. Influence with us | www.cih.org
Universal credit – what’s it about? Learn with us. Improve with us. Influence with us | www.cih.org
Universal credit main features • 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 4 Learn with us. Improve with us. Influence with us | www.cih.org
Current benefits & tax credits 600 500 Net pay, benefits and tax credits 400 300 200 100 0 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 5 Learn with us. Improve with us. Influence with us | www.cih.org
Universal credit £600.00 £500.00 Net pay and benefits £400.00 £300.00 £200.00 £100.00 £0.00 Weekly gross pay Net pay Child benefit Universal credit Localised CTRS Couple, two children, one earner, rent £75.00, council tax £23.00 6 Learn with us. Improve with us. Influence with us | www.cih.org
Current & UC compared £600.00 Weekly net earnings & benefits (ex CTR) £500.00 Earnings plus basic benefits £400.00 (excluding CTRS) HB/WTC/CTC £300.00 Earnings plus £200.00 basic benefits (excluding CTRS) UC £100.00 £0.00 Gross weekly pay (£) Couple, two children, one earner, rent £75.00, council tax £23.00 7 Learn with us. Improve with us. Influence with us | www.cih.org
Policy development Learn with us. Improve with us. Influence with us | www.cih.org
The shifting timetable 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 ) 9 Learn with us. Improve with us. Influence with us | www.cih.org
Policy sources • 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? 10 Learn with us. Improve with us. Influence with us | www.cih.org
Personal Budgeting Support • 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 11 Learn with us. Improve with us. Influence with us | www.cih.org
Identifying support • 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 (?) 12 Learn with us. Improve with us. Influence with us | www.cih.org
Demonstration project findings Learn with us. Improve with us. Influence with us | www.cih.org
General lessons 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 14 Learn with us. Improve with us. Influence with us | www.cih.org
Rent collection • 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 H ighly resource intensive Required resource tends to level off over time 15 Learn with us. Improve with us. Influence with us | www.cih.org
Communication • 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) 16 Learn with us. Improve with us. Influence with us | www.cih.org
Getting in shape Learn with us. Improve with us. Influence with us | www.cih.org
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 18 Learn with us. Improve with us. Influence with us | www.cih.org
Tasks • 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 19 Learn with us. Improve with us. Influence with us | www.cih.org
Rent arrears good practice • 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 20 Learn with us. Improve with us. Influence with us | www.cih.org
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 21 Learn with us. Improve with us. Influence with us | www.cih.org
Targeting support systems • Mystery shopping for basic bank accounts • Targeted financial awareness training (18-25 year olds) sign-up or pre-tenancy 22 Learn with us. Improve with us. Influence with us | www.cih.org
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 23 Learn with us. Improve with us. Influence with us | www.cih.org
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 24 Learn with us. Improve with us. Influence with us | www.cih.org
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? 25 Learn with us. Improve with us. Influence with us | www.cih.org
Some new ideas Learn with us. Improve with us. Influence with us | www.cih.org
A chance to innovate 27 Learn with us. Improve with us. Influence with us | www.cih.org
What’s out there? • Pre-payment cards • Consumer reward schemes • Bulk purchase • Tenant products • Consumer bundles 28 Learn with us. Improve with us. Influence with us | www.cih.org
Pre-payment cards Prepaid Card Prepaid Card Debit Card “Open Loop” “Restricted Loop” “Open Loop” Reloadable Reloadable Learn with us. Improve with us. Influence with us | www.cih.org
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 Learn with us. Improve with us. Influence with us | www.cih.org
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 Learn with us. Improve with us. Influence with us | www.cih.org
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