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Learn with us. Improve with us. Influence with us | www.cih.org
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
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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
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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
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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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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
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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
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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
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
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
Couple, two children, one earner, rent £75.00, council tax £23.00
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Demonstration project findings
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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
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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
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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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Social sector size criteria
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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
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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
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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
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Getting in shape for UC
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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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Testing and targeting support
• 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 one specific bank or branch
• FSA guidance for social housing providers
http://www.fsa.gov.uk/pubs/guidance/guidance9.pdf
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What’s out there?
• Pre-payment cards
• Consumer reward schemes
• Bulk purchase
• Tenant products
• Consumer bundles
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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
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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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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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Payment technology
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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
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Beware redundancy
New technology
• Fixed or flexible?
• Plastic card or mobile?
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Learn and share
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www.cih.org/directpaymentslearningnetwork
[email protected] [email protected]
CIH learning network
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Working together
Strengthening and/or developing partnerships:
• West Midlands Best Use of Stock Partnership
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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
Learn with us. Improve with us. Influence with us | www.cih.org
Summary
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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