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IRRV virtual conference 2020: Reimagine Debt: A tale of two councils

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In October 2020 our Director and Founder, Deven Ghelani, presented to IRRV Annual Conference and Exhibition attendees on Reimagine Debt: A tale of two councils.

Watch the full presentation: http://policyinpractice.co.uk/IRRV-2020

Find out more about the Cabinet backed Reimagine Debt pilot: http://policyinpractice.co.uk/reimagine-debt/

For more information please visit www.policyinpractice.co.uk, call 0330 088 9242 or email hello@policyinpractice.co.uk

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IRRV virtual conference 2020: Reimagine Debt: A tale of two councils

  1. 1. IRRV Virtual Annual Conference 2020
  2. 2. IRRV Virtual Annual Conference 2020 Deven Ghelani Director and Founder Policy in Practice Reimagine Debt: A tale of two councils
  3. 3. IRRV Virtual Annual Conference 2020 Presenter - Deven Ghelani Curriculum Vitae: Deven is the Director and founder of Policy in Practice, an organisation founded to make the welfare system simple to understand so that people and organisations can make the decisions that are right for them. Deven has advised private and public sector organisations, including central and local government on the impact of changes to the welfare system, and was part of the team that developed Universal Credit at the Centre for Social Justice. Deven Ghelani has written and spoken extensively on welfare reform.
  4. 4. www.policyinpractice.co.uk A team of professionals with extensive knowledge of the welfare system. We’re passionate about making social policy work We help over 100 local authorities use their household level data to identify vulnerable households, target support and track their interventions Our benefit calculator engages over 10,000 people each day. We identify the steps people can take to increase their income, lower their costs and build their financial resilience Policy in Practice: What we do
  5. 5. www.policyinpractice.co.uk Why Re-imagine Debt?
  6. 6. www.policyinpractice.co.uk Why Re-imagine Debt? “Debt is not about numbers, debt is about people, behaviours and circumstances. “As a sector, we should focus less on getting debt out of people, and more on how we get people out of debt. “We fix debt problems by focusing on people.” Steve Coppard Cabinet Office
  7. 7. www.policyinpractice.co.uk Why Re-imagine Debt? “Often, residents have other challenges to deal with which can affect how they’re able to deal with the financial aspects of their lives. “Proactive and holistic debt interventions can support people to get back on their feet and have a more stable life.” Claire Horton Newcastle City Council
  8. 8. www.policyinpractice.co.uk Why Re-imagine Debt? “Debt is almost always a symptom of a deeper challenge. “Data allows you to quickly identify that there’s a problem, and face to face interaction allows you to get to tackle the root cause and find solutions.” Mark Fowler London Borough of Barking and Dagenham
  9. 9. www.policyinpractice.co.uk ● ‘Re-Imagine Debt’ came out of cross-departmental competition ● Led by the Cabinet Office and two pilot local authorities Aims of the project ● Collect more, at a lower cost, and with better outcomes for people in debt ● Develop a single view of debt owed by individuals to government, rather than trying to collect multiple debts across different departments ● Initiate proactive, preventative and holistic debt interventions with residents to improve how money owed to local and central government is collected ● Phase one: Newcastle and Barking and Dagenham councils each manually pooled debt data on 39 families and offered them holistic debt guidance. The Re-imagine Debt project
  10. 10. www.policyinpractice.co.uk An enlightened approach: The case for a preventative approach to debt management
  11. 11. www.policyinpractice.co.uk A tale of debt prevention in two cities Newcastle City Council ● Focused on those most at risk for the pilot ● Identified 20 households already in serious debt, owing more than £20,000 ● Of these, 14 households engaged and were offered holistic support alongside debt guidance London Borough of Barking and Dagenham ● Took an early intervention approach, working with families through their Community Solutions team ● 28 households with combined government debt of below £8,000 ● Of this cohort 25 people were seen and 17 experienced a positive outcome
  12. 12. www.policyinpractice.co.uk Newcastle City Council ● Professional debt advisors led the discussions London Borough of Barking and Dagenham ● Residents were supported by a team from Community Solutions Both councils ● Holistic support of short, informal meetings given ● Residents discussed debt management advice as well mental health ● Follow up meetings as needed, average of four advice sessions ● Action-orientated advice, eg applying for Discretionary Housing Payments and other underclaimed benefits, budgeting, and liaising with creditors including council tax departments, as well as private sector creditors Type of support given
  13. 13. www.policyinpractice.co.uk The evaluation found that debt can be collected in an intelligent and cost effective way that delivers better outcomes to society
  14. 14. www.policyinpractice.co.uk Outcomes Of the households LIFT tracked in Newcastle, the following outcomes were achieved: Arrears fell: ● People in arrears of £250+ fell from 74% to 58% ● Rent and council tax arrears fell by £1,216 ● 17% became wholly arrears free ● Arrears fell by £200 more in the treatment group than in the control group Income rose: ● Benefits income increased by £115 ● Average income rose by £124 per month
  15. 15. www.policyinpractice.co.uk Outcomes Of the households LIFT tracked in Barking and Dagenham, the following outcomes were achieved: Arrears fell: ● People in arrears of £250+ fell from 18% to 8% ● Average rent and council tax arrears fell by £174 ● Arrears fell by 3x more in the treatment group than in the control group ● Half of all participants became arrears free Income rose: ● Average benefits income increased by £171 per month ● Average earned income increased by £108 per month ● Unemployment fell from 91% to 67%
  16. 16. www.policyinpractice.co.uk Return on investment Average arrears fell by 65% and by £160 London Borough of Barking and Dagenham Fiscal savings £246,449 Economic savings £78,835 Total savings £325,284 Total cost £9,545 Total benefit £315,739 Return on investment 34 x Newcastle City Council Fiscal savings £113,682 Economic savings £61,415 Total savings £175,097 Total cost £6,873 Total benefit £168,224 Return on investment 24 x Average arrears fell by 29% and by £1,081
  17. 17. www.policyinpractice.co.uk Fiscal savings Service Area Annual cost for one household Number of households Total annual savings Eviction: Simple case Eviction: Complex case Cost of eviction: £8,800 Cost of eviction: £14,800 3 3 £70,800 Health: Physical treatment Health: Mental treatment GP and prescription costs: £941 Anxiety / depression treatment: £830 1 2 £1,882 Domestic violence Cost per incident: £2,470 1 £2,470 Employment / Out of Work Benefits Fiscal benefit from a workless claimant entering work: £12,657 3 £37,971 Total fiscal savings £113, 123
  18. 18. www.policyinpractice.co.uk Fiscal savings Service Area Annual cost for one household Number of households Total annual savings Eviction: Simple case Eviction: Complex case Cost of eviction: £8,800 Cost of eviction: £14,800 15 4 £190,750 Health: Physical treatment Health: Mental treatment GP and prescription costs: £941 Anxiety / depression treatment: £830 1 2 £2,601 Domestic violence Cost per incident: £2,470 1 £2,470 Employment / Out of Work Benefits Fiscal benefit from a workless claimant entering work: £12,657 4 £50,628 Total fiscal savings £246,449
  19. 19. www.policyinpractice.co.uk Feedback from advisors Mental health improved “It takes a boulder off their shoulders.” “We fill in the difficult period for them to get back on their feet again.” “They don’t know where to turn, they are coping with so much.” People felt empowered “[They were] passive participants in their financial lives.” “Debts and deductions just happen.”
  20. 20. www.policyinpractice.co.uk
  21. 21. www.policyinpractice.co.uk Feedback from advisors
  22. 22. www.policyinpractice.co.uk ● Interventions by Newcastle and Barking and Dagenham councils were different, yet both showed positive outcomes for the households on the programme, for the teams involved, and for the council LIFT successfully found 35 of 39 households (90%) through benefits administration data, and tracked 28 (72%) from mid-2018 to mid-2019 ● 16 households saw their arrears fall ● 7 households saw their income rise ● Positive impact on other outcomes including employment and benefit take-up ● Outcomes were matched to a control group using LIFT. Those on Re-Imagine Debt were much better, but the sample size was too small for the findings to be statistically significant What has the project achieved?
  23. 23. www.policyinpractice.co.uk What now for Collections?
  24. 24. www.policyinpractice.co.uk ● Overall claimant count more than doubled to 2.7m by July 2020 (DWP) ● Councils are seeing an increase in caseload (typically 40% by July 2020) ● 9.6m people on furlough (August 2020) ● 10% of people on furlough expected to be made redundant in October ● This is expected to push unemployment up to 10% (from 4.1% in July) an increase of 2.1m (to 3.4m people). Debt and COVID-19 ● Councils have seen council tax arrears jump by 53% ● UK households are expected to rack up debts worth a combined £6bn because of the coronavirus crisis ● Many households saw savings levels jump during lockdown, so impacts have been hugely unequal COVID-19 and collections
  25. 25. www.policyinpractice.co.uk ● Higher council tax collection rates are associated with the generosity of a borough’s Council Tax Reduction Scheme and lower levels of poverty in the borough. We found no clear relationship between stricter council tax collection policies and higher council tax collection rates. Local authorities that offer more council tax support, and have lower levels of relative deprivation tend to have higher council tax collection rates. Analysis: Flexible collections
  26. 26. www.policyinpractice.co.uk ● The relative rigidity of the regulations and limitations to the IT systems can be overcome, enabling councils to pause recovery action for Council Tax Reduction recipients before the summons stage. ● Better data-sharing would help move towards a more rounded, single view of household debt and help to identify the households who need most help. ● In-year collection performance indicators are a barrier to more flexible approaches, broader performance indicators should be considered. ● Seeking to recover the full council tax bill (rather than a missed instalment) significantly weakens financial resilience, more so if charges for enforcement action are added. Analysis: Flexible collections
  27. 27. www.policyinpractice.co.uk Huge credit to Newcastle City Council and London Borough of Barking and Dagenham for being part of the project through its various iterations, investing in both the support and evaluation throughout that time. The Cabinet Office call for evidence and support for a debt management bill is building momentum. Will councils picking up the baton and lead the way, or wait for regulations set by central government? LIFT makes a larger scale trial of Re-Imagine Debt possible, cost-effective, and a positive next step for all councils. Two councils showed the way
  28. 28. www.policyinpractice.co.uk Please visit our virtual stand now to: ● Download more information ● Get our contact details ● Enter our prize draw
  29. 29. www.policyinpractice.co.uk
  30. 30. Thank you www.policyinpractice.co.uk I look forward to your questions. If you would like to learn more, please contact me: Deven Ghelani Director and Founder deven@policyinpractice.co.uk 07863 560677 hello@policyinpractice.co.uk 0330 0889242

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