Reimagine Debt. A tale of two councils: Reimagine Debt Collection

Policy in Practice Reimagine Debt
A tale of two councils:
ReImagine Debt Collection

● Councils have an increase in caseload (typically 20 - 50% by July 2020)
● 9.6m people on furlough (August 2020)
● 194,000 additional redundancies by July 2020 (ONS)
● 750,000 job losses since April 2020 (OBR)
● Out of work benefits and UC claims doubled to 2.7m by July 2020 (DWP)
Forthcoming changes
● 10% furloughed workers likely to be made redundant by October 2020 (OBR)
● End of SEIS (October 2020)
● MIF to be reinstated
● Emergency benefit increases to end
● Brexit
Background and context
www.policyinpractice.co.uk

Job Retention Scheme: 2 August
● 9.6m jobs furloughed, 1.2m employers furloughing, £33.8bn value of claims
● Falling support in August; Ending in October
SEISS: 19 July
● 2.7m claims made, £7.8bn value of claims made
Universal Credit: 23 June
● 3.2m individual declarations, 2.6m households, 1.1m advance payments
The outlook for Winter and 2021

In 2018 the Government launched the cross-departmental Reimagine Debt
programme, led by the Cabinet Office and two pilot local authorities. They initiated
proactive, preventative and holistic debt interventions with residents to improve
how money owed to local and central government was managed and collected.
Background and context

COVID-19 is changing caseloads
Less disability Less likely to be working
More claimants in receipt of Universal Credit

The impact of COVID-19 to date

Data from 20 London boroughs since 2016

Benefit Cap: Key findings across London
● The number of households affected by the benefit cap would double overnight
due to the benefit increases (to LHA rates, UC and tax credits)
● Households already subject to the benefit cap are missing out on more than
£400/month of benefit income on average after the changes
● The impact of the hardship fund is differs dramatically depending on the
generosity of local council tax support scheme

Living standards declined from 2016 to 2019
Cash shortfall is when a
household’s expected costs
exceed their take-home
income.
In less than four years, the
proportion of working-age low-
income Londoners who are in
cash shortfall has increased
significantly.

Those impacted by welfare reforms fared worst

Lone parents out of work were badly hit
● We found that many of the groups most likely to be in cash shortfall are those
hit by more than one welfare reform
● For instance, lone parents out of work were disproportionately likely to be
impacted by the two-child-limit, the benefit cap, and have moved to UC
● In 2016, 22% were in cash shortfall
● By 2019, 38% were now struggling to make ends meet
● And recent research shows lone parents are among the worst hit financially
by COVID-19 ...

How did April’s Covid-19 reforms change things?
● We modelled data to April 2020 so
we could assess impact of reforms
● Shows a big boost to low-income
Londoner’s incomes
● 6% of households moving out of
cash shortfall as a result of the
boost to UC, tax credits and LHA

Replace with Tom’s Housing Screen and Key points
● Increasing cash shortfall - though absolute levels varies between councils,
direction trending up
● Lone parents out of work almost twice as likely to be in cash shortfall in 2019,
compared to 2016
● Those impacted by welfare reforms fared worst - but often impact not quite so
severe, likely because of housing costs in London eg LHA or Benefit Cap
● Our report in March showed how April’s welfare reforms would boost incomes
● National trends are based on exploratory research in a few councils - we’re
eager to work with more councils outside London to go more in depth

Housing
affordability
Added page in
similar style to
existing ones to give
top line introduction
and then compare
social rented sector
to the private rented
sector

New measure
on Borough
Explorer page
Added a measure for
the percentage of low-
income London
renters who spend
more than 30% of
their income on rent.
e.g. Disparities in
Greenwich

Secure, scalable, real-time updates:
● Monthly updates, with improved security, linkage and analyst time
● New claimants coming into the system
● Impact on arrears and housing affordability
● Future modelling of caseload and policy
● Predictive approaches to homelessness and housing need
● Immediate and actionable insight to improve lives
Real-time analytics will be crucial to the full picture
http://policyinpractice.co.uk/lsi-london/

“The more timely your data, the more powerful it is. If you want to
operationalise the information you're using it's absolutely critical that the
data is timely.” Mark Fowler, Community Solutions Director, LBBD
Automation and Innovate UK

Roadmap: Future modelling
Key drivers impacting on household and council finances:
● Will the emergency benefit changes be retained?
● What will happen to caseloads once the furlough scheme ends?
● Who are the new cohort, and how are they different?
● What is happening to poverty and ability to pay?

Post-covid claimants are less likely to be disabled

A big jump in Universal Credit and CTS claims

The post-COVID cohort are less likely to be working,
but also less likely to be long term unemployed

Modelling the future: two key
questions
Key questions:
1. How many households will be claiming CTR when the Coronavirus Job
Retention Scheme (CJRS) ends in April 2021?
1. How will the cost of your CTR scheme change as a result of this new
caseload?

What we can model: caseload
We are modelling the number of households claiming CTR in 2021 based on:
● Number of households in current CTR cohort
● Estimated number of households leaving the CJRS in April 2021, based on:
○ Number of CJRS households in LA
○ Proportion of CJRS households expected to become unemployed after
the scheme ends*
○ Number of CJRS households already claiming CTR
*The default rate will be based on the latest OBR estimates but can be set by the
LA for their own modelling purposes

What we can model: cost
We are modelling the cost of CTR in 2021 based on:
● Actual CTR awards of the current CTR cohort
● Average awards for the projected 2021 cohort based on:
○ Average CTR awards for in work, unemployed and out of work
(carer/disabled/lone parent) households in current cohort
○ Projected number of in work, unemployed and out of work households in
2021 (using the demographic distribution of the new CTR cohort that
joined after April 2020)

Modelling CTR caseload and
cost in 2021

Roadmap: New poverty metrics
Financial Resilience Income less estimated outgoings
Food poverty Households with income (after priority costs) lower than
Minimum Income Standard for food expenditure
Fuel poverty Households that would fall below the relative poverty line
if faced with fuel expenditure at the UK median level
Water poverty Households with estimated water and sewerage costs
greater than 3% of their income after housing and
household costs
Social Metrics Commission Income less unavoidable costs < 60% of UK average

SMC report: Poverty and Covid-19

Questions and answers

Next steps
● Case study: Reimagine Debt
● Blogpost: Councils get faster data insights to boost their Covid-19 recovery
● Analysis: The impact of the COVID-19 Hardship Fund on low- income
Londoners
● Evidence: The interaction of COVID-19 measures and the Benefit Cap on
low-income Londoners
● Next webinars:
○ Wed 9 September: How viable is your council tax support scheme?
○ Wed 7 October: How to predict the demand for your customer-facing services in
April 2021

Would you like
to stay for a 15
minute demo of
how the LIFT
Dashboard
helps you tackle
problem debt?

Thank you
Deven Ghelani, Director and founder
Duncan Hatfield, Policy and Operations Analyst
Terrin Mathew, Technical Data Analyst
hello@policyinpractice.co.uk
020 3239 5579

1. Focus on one cohort with LIFT

2. Identify to street level with LIFT

3. Identify to household level with LIFT

4. Understand a household’s journey

5. Track outcomes over time with LIFT

Thank you
hello@policyinpractice.co.uk
020 3239 5579

Reimagine Debt. A tale of two councils: Reimagine Debt Collection

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Reimagine Debt. A tale of two councils: Reimagine Debt Collection