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

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Deven Ghelani, Director and Founder of Policy in Practice, spoke at the IRRV Virtual Annual Conference about the Cabinet Office's reimagine debt pilot scheme.

As COVID-19 continues to hit the financial resilience of many families councils are looking ahead to what this means for collection rates. With council tax arrears already at £3.5 billion pre-crisis, and forecast to reach nearly £5 billion by the end of parliament, councils will need to find new ways to maximise collections. Deven Ghelani spoke about how two councils identified which residents owed multiple debts to them, how they stabilised their incomes, and how they tracked the effectiveness of support. Attendees learnt how early intervention offers a proven approach for other councils to consider to prevent problem debt.

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Publicado en: Economía y finanzas
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Reimagine Debt. A tale of two councils: Reimagine Debt Collection

  1. 1. Policy in Practice Reimagine Debt A tale of two councils: ReImagine Debt Collection
  2. 2. ● 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
  3. 3. 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
  4. 4. 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
  5. 5. COVID-19 is changing caseloads Less disability Less likely to be working More claimants in receipt of Universal Credit
  6. 6. The impact of COVID-19 to date
  7. 7. Data from 20 London boroughs since 2016
  8. 8. 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
  9. 9. 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.
  10. 10. Those impacted by welfare reforms fared worst
  11. 11. 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 ...
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. “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
  18. 18. 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?
  19. 19. Post-covid claimants are less likely to be disabled
  20. 20. A big jump in Universal Credit and CTS claims
  21. 21. The post-COVID cohort are less likely to be working, but also less likely to be long term unemployed
  22. 22. 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?
  23. 23. 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
  24. 24. 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)
  25. 25. Modelling CTR caseload and cost in 2021
  26. 26. 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
  27. 27. SMC report: Poverty and Covid-19
  28. 28. Questions and answers
  29. 29. 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
  30. 30. Would you like to stay for a 15 minute demo of how the LIFT Dashboard helps you tackle problem debt?
  31. 31. Thank you Deven Ghelani, Director and founder Duncan Hatfield, Policy and Operations Analyst Terrin Mathew, Technical Data Analyst 020 3239 5579
  32. 32. 1. Focus on one cohort with LIFT
  33. 33. 2. Identify to street level with LIFT
  34. 34. 3. Identify to household level with LIFT
  35. 35. 4. Understand a household’s journey
  36. 36. 5. Track outcomes over time with LIFT
  37. 37. Thank you 020 3239 5579