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

IRRV Virtual Annual Conference
2020

IRRV Virtual Annual Conference 2020
Deven Ghelani
Director and Founder
Policy in Practice
Reimagine Debt:
A tale of two councils

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.

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

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

“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

“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

● ‘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

An enlightened approach:
The case for a preventative approach
to debt management

A tale of debt prevention in two cities
● 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
● 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

● Professional debt advisors led the discussions
● 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

The evaluation found that debt can be
collected in an intelligent and cost
effective way that delivers better
outcomes to society

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

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%

Return on investment
Average arrears fell by 65% and by £160
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
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

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
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

Fiscal savings
Service Area Annual cost for one household
Number of
households
Total annual
savings
Eviction: Simple case
Eviction: Complex case
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

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.”

Feedback from advisors

● 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?

What now for Collections?

● 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

● 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

● 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

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

Please visit our virtual stand now to:
● Download more information
● Get our contact details
● Enter our prize draw

Thank you
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

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

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