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Tackling debt, financial resilience and vulnerability at LACEF
The document discusses the challenges of debt, financial resilience, and vulnerability within the context of welfare reforms and the implementation of Universal Credit in the UK. It highlights the need for proactive measures from the Department for Work and Pensions and local councils to identify and support households in financial distress. Additionally, the 'Reimagine Debt' project aims to use data-driven insights to enhance service delivery and improve economic outcomes for low-income families.
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Tackling debt, financial resilience and vulnerability at LACEF
- 1. Deven Ghelani Policy inPractice LACEF Debt, Financial Resilience and Vulnerability.
- 2. We make thewelfare system simple to understand, so that people can make the decisions that are right for them We help people toward independence by making government policy simple to understand.
- 3. 333 Why are peoplein debt?
- 4. Wider welfare reformsand austerity
- 5.
- 8. • 1.6 millionpeople on Universal Credit today • A further 1.6m people moving onto Universal Credit this year • 2 million people moving on through ‘managed migration’ from 2020 Key Recommendation: The DWP and councils can identify these pressure points, and act proactively to prevent hardship and ease the transition to Universal Credit. Universal Credit is rolling out fast
- 9. The average amountof income after costs for low income households is £452/month. • With a deal, income after costs falls by £100 per year (on average). • Under a no deal scenario, which looks unlikely, income after costs falls by £250 per year. • However, unemployment and a weaker economy driving austerity could lead to Brexit impacting incomes by as much as £1400 / year. The impact of Brexit CPI is forecast to hit 3.7% due to devaluation, plus a further 1% impact on costs due to tariff / non-tariff barriers. Unemployment + 0.3% with a deal Unemployment + 2.6% in a no deal scenario
- 10. Cost avoidance throughreimagine debt interventions: • Court costs of enforcement and better collection • Eviction (referred to panel) and care costs for children (direct care costs and impacts of moving schools) • Improved wellbeing and better mental health outcomes (17% of cohort), e.g. lower GP / Medication costs (no longer losing sleep, less anxiety, depression, leaving the house) • Advisors had impacts on other outcomes too, clients could be suicidal, facing domestic violence, have language barriers to overcome, or parental conflict (parents with non-dependant children) The impacts of indebtedness
- 11. 111111 Policy in Practicehas been asked by the Cabinet Office to conduct analysis in support of a project on the management and collection of local and central government debt. Building on the successful ‘Reimagine Debt’ pilot, the project as a whole seeks to understand the role of data to generate a consolidated household level view of debt. Consolidated debt data, placed in the context of a household’s wider economic circumstances, can create a culture of holistic, proactive and effective service delivery across local & central government. Phase 1 of the project saw Newcastle and Barking and Dagenham councils manually pool debt data on 39 families to offer them debt guidance. Phase 2 looks at how this approach can be scaled to deliver benefits to the public. Reimagine Debt
- 12. We pool yourdatasets on low income families, and link them over time to create a single view Our policy engine shows the impact of all policies, now and in the future, on each family The insights enable you to proactively identify who needs what support, engage people and track impact Household data + Advanced Analytics
- 13. 16,934 low incomehouseholds in Neath Port Talbot
- 14. 2,596 are incouncil tax arrears
- 15. 1,255 owe morethan one month’s council tax
- 16. 205 of themare impacted by welfare reform
- 17. 59 of whomface an ongoing cash shortfall
- 18. … and sevenwill be worse off under Universal Credit
- 19. Focus on 1household
- 20. Engage through tailoredcalculation
- 21. Policy / legislativeawareness: Look into the three cases where DHPs were refused. If households affected by welfare reforms had been made aware of DHPs earlier, then arrears could potentially have been avoided. Ensure take-up of benefits: many of the improved cases started claiming Housing Benefit and/or Council Tax Support for the first time. What counts as an improvement?: There are cases where arrears have worsened, but their lives may have improved in other aspects (ie they have started work, agreed a payment plan). We need to track these households over a longer time period. Many of the improved households had changed utility provider: Is this a large opportunity, and does it have implications for the involvement of third parties eg. utilities? Consider differences in outcomes between Advisors: 90% of Advisor 3's clients saw their level of debt improve - compared to 63% of Advisor 2's and 43% of Advisor 1's. Are different Advisors taking different approaches, and can improved approaches be scaled?** Lessons learned in Barking
- 22. We tracked thedebt severity, living standards, financial resilience and other outcomes for 21 households across Barking and Dagenham across eighteen months. • 3 households moved out of arrears completely • Average arrears fell by £1,100 • Across the 21 households, the total rent arrears balance fell by £17,600 and the total council tax arrears balance fell by £5,500 The outcomes of reimagine debt
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- 24. A team of professionals withextensive knowledge of the welfare system who are passionate about making social policy work We help over 80 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 actions people can take to increase their income, lower their costs and build resilience
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- #25 Analytics – Software – Policy