A Year of Welfare Reform – Direct influence
Ian Simpson reports on Bron Afon’s experience of the direct demonstration project in Torfaen and the lessons learned
In November 2011 Bron Afon together with our partners Charter Housing and Torfaen County Borough Council took a brave step into the unknown. We expressed our interest in hosting one of the department for work and pensions’ six UK direct payment demonstration projects.
Why were we brave? Well, because when London & Quadrant piloted direct payment of housing benefit to their tenants in 2004 they saw arrears rise by a massive 80 per cent. And perhaps because others were quietly (and in some cases not so quietly) questioning our motives at a time when UK Government’s welfare reforms were coming in for lots of criticism.
What was unknown? Well, whilst the DWP\’s brief prospectus outlined some high level aims it became quickly apparent that working out what it would look like in practice was going to be an iterative process. Looking back this was a real plus. The plan that emerged was very much co-produced by the demonstration project areas and the DWP’s project team. At the time though it was quite scary, particularly as we were all still frantically trying to pin down the detail the day before we were due to begin the live running stage of the project in June 2012!
So why then did we do it and what did we learn?
Our decision to get involved was driven by a strong desire to be well prepared for the anticipated arrival of universal credit in October 2013, a keenness to influence and a firm commitment to making sure that tenants’ interests were represented. We judged that we could best achieve this by being inside the tent.
The Torfaen demonstration project ran for 18 months until November 2013 and 90 per cent of households participating were Bron Afon tenants.
Finance management
In its baseline survey undertaken before direct payments commenced, the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University found that, whilst 66 per cent of tenants in Torfaen considered themselves adept at managing their finances, 31 per cent thought they would cope poorly with direct payment and 36 per cent felt they would need significant long-term support. This reflects our practical experience during the project, which concluded with 666 tenants from Bron Afon and Charter Housing being on direct payment and another 343 (34 per cent) having been switched back to landlord payments primarily because they had consistently underpaid.
Over the term of the project Bron Afon’s overall collection rate was 98.75 per cent (£5,334,024 charged/£5,267,392 collected since June 2012). By this measure tenants’ arrears totalled £66,832. Tenants who remained in arrears at the end of the project owed on average £77 more than their peers outside the project which for us is broadly equivalent to one week’s rent. This figure comes from a snapshot taken in the week immediately prior to December\’s housing benefit run.
Our project was extended beyond June 2013 in order to capture more learning. During this second phase we began to move all new tenants of working age who were in receipt of housing benefit on to direct payment. We also began to test new approaches to support centred on personal budgeting.
In the first phase of our project we only offered personal budgeting support (PBS) to tenants who had been switched back to landlord payment. In the final six months the PBS offer was extended. We included new tenants who were claiming housing benefit for the first time and tenants already on direct payment who we judged to be at a \’tipping point\’ where without intervention they would soon be switched back to landlord payment.
Soon after our three PBS officers set to work it became clear that the support needs we were encountering were far broader than budgeting. We shifted the emphasis to the provision of tenancy support and achieved some very positive results. For example, arrears amongst the 32 new tenants who received support were on average four times less than for new tenants outside the project. And the level of arrears for tenants who received support after reaching the \’tipping point\’ fell by 4 per cent in contrast to a rise of 7 per cent amongst those who we did not engage.
Mental health issues
We are particularly concerned about the link between mental health and debt. One in four of our tenants who participated in the CRESR baseline survey said they were suffering from some form of stress or anxiety. Not surprising then that people with mental health issues and families with multiple and complex needs figured large in the cohort of tenants who were switched back to landlord payment. Moreover it is our assessment that nine in every ten cases in the switched back cohort meet the DWP\’s proposed guidelines for alternative payment arrangements under universal credit.
The close relationship we have with Torfaen Council’s housing benefit team proved hugely important at all stages of our project and without it we would have been severely hampered. Data sharing, as our project has clearly evidenced, is vital to allow early interventions to take place for unless landlords are aware of a problem they cannot provide timely support. Indeed, as CHC, CIH and others have made clear, any realistic approach to developing a workable alternative payment arrangement mechanism for vulnerable tenants under universal credit must be founded on the principle of two-way data sharing between the DWP and social landlords.
Systems issues
There have been big lessons for us around systems and resources. We are typical of most in that our income recovery system has been designed to manage defaults and weekly rent account balances. Our IT is not easily configured to manage the multiplicity of payment arrangements, methods and frequencies that is likely to be the norm under universal credit. In the demonstration project our workaround has been to resort to resource intensive manual intervention to keep on top of case management. Contact levels have consequently doubled. We have routinely used text messages too as a value for money way to remind tenants that housing benefit has been paid into their account and their rent is due. In one month, for example, 83 reminder text messages were sent at a cost of £18, which resulted in payments totalling £2,600 and a further £500 was recovered for the price of 10 late payment texts.
We have consequently invested in an IT product that intelligently interrogates previous payment patterns and identifies cases for intervention based on the level of risk they pose as both existing and potential debtors. We are marrying this up with our in-house designed customer relationship manager (CRM) system, which, as the cornerstone of contact management, will help facilitate our aim of everyone at Bron Afon having a role in supporting tenants to pay their rent This is just one aspect of the major change project that is well underway to ensure that our operational housing and property services continue to remain fit for purpose.
Face-to-face support
Our project has certainly been resource hungry! Between 2011 and 2013 we saw a 100 per cent increase in interactions with tenants who moved on to direct payment. Outbound phone calls rose by 80 per cent and personal visits four-fold. Most of these visits took place at the beginning of the project, evidencing the time that needs investing in face-to face-support during transition.
Transactions also increased as tenants were encouraged to use direct debit. Although this method of payment was not the favoured option for our tenants (76 per cent used Allpay payment cards) we nevertheless saw an extra 1,220 direct debit transactions plus another 880 through Credit Union accounts.
Our team grew as the project evolved. In the final phase it comprised a payments co-ordinator, three personal budgeting support officers and two income recovery officers. Income recovery officer caseload was initially half that outside the project but this levelled out as lessons were learnt and processes improved.
We are putting the finishing touches to our new service delivery model which draws heavily from our demonstration project experience. This major project will see us significantly strengthen our capacity to provide support and mainstream key elements of our successful Aspire family of skills and work programmes that have previously been externally funded. By being clear about the future purpose of our services and then reconfiguring structures and job roles accordingly our aim is to create the capacity and agility we need to respond to the future demands of our operating environment, including welfare reform, within our existing resources.
We are pleased that the DWP is reflecting the learning from the demonstration projects in a more pragmatic approach to universal credit. At the time we were selected to jointly host the Torfaen project the line from ministers was very clear: there would be few exceptions to direct payment. Two years on there is recognition that not everyone will be ready to make the move straightaway and we now hear a very clear message that there will be provision for alternative payment arrangements. Building on the work of the demonstration projects the DWP has announced three levels of protection:
• Decisions about whether tenants should receive direct payments will be made in collaboration with social landlords
• If arrears build up to the equivalent of one month’s rent the decision to make direct payments will be reviewed
• If arrears reach the equivalent of two months’ rent, the claimant will have housing payments switched to the landlord.
Scope for changes
The devil is of course in the detail and we look forward to these statements being fleshed out by DWP well ahead of the large-scale roll out of universal credit to new claimants in 2016. There is scope for yet more changes with a consolidated learning report due from CRESR in the next couple of months along with the initial results of its detailed analysis of the impact on rent accounts. And the landlords involved in the demonstration projects are co-producing their own learning document which should be available by April.
On reflection we made the right decision back in 2011 to take part. With the help of our peers in the other five demonstration projects we can confidently say that we have achieved our aim of influencing the DWP’s approach. We have been able to practically evidence where the system must have regard to the needs and interests of our tenants. And we have put our learning experience to good use in reshaping our services to ensure that Bron Afon is well prepared for the huge change to come.
Ian Simpson is director of community housing and support at Bron Afon Community Housing