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Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data

Dr Ben Fell, Head of Policy and Deven Ghelani, Director and founder of Policy in Practice were invited by London School of Economics to deliver a seminar to the Centre for Analysis of Social Exclusion on the topic of 'Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data'.

The seminar focused on:

- Policy micro-simulation and administrative benefits data
- Modelling the impact of Universal Credit on living standards
- Isolating the impact of the two child limit
- Impact evaluation using retrospective matched controls

For further information visit www.policyinpractice.co.uk, call 0330 088 9242 or email hello@policyinpractice.co.uk

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Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data

  1. 1. Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data LSE CASE Seminar, 20 November 2019 Deven Ghelani Dr Ben Fell Policy in Practice
  2. 2. Outline www.policyinpractice.co.uk Introduction Method: policy micro-simulation and administrative benefits data Modelling the impact of Universal Credit on living standards Isolating the impact of the two child limit Impact evaluation using retrospective matched controls
  3. 3. Universal Credit and financial resilience www.policyinpractice.co.uk Here’s how far you can get with publicly available data… But so what?
  4. 4. Policy micro-simulation and administrative benefits data www.policyinpractice.co.uk
  5. 5. Modelling the impact Universal Credit on living standards Combining administrative data and microsimulation, it is possible to proactively identify which households will struggle with the transition to Universal Credit www.policyinpractice.co.uk
  6. 6. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards
  7. 7. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards - 2017/18 data - Uprated to 2019 - Households not claiming, but eligible for UC - n = 5,502
  8. 8. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards - Models all mechanical interactions of welfare system - Flexible scenario modeling: - E.g., ‘move’ households onto UC
  9. 9. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Income After Costs Total benefit eligibility under Universal Credit vs. legacy system
  10. 10. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Income After Costs: Legacy system Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ...
  11. 11. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... Income After Costs: Legacy system Income After Costs: Universal Credit
  12. 12. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Definition % Average change in award level Better off on Universal Credit 41% £132 No change (change less than £5 per month) 31% £2 Worse off on Universal Credit 28% -£208
  13. 13. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  14. 14. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  15. 15. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  16. 16. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk ● 3.3 million households, or 71% of the cohort yet to move to Universal Credit, will face at least one of these challenges. ● 1.2 million low-income households, around 26% of the cohort yet to move onto Universal Credit, will face two or more of these challenges. ● 150,000 low-income households, around 3% of the cohort will face three or more of these challenges.
  17. 17. Isolating the impact of the two child limit We were able to identify in advance 18,000 children in 4,600 households across 19 councils affected by the two child benefit limit to help councils target support www.policyinpractice.co.uk
  18. 18. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Income After Costs (IAC)
  19. 19. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Income After Costs (IAC) - 2019 data from 19 local authorities - 274,579 children in 138,793 households claiming either HB or CTS
  20. 20. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40
  21. 21. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00
  22. 22. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31
  23. 23. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31 Household costs Living Costs and Food Survey (ONS) -£274.36
  24. 24. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31 Household costs Living Costs and Food Survey (ONS) -£274.36 Income after costs (monthly) Benefit and Budgeting Calculator £140.73
  25. 25. Isolating the impact of the two child limit www.policyinpractice.co.uk Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... IAC: Two child limit Administrative HB/CTS data
  26. 26. Isolating the impact of the two child limit www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... IAC: Legacy system Two child limit IAC: Two child limit REMOVED
  27. 27. Isolating the impact of the two child limit www.policyinpractice.co.uk ~21% of households (~4,600 households, ~18,000 children) whose families face a cash shortfall under the Two Child Limit would no longer face a cash shortfall if the policy were removed, gaining £366 on average
  28. 28. Impact evaluation using retrospective matched controls Using longitudinal administrative data it is possibly to track the impact of policies and interventions, and measure their effectiveness using retrospectively matched controls www.policyinpractice.co.uk
  29. 29. Impact evaluation using retrospective matched controls www.policyinpractice.co.uk Challenge: impact evaluation for social policy interventions is hard ● Support is often reactive (don’t know who will need support in advance) ● Collecting pre-/post-test data is costly, difficult and can introduce bias ● Ethically unjustifiable to withdraw support from control cases
  30. 30. Impact evaluation using retrospective matched controls www.policyinpractice.co.uk Solution: administrative benefits data ● Routinely collected for at-risk cohort (low-income households) ● Longitudinal - allows pre/post comparison and tracking long term outcomes ● Control cases can be retrospectively matched
  31. 31. Step 1: Identify cohort Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  32. 32. Step 2: Engage households (and record service use) E.g., ● ‘Reimagine Debt’ (project with Cabinet Office) - ongoing & personalised debt advice in two Local Authorities (~40 households) ● Legal support (project with Legal Education Foundation) - three support services offered by law centre - add numbers Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  33. 33. Step 3: Track cohort Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  34. 34. Step 4: Match control sample Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  35. 35. Step 5: Compare outcomes Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  36. 36. What would you do with this data? Quick demonstration of LIFT Dashboard www.policyinpractice.co.uk
  37. 37. Thank you Dr Ben Fell ben@policyinpractice.co.uk Deven Ghelani deven@policyinpractice.co.uk hello@policyinpractice.co.uk 0330 088 9242 www.policyinpractice.co.uk

Dr Ben Fell, Head of Policy and Deven Ghelani, Director and founder of Policy in Practice were invited by London School of Economics to deliver a seminar to the Centre for Analysis of Social Exclusion on the topic of 'Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data'. The seminar focused on: - Policy micro-simulation and administrative benefits data - Modelling the impact of Universal Credit on living standards - Isolating the impact of the two child limit - Impact evaluation using retrospective matched controls For further information visit www.policyinpractice.co.uk, call 0330 088 9242 or email hello@policyinpractice.co.uk

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