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Webinar slides: Practical ways to help vulnerable households deal with debt

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Policy in Practice’s analysis estimates that the average hit faced by low income households, on top of existing pressures, will be over £40 per week by 2020. More households are now ‘can’t pay’s rather than ‘won’t pay’s.

Income collection teams have a responsibility to help both their clients and their customers, both of whom are feeling the pinch. As an ethical enforcement agency, Phoenix recognises that they can support people by helping them to better understand their financial position and find ways to increase income and lower expenditure, prior to enforcement action.

Using Policy in Practice’s Benefit and Budgeting Calculator they are bringing welfare support together, around the customer. Early results after 4 months are extremely promising.

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

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Webinar slides: Practical ways to help vulnerable households deal with debt

  1. 1. Policy in Practice Webinar: Practical ways to help vulnerable households deal with debt Wednesday 23 May 2018
  2. 2. Housekeeping • Audio check • Please ask questions • Polls and a survey • Finish by 11:30
  3. 3. We make the welfare system simple to understand, so that people can make the decisions that are right for them
  4. 4. Speakers Zoe Charlesworth Peter Carter Nick Rowe LB Ealing Carole Kenney Phoenix
  5. 5. Agenda • The big picture: Understanding living standards and debt • The regulatory framework for responsible collection • Local authority view on income collection and identifying protection for vulnerability • Enforcement agency view on income collection and identifying protection for vulnerability • Technology that can help
  6. 6. 666 Poll: What challenges do you face when helping vulnerable people deal with debt?
  7. 7. 777www.policyinpractice.co.uk Over to Zoe
  8. 8. The scale of the problem • 10% of households hold over £10,000 of unsecured debt • 35% of those in the lowest income decile have debts of greater value than their financial assets • 16% of those in the lowest income decile are in arrears with utility payments • 25% in the lowest income decile spend more than a quarter of their current income servicing debts. The poorest fifth spend £457 a month paying back their debts out of an income of £1,012 • Debt is persistent without intervention: Of the poorest fifth of households who spend more than a quarter of their income on debt repayments and charges, more than 40% were found to be stuck in a similar position two years later • Among the poorest fifth of working-age households 36% of those in debt were struggling to pay for their accommodation Problem debt and low-income families, Institute of Fiscal Studies, January 2018
  9. 9. Types of household debt 43% formal loans 24% credit cards 21% hire purchase 5% overdraft 3% informal loans 2% arrears 1% store cards 1% mail order
  10. 10. Triggers for problem debt • Redundancy • Unemployment • Illness and disability including mental health issues • Servicing previous debt • Divorce/separation • Benefit changes (benefit cap, LHA, 2 children limit, self-employed) • Gap in benefit income (wait for UC, wait for WCA, sanctions) • Persistent low earnings - changes in employment structure (the gig economy, zero-hours) - Freezing of working-age benefit support The key message from all research around debt is that most households are not protected from accumulating debt if they face a trigger situation
  11. 11. Working age households are hit hardest at £41.45 per week The main drivers are: • the benefits freeze, losing £33.54 per week on average • rising rents and living costs (2.4%) • combined impact of multiple reforms hitting the same family People are going to be worse off
  12. 12. Supporting vulnerable households • Universal Credit is rolling out, and rolling out fast • The ‘real’ impact due to rising rents and benefit freeze is significant, impacting ability to pay • Local data allows identification of households most in need of support, and eligible • Agencies can work proactively with councils today • Vulnerability teams can check eligibility and increase take-up of other support, making is more likely customers will be able to pay their bills
  13. 13. Debt is a persistent cycle
  14. 14. Intervention is key
  15. 15. Intervention Intervention is the key to breaking the cycle of debt and for many vulnerable households the first intervention is from collection and enforcement agencies The practices of these agencies will be important in: • Separating the ‘can’t pay’ from the ‘won’t pay’ • Supporting vulnerable households and preventing debt escalation Taking account of vulnerability enhances rather than works against, efficient collection
  16. 16. Quality intervention “Vulnerability continues to present difficulties and the approach of judging each case individually after reviewing all circumstances has to be the way forward” Nick Rowe, Assistant Director of Finance, Local Taxation, LB Ealing Enforcement News, Winter 2017
  17. 17. Nick Rowe Assistant Director of Finance, Local Taxation, London Borough of Ealing
  18. 18. 181818www.policyinpractice.co.uk Over to Peter
  19. 19. Carole Kenney Phoenix
  20. 20. Winner: Credit & Collections Technology Awards 2017, Affordability Assessment Solution Engage as early as possible in the collection process: • Before high fees and charges are incurred • It’s more cost effective to support people in poverty prior to enforcement action • Because more people will be can’t pays, ineffective enforcement action drains resources • Creditors will recover more if people feel supported by agents • Positions the enforcement agent as a partner for the local authority client and their residents • Ethically, it is the right thing to do Policy in Practice’s Benefit and Budgeting calculator helps Phoenix understand their customer’s financial circumstances and develop an achievable management plan
  21. 21. 212121www.policyinpractice.co.uk Questions
  22. 22. Next steps Download Benefit and Budgeting flyer Download Tracking Living Standards flyer Download Universal Credit Roadmap Short survey: • We value your feedback • Ask questions or clarifications • Take another look at a LIFT Dashboard or Benefit and Budgeting Calculator • Request the Policy in Practice and Phoenix case study
  23. 23. www.policyinpractice.co.uk Thank you Zoe Charlesworth zoe@policyinpractice.co.uk Peter Carter peter@policyinpractice.co.uk hello@policyinpractice.co.uk office 0330 088 9242

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