Internal Affairs for Adactus500 Scrutiny Panel Universal Credit: Interim Report 10 June 2016
Internal Affairs for Adactus500 Scrutiny Panel
Contents
Page
Project background ................................................................................................................................. 3 1.
Information, advice and guidance ........................................................................................................... 3
2.
Money Advice Service ............................................................................................................................. 5
3.
Universal Credit notification ................................................................................................................... 6
4.
Managing arrears .................................................................................................................................... 6
5.
Affordability checks ................................................................................................................................ 9 What we liked ........................................................................................................................................ 9 What concerned us? ............................................................................................................................... 9 What we could look at next? .................................................................................................................. 9 Appendix: Staff Interviews ..................................................................................................................................... 10 Spot check – Welfare Reform information............................................................................................ 11 Spot check – Arrears Recovery ............................................................................................................. 11
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
Scrutiny Review: Universal Credit Interim Report The Project Impact of Universal Credit
Background Universal Credit is part of the government’s welfare reform. It was the cornerstone of the coalition government’s approach to ‘work incentives’ and is still being rolled out by the current Conservative government. The Universal Credit pilot started in April 2013 in Ashton-Under-Lyne then Wigan before being rolled out to other areas. Universal Credit combines six different benefits into one single payment; Working Tax Credit, Child Tax Credit, Income Support, Employment and Support Allowance, Jobseekers Allowance, and Housing Benefit. The impact of this change is that housing benefit will no longer be paid separately or direct to the landlord but will be paid monthly in arrears as part of a single Universal Credit payment to the resident. Therefore, there is a risk that residents may fall behind with their rent payment and ultimately face eviction whereas the Association will lose rental income and may suffer financially.
What we wanted to know • • • • •
What information and advice does Adactus provide to its customers about Universal Credit? How has Adactus addressed the issue of its customers falling into arrears? How does the Money Advice Service help Adactus customers? How does Adactus ensure new tenants will be able to afford the rent? How has Adactus planned for future impact of Universal Credit?
What we looked at • • • •
Information and advice provided to residents about Universal Credit. The process for managing arrears. Money advice service. Methods of assessing financial capability of new housing applicants.
What we found 1. Information, advice and guidance a. Written and online information
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
• Information on Welfare Reform and Universal Credit has featured regularly in the ‘inhouse’ magazine for customers. A review of five magazines revealed the information was useful, easy to understand, and it detailed the changes to Housing Benefit, PIP, Discretionary Housing Payments, Bedroom Tax and Council Tax. The articles also provided guidance on how to open a bank/Credit Union account, how to budget and also advertised the services of the Money Advice team. • A leaflet entitled ‘Welfare Reform – are you prepared?’ has in the past been distributed with the rent statements that contains information on the changes to Welfare Reform. Evidence was seen of the leaflet; it encouraged customers who may be affected by the welfare changes to contact the Income team for practical advice and support on how to manage their income. • A new leaflet has recently been produced that will be included in future rent statements. It provides information on the proposed Government changes taking place between 2016 and 2018 namely; benefit cap and change to allowances, Housing Benefit for young people, childcare, and Housing Benefit backdating. • The Adactus website provides detailed information on Welfare Reform changes, underoccupancy, benefit capping, disability living allowance, and tax credits however, this information was published before the changes came into effect and some elements need updating for example, the new benefit cap rates. • Adactus website also provides details of other specialist organisations that can provide help and advice with money related matters. • Adactus operates a scheme called’ RightSize’ which aims to help customers who may be affected by the under-occupancy rules with downsizing, also known as the bedroom tax (this is a reduction of housing benefit entitlement for any spare bedrooms). The Adactus website states that customers can contact a dedicated Occupancy Officer (whose correct job title is Lettings Officer) who will help and advise with tenancy and under-occupancy matters for example; how to search for properties that match their criteria, help to register their details on Adactus’ internal transfer list and with Home Swapper. If a customer is not computer literate then the Lettings Officer will complete the application on their behalf. Since the scheme began in April 2013, RightSize has helped eighty-one households to downsize; fiftynine transferred into another Adactus property, twenty-one were by mutual exchange and one was rehoused by a Local Authority. Referrals to RightSize were made directly by the customer via the Contact Centre. b. General advice • Rising fuel costs are a cause of increasing poverty and the impact has intensified since welfare reform began. To help its customers, Adactus employs an Energy Advisor who will offer advice on tackling fuel poverty and also visit customers in their home to make an assessment of the energy efficiency of their home. Referrals are generally made by Asset Management if the customer has reported damp or condensation issues or a customer may request this service via the contact centre.
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
• Scripts provide guidance to Contact Centre staff on how to deal with a range of rent related issues. A spot check of the scripts revealed there is specific guidance for staff to enable them to deal with a Universal Credit applicant who does not have internet access. 2. Money Advice Service • Adactus employs a team of three Money Advisors who work with customers to help improve their financial situation. • Money Advisers will help a customer by looking at their financial situation and also at a number of other issues such as benefit entitlement, options to maximise the customer’s income and help them to budget, prioritise their debts to advise which debts require immediate attention. They will also assist a customer with completing welfare benefit application forms and will represent and support them through any appeal/ tribunal process. • Money advice referrals can come directly from the customer requesting this service following receipt of an arrears letter, or from various departments for example; asset management following a repair service, the tenancy enforcement and support team after contact, or from a scheme manager at a sheltered property. Between January and May 2016, 558 referrals were received as follows: o 269 - from the Income Team o 271 - from the Contact Centre o 12 - from the Sheltered and Supported team o 6 - from other departments (such as the tenancy enforcement and support team). • In October 2015 a new ‘triage’ system was introduced for a referral, this is operated by the finance department. This process is used to determine the priority of customers in order to utilise the Money Advisors’ time efficiently. • Referrals are received into the Money Advisors’ email inbox. The Income Team Administration Officer will contact each customer within twenty-four hours to assess their issues and determine what level of advice they need for example; a basic benefit check using the “entitled to” website, completing a benefit form, or representation at an appeal hearing. The triage service will also deal with the more straight forward cases such as the completion of an online Housing Benefit form or a first application for Discretionary Housing Payments. More complex cases such as queries relating to Employment Support, PIP, and Tax Credits are then passed to a Money Advisor. • Occasionally Money Advisors may refer a customer as they will not deal with a customer’s personal debt; where appropriate they will refer the customer to an external organisation that specialises in debt advice. • Money Advisors are allocated geographical areas to work in (two are based at the Miles Platting office and one at Chorley); this enables them to build up a rapport with the customer based on trust and understanding.
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
• Money Advisors each visit on average five customers a day; these can include repeat visits to follow up actions. In the last financial year, on average they each visited six-hundred customers. • Money Advisors are flexible in their approach and on a number of occasions they have visited a customer at their work place to give advice (at the customer’s request). • Due to the demand of the money advice service the current average waiting time for an appointment with a Money Advisor is up to two weeks. It is envisaged that this services will be in more demand as the roll out to Universal Credit and transition from Disability Allowance to PIP progresses. • Housing Benefit and Universal Credit training for staff was taking place at the time of this scrutiny. Training was delivered by a Money Advisor with the aim to equip staff with the correct level of knowledge to enable them to provide customers with appropriate basic advice. A spot check revealed the training provides staff with an understanding of Housing Benefit and how it is calculated, as well as basic knowledge of Universal Credit and what the transition to it means for customers. 3. Universal Credit Notification • When an existing customer makes a new benefit claim, the DWP should notify the Group that a claim has been made. Provided this notification is received an Income Officer will contact the customer in order to establish a payment date and to ensure they are aware that their Universal Credit housing related element is being paid to them and not the Association. A money advice referral is offered at this stage to assist customers in managing their finances. • A ‘flag’ is applied to the customer’s rent account that enables the system to identify customers in receipt of Universal Credit. This enables the income team to monitor accounts and identify customers who fall behind with their rent and who may need assistance with managing their finances. • Customers in receipt of Universal Credit are sent a text message a few days before their Universal Credit payment date reminding them that they need to make a rent payment when they receive their Universal Credit payment. If the rent is not paid on the due date then the system triggers a further text message to remind the customer that they have received their Universal Credit payment and not yet made a rent payment. 4. Managing arrears a. Arrears Process • A firm and robust approach is taken on rent collection and arrears recovery. It is the policy to take early action to progress customers in arrears through the arrears process to ensure that the debt is dealt with as quickly as possible before it escalates into an unmanageable amount. This is considered to be the correct approach as the Group will only afford to provide services if customers pay their rent.
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
• All arrears are treated in the same way; there is no distinction between customers in receipt of Universal Credit, Housing Benefit or choosing to pay by another method for example, direct debit or all pay. • Adactus uses an automated escalation process to enable better management of rent arrears. The Rentsense software uses complex algorithms to analyse the historical data on a customer’s account to assess their true arrears situation and prioritise cases. • A report is produced from Rentsense on a weekly basis to enable staff to accurately identify arrears cases that need further attention for example, it identifies tenancies that had their housing benefit reduced or stopped, broken agreements and static debts. A manual check is undertaken on a weekly basis of any cases that are suggested to receive a Notice Seeking Possession. Once this check is complete the data is uploaded on the Qlx computer system and automated arrears letters are produced: 1. First arrears letter – sent following an account going into true arrears over £10. 2. Pre action warning letter – sent (one week after the first letter) if the account has true arrears of greater than £10 and no payment has been received or agreement made since the initial letter. 3. Notice of Seeking Possession (NSP) – is served two weeks after the second letter if arrears are above £25 and no payment has been received or agreement made since the second letter. 4. Court warning letter – served two weeks after the NSP was issued if arrears continue and no payment has been received or agreement made. • If after all of the above stages the customer fails to make contact or to make an agreement to pay the arrears, then an application will be made to the County Court for possession. • A less vigorous automated letter system, managed by the Income Team Supervisors, is in place to take account of vulnerabilities in sheltered accommodation. Those customers in extra care and supported properties are omitted from the automated escalation process. • Once the weekly Rentsense data is uploaded onto Qlx, automated calls and text messages are sent to customers in arrears. Three telephone calls and text messages are made each day to give the customer the opportunity to discuss their arrears. The view is that early intervention will give customers in arrears the best chance possible of making arrangements to repay the amount outstanding before it escalates into a problem debt. • Money advice service, both internally and externally, is recommended at each stage of the arrears recovery process. A spot check of the arrears letters confirmed this was the case; the free money advice service is offered on each letter. • The information contained in the arrears letters is clear and concise and encourages customers to contact the Income team if they are experiencing difficulty in paying their rent. • The letters also advise customers to notify the Association if they are in receipt of Universal Credit or in the process of making a claim. • The Association relies on its customers to inform them if they move to Universal Credit. The previous system of notification from DWP was inconsistent and a new email notification system from DWP is in its infancy. The view is that if customers notify the Association they Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
are claiming Universal Credit then any arrears arising from this transition can be addressed quickly particularly as Universal Credit has a one week disregard when the claimant will not receive any benefit. • An agreement can be made to pay arrears at a minimum amount of £3.70 per week. Once a customer makes an agreement then the escalation process is suspended. However, if the customer defaults and does not adhere to the agreement then the escalation process will resume which can result in the matter being submitted to court. • One hundred and thirty-four arrears cases have been submitted to court between 1 November 2015 and 11 May 2016. • Forty evictions have been made between 1 November 2015 and 11 May 2016 due to rent arrears. b. Alternative Payment Arrangements • As stated above, there is no distinction between arrears of customers receiving Universal Credit, Housing Benefit or self paying; they are all progressed through the arrears process in the same way. However, for Universal Credit claimants an ‘Alternative Payment Arrangement’ is available where the Association can apply to have the housing related element paid directly to them instead of the customer. These are initiated as quickly as possible where appropriate for example, if the customer is more than eight weeks in arrears, is vulnerable or struggles financially. In such cases an application will be made to the Department of Work and Pensions (DWP) for the housing element to be paid direct to the Association. The DWP aims to make a decision within five days of receiving the application. • An application for an Alternative Payment Arrangements can also be made for arrears deductions to cover outstanding arrears. The DWP will set this at a minimum of ten per cent of the customer’s personal allowance or a maximum of twenty per cent. If twenty per cent is applied and the customer is suffering financial hardship as a result of this then an application can be made to the DWP to have the recovery amount lowered to the ten per cent minimum threshold. • At 11 May 2016, two hundred and sixty-one customers were in receipt of Universal Credit; of those, eighty-three (32%) had an alternative payment arrangement in place. c. Arrears and planned maintenance • Customers with rent arrears will not qualify for planned maintenance work (however, there are some exceptions to this rule). A flag is placed on a customer’s rent account if they have arrears; this notifies staff that a restriction is in place for planned maintenance work due to their rent arrears and also alerts contact centre staff to pass the customer’s call through to the income team so they can discuss the arrears and provide help and support where necessary. d. A spot check of five arrears cases revealed…
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
• We can be confident that every effort is made to contact customers with arrears in order to make a payment agreement to avoid the debt escalating. Money Advice service is offered before a court application is made in an attempt to help the customer manage their finances and ensure their income is maximised. In some cases the Income team had contacted the Housing Benefit department to confirm they had received the customer’s application. A record of telephone contact and the letters sent to the customer were detailed on the customers rent account. 5. Affordability check • To ensure viability Adactus assesses the financial capability of new applicants. Lettings Officers carry out an affordability check pre sign-up to determine if the applicant will be able to afford the rent without falling into difficulty. They use an online tool to calculate affordability; details of income and expenditure are input into the system along with any ongoing debts. The system uses a traffic light system and gives each person a score based on their disposable income. As part of this affordability check a risk assessment is also completed. This takes account of any known risk factors within the household, for example, in employment but on a zero hours contract. The completed affordability assessment is sent to a Money Advisor for them to assess and determine what assistance can be given to maximise the household’s income. Affordability assessments that show a property to be unaffordable, despite the Money Advisor’s proposed intervention, are passed to the Head of Income and Assistant Director of Asset Management to make a final decision on the allocation. To date, only one person has been refused a property on the grounds that they would experience significant financial hardship and would not be able to sustain their tenancy. • A new tenant is required to pay one week’s rent payment in advance. • Lettings Officers will help a new customer to set up a direct debit payment to pay their rent.
What we liked: • • • • • • • •
Rentsense reports to identify tenancies that had their housing benefit reduced or stopped, failed agreements and static debts. Contacting tenants at the start of arrears before they build up. Automated calls and texts to tenants to remind them of their arrears. Treating vulnerable customers with arrears sensitively. Money advice service. Helping customers to downsize via mutual exchange/Home Swapper. Training of front line staff to keep them up to date with changes to the benefit system. Affordability checks.
What concerned us? • Information on the website requires updating.
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Internal Affairs for Adactus500 Scrutiny Panel
What we could look at next? • Future plans for dealing with the potential impact of Universal Credit. • Spot check incoming calls to determine if they are dealt with in an understanding manner. • Adactus500 survey results.
Appendix Staff Interviews The following interviews were carried out with staff: Name Role Mike Murphy
Clare Myers
Date interviewed
Topics covered
Head of Income/Leasehold Management
11/5/16
Impact of Universal Credit
Arrears Supervisor
11/5/15
Arrears recovery process Arrears recovery process Monitoring 24/5/16
Arrears Letters
Lettings Officer - Tenancy Matters
11/5/16
RightSize
James Wright
Money Advisor
18/5/16
Money Advice service
Robin Graham
Money Advisor
18/5/16
Money Advice service
Lorna Taylor
Income Team Administration Officer
20/5/16
Triage system - Prioritising money advice referrals
Athanasius Protopapas
Marketing & PR Manager
24/5/16
Promoting Universal Credit
Liaqat Ali Shan
Under occupancy
Inhouse magazine Leaflets
Sam Ryan
Marketing Officer
24/5/16
Universal Credit and publications Inhouse magazine
Helen Coulson
Shehnaz Akhtar
Allocations & Lettings Manager
24/5/16
Affordability checks
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Internal Affairs for Adactus500 Scrutiny Panel
1. Spot check – Welfare Reform Information What we wanted to check We wanted to know how Adactus had prepared its customer for the change to Welfare Reform and what information, advice and guidance on Universal Credit had been provided. What we looked at A request was made to the Marketing team to provide a copy of a recent inhouse magazine. A check was carried out to determine if information on Universal Credit had been featured in the magazine. What this means Information on Universal Credit was regularly featured in the inhouse magazine: o Winter/spring 2013 – preparing for Welfare Reform change and independent (external) Money Advice Service. o Autumn/winter 2013 – full page article on welfare benefits system and half page on bedroom tax. o Spring/summer 2014 – double page featured article on Universal Credit, ways to pay rent, PIP and Discretionary Housing Payments. o Autumn/winter 2014 – full page article on Welfare Reform including bedroom tax and students, full page on credit unions, library internet access and setting up direct debits. o Summer 2015 – full page article dedicated to Universal Credit with information on opening a basic bank account, it also featured a full page article giving advice on budgeting.
2. Spot check – Arrears Recovery What we wanted to check We wanted to know if the Rent Arrears Recovery Policy was followed when chasing rent arrears and if Money Advice was offered in an attempt to help a customer with arrears. What we looked at We randomly selected five arrears cases identified by MobySoft. We accessed each customer’s rent account and checked the arrears history and monitoring notes. What this means The arrears recovery procedure was followed correctly in all the sampled cases. Four customers made contact after receiving the second letter and made an agreement to pay their arrears however, the agreement was not held and the cases progressed to Notice Seeking Possession then a court warning letter. The customers made contact following the court warning letter and Money Advice service was offered. Two customers made an agreement after an application had been
Shehnaz Akhtar
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Internal Affairs for Adactus500 Scrutiny Panel
made to the court (a suspended possession order was awarded in these cases). In two cases staff had contacted the Housing Benefit department to confirm if an application had been made and to establish at what stage it was at; once confirmed the arrears recovery procedure was suspended. Case Letter 1 Agree Letter 2 Agree NSP Agree Court Agree ment ment ment Warning ment
Money Agree Apply to Warning Agree Court Advice ment court? ment offered? Application
1 2
n/a
3 4 5
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