Helping residents manage their money Hertfordshire Housing Conference Tony Bailey Chairman HertSavers Credit Union April 2013

Helping residents manage their money What is the problem? Likely Consequences Solutions Why use a credit union? Who will need help to adjust? Potential new credit union services Risks and Unknowns Costs and Partners Questions

Social Welfare Reform = Radical Change And then there is Universal Credit … Income Support Housing Benefit Council Tax Benefit Incapacity Benefit Employment Support Allowance Tax credits Disability Living Allowance into Personal Independence Payments Total Benefit Cap Community Care Grants Social Fund Crisis Loans

Universal Credit: resident’s challenge replacement for most working age benefits a single monthly payment for a household a basic amount - paid in arrears plus amounts for children, disability, housing and caring single rate of withdrawal when a person enters work digital by default new sanctions for fraud and error But we may see some backtracking on the details as the system is rolled out: Pathfinder April 2013 Rollout for new claims October 2013 to April 2014 Rollout for existing April 2014 to 2017

Impacts on Tenants, Social Landlords and Councils Residents to budget and manage money monthly R educed benefit income to be replaced by earned income “No losers at point of change” but frozen benefits Comparative losers – people making new claims or changes Clearly designed to reduce the bill for social welfare over time Potential for increased level of rent arrears Potential for increased level of Council Tax arrears Some mitigation by Discretionary Housing Payments and Hertfordshire Welfare Assistance Scheme

Ways of managing money monthly Banks Think Banking RBS Others Prepaid Cards Allpay CredEcard Credit Unions JamJar Accounts Current Accounts “If you don’t take care of your money, who can you trust to help ?”

Why use a credit union? Social enterprise – not for profit co-operative Trading surpluses go back to residents Scope for members and partners to shape services Residents more likely to receive a sympathetic service Provides employment for staff within the county Improves sustainability of credit union services HertSavers CU serving Welywn Hatfield since 2001 and Hertfordshire since 2009 Approximately 1100 members Two offices: Hatfield and Waltham Cross Open 23 hours a week There are already over 5000 credit union members in the six credit unions in the county

Who will need help to adjust? Light Support Able to budget with short term support Independent Able to budget Intensive Support Only able to budget with ongoing support Exceptions Never able to budget (20%) DWP suggest claimants will fall into one of four groups: 1 million people use a PO account with no transactional banking 1.4 million people have no bank account 2 million have accounts with failed direct debits 850,000 have accounts with regular failed direct debits

Potential new credit union services Light Support Able to budget with short term support Independent Able to budget Intensive Support Only able to budget with ongoing support Exceptions Never able to budget (20%) Credit Union Current Account (CUCA) Regular Bank Account Credit Union Managed Payment Service DWP Exceptions process

Credit Union Managed Payment Service Wages and Benefits paid into CU bank account Automated allocation of credits to member accounts Member Agreement to provide list of payees Automated payments to payees Rest allocated to saving accounts and/or Prepaid VISA card Electronic remittances to payees and ed Remittance Advice Standard u se of Prepaid VISA card like all VISA debit cards HertSavers CU already has the software Supplier workshop for feedback from trials in April Controlled payment of rent, council tax etc while member adjusts to system

Managed Payment Service Implementation

Credit Union Current Account (CUCA) Cash withdrawals at any Link ATM machine Direct Debits + Standing Orders - no cheque book VISA Debit Card used as any other VISA Debit Card Instant access to electronic credits: wages, benefits etc No unfair charges – only reflecting actual costs Own Sort Code/Account Number Improved service for members who cannot visit the CU office Exists already in use in some credit unions The benefits of a current account for members who are better able to manage their money

CUCA Implementation options

Risks and Unknowns Possible changes to UC proposals from trials etc Length of time before reversion to direct payments Delays to UC computer projects Numbers of residents taking up the services Speed of rollout (if problems emerge) Size of increase in arrears CU capacity to manage the workload Any change from 2015 election Is a big bang approach wise at this stage?

Costs: Part 1- Managed Payments Set up Costs £6,500 Project costs approx £5,000 + equipment £1,500 Annual running Costs £23,000 Staff £19,600 (based on 25 hours a week) Experian/Cards/Stationery £3,400 Transaction Costs (volume dependant) Allow £40 per account per annum Cost to partners (10) £650 setup then £2,300 pa running costs until breakeven and £5 per account per month (paid by partner for resident)

Costs: Part 2- CU Current Account Set up Costs £40,000 VISA Joining Fee €10,500 Project costs approx £28,000 + equipment £2,000 Annual running Costs £27,500 Staff £15,500 (based on 20 hours a week and Pt1 in place) Experian/Cards/Stationery/ADSL £3,000 Service Desk/Fraud monitoring etc £9,000 Transaction Costs (volume dependant) Allow £40 per account per annum Cost to partners (10) £4,000 set up then £2,750 pa running costs (until breakeven) plus £5 per account per month (paid by partner for resident)

Partners and interested parties East Herts District Council B3 Living Welwyn Hatfield Community Housing Trust Dacorum Borough Council North Herts Homes Riversmead HA Broxbourne Borough Council Stevenage Borough Council Hightown Praetorian CHA Howard Cottage HA We still need more partners …

Timescales Part 1 – Managed Payments Recruit and train staff member Test systems Launch October 2013 Part 2 – CU Current Account Supply pre-implementation documents to ABCUL Seek membership of VISA International (Apr/Jul/Oct/Jan) Commission Co-op Bank to set up CUCA (6 months) Recruit and train staff Test systems Launch April 2014 ??

Next Steps Conclude Partnership Agreements Implement Managed Payments Submit Application and Business plan to ABCUL Apply for membership of VISA Initiate CUCA Implementation project Phone: or

Questions Thank you for listening. Any Questions? Phone: or Helping residents manage their money Hertfordshire Housing Conference Tony Bailey Chairman HertSavers Credit Union April 2013

Incoming payments can be automatically allocated to a set of members’ accounts

Landlords/utilities details are stored in a file of Payees that links to members

Agreement made with members to receive Universal Credit & make payment to their payees. Money leftover is transferred to savings, current or debit card acct.

System produces list of payments to be made and highlights any where insufficient funds need to be investigated. Then outputs BACS file and s.