Exploring debt poverty (the causes, residents’ responses, access to services & information, approaches to debt management) so that we can develop a more holistic and effective approach and alleviate some of the current problems for our residents suffering debt poverty.

Full Application: Not funded at this stage

Debt poverty is an issue that affects all Local Authorities in the UK. The Joseph Rowntree Foundation estimates that approximately 22% of people in the UK are living in poverty. Problem debt is defined by the Family Resources Survey as “being behind with any household bill or credit commitment” and is reported by 8% of UK households. This figure is much higher among those in the poorest fifth than the rest of the population; 20% of those in the poorest fifth report problem debt, whereas it is 11% in the second poorest fifth and just 1% for the richest fifth (source: https://www.jrf.org.uk/data/household-problem-debt).

According to Parliament UK statistics, individuals living in relative low income is at its highest in the North East of England, meaning that poverty and debt poverty is more acutely felt in the region where the three Local Authorities supporting this bid are based.

The causes of debt are well researched, and include factors like worklessness, education, skills, the local economy, job market, family type, employment type, disability and illness and ethnicity (source: Joseph Rowntree Foundation). As debt poverty can be multi-dimensional, and therefore seeking support can occur in many different settings, the anecdotal evidence we have suggests that the help available to people in debt is fragmented and therefore difficult to navigate. Our Discovery project is aiming to understand this landscape better in order to explore and develop common reusable data models and service patterns that could provide a more holistic and effective approach to debt poverty, support and debt management.

We believe the results of the project will be of interest to any Local Authority that is seeking to better understand, manage and prevent debt poverty. We also believe that there are significant financial, economic and societal benefits from doing so that may be of interest to Government and other public sector organisations, especially in the context of Welfare Reforms.

The main users for this project are will be residents who are in debt poverty, and Local Authority staff.

Our Discovery project would seek to explore the Hypotheses in more detail and would create a Research Plan that would test the Hypotheses.

The current hypotheses we have about this problem (that would be further explored and tested in the initial workshop) are:
1. There is no joined-up approach within Local Authorities for collecting debts for a resident leading to a negative customer experience and impact, and duplication of effort across Local Authority departments.
2. How the council manages a resident’s debt is disjointed; which can lead a resident further into debt poverty.
3. There is a taboo of being in debt which is why residents don’t seek help; this can lead to bigger debt (and other) problems.
4. Residents aren’t aware of the debt management mechanisms available to them meaning they don’t get support that might help them to get out of debt.
5. Residents that are in debt aren’t aware how to prioritise their debt; this can lead to bigger debt (and other) problems.

The research methods we would anticipate using to explore this problem would be:
• User research – resident surveys, interviews and focus groups. Council Services staff surveys, interviews and focus groups.
• Observational analysis and shadowing – spending time observing services that provide support to people in debt.
• Process and journey mapping – exploring and illustrating how debt support is provided / how residents find support. We will seek to highlight the customer experience, the financial cost of activities, and any key issues.
• Desktop analysis – considering published research on the issues, and doing web searches to emulate the customer experience
• Utilising qualitative and quantitative analysis from commissioned debt providers to understand the impact.

We will then review all the research to enable us to Define the problem and summarise the;
• Size and severity of the problem.
• Case for change
• Opportunities to address the problem.

Sunderland City Council has recently started exploring this topic with a cross-organisational project. The early work has highlighted the complexities of the issue, and that further in-depth Discovery work is required. Newcastle City Council is currently reviewing debt with the aim of moving from a model focused on collection to one that better understands a resident’s circumstances to identify opportunities to prevent debt from occurring and better responding when it does. If this bid is successful, the learnings from these pieces of work will be fed in to the project.

As previously referenced in section 2.2, individual and family debt is an issue that causes problems in all Local Authority areas. The Money Advice Service estimates the level of over-indebtedness (where debt becomes unmanageable). It is thought there is close to 16.1% of the population across the UK who are over-indebted, in the North East it’s 17.7%. Sunderland is the highest authority in the North East with 20.6%.

The societal and financial cost of this is very difficult to estimate, and our Discovery project would seek to explore this further and quantify it for the Council’s involved. Financial costs to Councils include the Debt recovery processes and the amount of Debt written off each year. Debt recovery and write-off processes often takes place across several disparate Departments within Council’s and therefore these costs are often duplicated and this can have huge societal impacts as residents can be chased for multiple debts. 

Given the statistics around the high number of people who are in debt poverty, especially in the North East of England, and the anecdotal evidence we have about the amount of staff time and resource we put in to supporting people, we expect there to be a significant financial cost saving opportunity around an improved and more holistic approach to debt poverty. We also expect there to be significant societal and individual benefits of improving the support offered.

We will work as a virtual team across the three locations and will establish routines and rituals that will enable all partners to be engaged and informed. This includes adopting an Agile approach to Discovery, with fortnightly sprints, and sprint planning / review retrospective meetings taking place fortnightly. We will also ensure all activities etc are captured in Trello (or something similar) so any stakeholder can see at a glance where the project is up to. We will also create a shared space (Google Drive or Microsoft SharePoint) for the sharing and storage of working documents.

While we will do a lot of our activities separately, we are geographically close enough to easily facilitate joint workshops and meetings with representatives from all three Councils when required. All Councils are committed to travelling to attend these events when it is required.

Sunderland (as the lead authority) will facilitate all activities and will take leadership in ensuring deadlines are set and met. We will have a cross-Council steering group with senior representatives on it that will meet virtually every four – six weeks to monitor progress against the deliverables and to make key decisions.

We would like to benefit from;
• Support and guidance as and when required directly from MHCLG
• Being able to send communications and messages through MHCLG channels to help us reach a wider audience
• Help with engaging with other local authorities that may wish to feed into the project and help with sharing the outputs across local government
• Access to GDS user research labs if appropriate to help keep costs manageable and provide a conducive environment
• Any further training opportunities available.