The effectiveness and value for money of Financial Inclusion

The effectiveness and value for money of
Financial Inclusion interventions
An evaluation template for social housing providers
Karl Dayson
About the author:
Professor Karl Dayson is the founder and Executive Director of Community Finance
Solutions.
Established in 1999 and located within the University of Salford, CFS is an independent
research and development unit engaged in promoting and developing integrated solutions for
financial and social inclusion, and community asset ownership. Founded in 1999 by Prof.
Karl Dayson and Dr. Bob Paterson, CFS seeks to empower communities to solve local
problems relating to land and financial exclusion. CFS has developed solutions for securing
community ownership of land and models for the provision of loans to low income, excluded
households in more than a dozen communities across the UK.
About the funder of the work:
Friends Provident Foundation is a grant-making charity, currently working to create the
conditions throughout the UK for improved access to appropriate financial services for those
who are currently excluded, particularly those on low incomes or otherwise vulnerable to
market failure. It particularly wants to encourage thinking that deals with the causes of the
problem. Established as part of the demutualisation of Friends' Provident Life Office in 2001
and the flotation of Friends Provident plc, Friends Foundation is an independent charity with
its own board of Trustees.
1.0 Background and Objectives
Funded by Friends Provident Foundation (FPF) during 2008, Community Finance Solutions (CFS University of Salford) undertook a review of the scope and the effectiveness and value for money of
the financial inclusion services that had been developed and delivered by Golden Gates Housing,
now Golden Gates Housing Trust (GGHT). At the time these services were in their infancy so in
2011/12 CFS returned to assess their impact in more detail.
The follow-on work had three main objectives:
1. To create a baseline of mainstream performance indicators with which to measure
the success of financial inclusion interventions based around (but not limited to):- levels of tenant debt
- (and inversely) increases in tenant income
- access to advice (internally and externally delivered)
- access to mainstream financial instruments
- use of credit union services
- integration of services (across interventions and with partners)
- number and trends of evictions, abandonments and similar measures
2. To review all current interventions in terms of historic and current performance,
execution, management, performance management and future prospects
3. To develop a financial model that could calculate the cash savings/benefit to GGHT
that would provide a reasoned explanation for investment in all/any one of their
financial inclusion activities from their mainstream budget.
4. Using this case study evidence to help assess whether housing associations in general should
(or should not) incorporate financial inclusion work into their core revenue protection
activities.
5. Produce an evaluation template that could be shared with other social housing providers.
This assignment has involved interviews exclusively with GGHT employees at differing levels within
the organisation. As is always the case with GGHT, CFS has enjoyed full access to information
requested and all employee time has been given freely and enthusiastically. For this we thank all
relevant parties, but particular thanks are due to Sally Lamb, Income Management Team Leader,
who provided intensive support at a time of great organisational change, and at a time when her
mind might legitimately have been elsewhere.
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2.0 Why are social housing
landlords involved with financial
exclusion?
2.1 What is financial exclusion?
Financial exclusion essentially means a lack of access to and use of appropriate and, sometimes
necessary, financial services in order for people to manage their money effectively. It comprises of
demand-side issues for customers centred on financial literacy and financial capability, and supplyside issues for providers centred a willingness and ability to provide appropriate products and
services.
2.2 What causes financial exclusion?
Exclusion can result from a number of barriers including:




 Access exclusion – for instance limited availability of appropriate services (including digital
1
exclusion and even cases of high street bank branches being made available only to high
2
net-worth customers ) 
 Condition exclusion – including minimum account balance stipulation or, for example,
prohibitively high excess levels on a home contents insurance policy. Condition exclusion
also includes terms that contradict an individual’s beliefs (e.g. the lack of Sharia Law
compliant products) 
 Price exclusion – although services may be available the associated charges prevent take-up. 
st
 Marketing exclusion – this can be seen as 21 century version of access/geographic
exclusion, in which certain individuals do not get offered products. 
 Self-exclusion – a process where the individual opts out of the formal banking system.
Although an individual may define themselves as self-excluded there may be structural
factors that result in that outcome. 
2.3 Why social housing landlords are involved with financial inclusion
Over the years, social housing landlords have increasingly housed those excluded from a range of
services. The sustainability of this residualisation of social housing has relied on a combination of
high levels of employment (even at low wages), benefits that broadly rose with inflation and Housing
Benefits being paid directly by the state to the social housing landlord. Over the last few years all
three of these have come under sustained scrutiny, placing social housing landlords in a more risky
environment. In response, many social housing landlords have developed a range of tenant focused
activities that have sought to improve their commitment to the landlord and their financial stability.
However, these have their precursor in the longstanding commitment by social housing landlords to
1
Extract from: http://www.21stcenturychallenges.org/focus/the-reasons-for-digital-exclusion/ ; “Research shows a clear correlation between
digital and social exclusion. This means that those already at a disadvantage and arguably with the most to gain from the internet are the least likely
to be making use of it and further disadvantaged by not using it.”
2
HSBC now has branches that offer face-to-face banking only to Premier customers with non-Premier customers being forced to use self-service
options or use alternative branches
2
notions such as ‘Housing Plus’ and other activity aimed at building communities among residents.
Moreover, the social housing landlords that were formerly part of local authorities had through
political representation an interest, and in some places a commitment, in tenant focused service.
The significant change has been the changing nature of the problems, but also the changing
circumstances of the residents. The recession has had a profound impact on British society. At a
micro level social housing tenants bear the brunt of the macro-level problems within their individual
households: unemployment is rising (2.65 million in June 2012), the risk of unemployment, and
underemployment (Dayson 2011); the Government’s reviews of state benefits has begun to result in
tightening conditions and is increasingly decoupled from the cost of living; personal debt continues
st
3
to rise, albeit at a slower rate, and the UK total stands at £1,456 trillion as at the 31 January 2012 ;
4
fuel prices have increased significantly, with petrol at £1.33.8 a litre and 4.75 million households
now said to be in Fuel Poverty (in 2010); but perhaps the biggest shift has been the expansion of the
sub-prime financial services market with Provident Financial continuing to grow and charge interest
rates in excess of 280%, while newer on-line and telephone rivals like Wonga charge rates over
3,000%. In such an environment social housing landlords have increasingly asked themselves what
they can do to help their residents tackling financial exclusion.
2.4
Roles a social housing landlord might adopt to address financial exclusion
Few groups are as affected by financial exclusion as social housing tenants. In their research for the
Financial Inclusion Taskforce, BMRB Social Research (2006) found that social housing tenants were
more likely than any other group to be unbanked: over 20% of social housing tenants did not have a
bank account. Similarly, social housing tenants are much more likely to be uninsured. According to
figures from the 2005/2006 Expenditure and Food Survey, only 36% of social housing tenants have
home contents insurance compared to over 75% for the UK as a whole and over 90% for owner
occupiers.
Social housing tenants are also less likely to have access to mainstream financing. The majority of the
over 2 million home credit customers reside in social housing estates (Ellis et al, 2006). The extent of
credit impairment among this group may make them even too risky for sub-prime lenders. Ellis et al
(2006, p. 5) found illegal money lending – a source of credit for those living on the very margins of
sub-prime let alone the mainstream financial sector – to be concentrated in “deeply deprived social
housing estates.”
Because such a large proportion of their tenants are financially excluded, many social housing
landlords in the UK are becoming involved in promoting financial inclusion. However, there are
considerable differences between social housing landlords in what they emphasise in promoting
financial inclusion; some social housing landlords prioritise facilitating access to affordable credit,
whilst others may put more emphasis on ensuring that their tenants’ home contents are insured.
3
www.debtsimple.co.uk/uk-debt-statistics.shtml
of the 18 June according to the AA. www.theaa.com/motoring_advice/fuel/index.html
4 As
3
Similarly, the social housing landlords differ in the role they decide to take in promoting financial
inclusion, which can placed in six broad categories (Conaty et al. 2008):
Figure 1: Roles of Social Housing Landlords in promoting Financial Inclusion
Sign-poster
Co-developer
Capacitybuilder
Funder
Underwriter
Owner
Source: Conaty et al, 2008






Sign-poster: Where effective and well-functioning providers of financial
inclusioninterventions exist it may suffice to put in place tenant referral mechanisms
 Capacity-builder: Where financial inclusion providers exist, but are lacking in scale and
capacity, social housing landlords may find that they need to invest in building capacity of
the provider. They can do this by seconding housing staff or entering long-term contractual
agreements to fund new activities and posts 
 Under-writer and community investor: Where third sector lenders are unable to meet
demand from new customers in the form of tenants, social housing landlords may want to
consider underwriting the lender by creating loan guarantees or putting in place a
guarantee fund 
 Promoter and joint funder: Where there is a gap in provision, social housing landlords
might promote and jointly fund local third sector lenders by providing supplementary lines
of credit for both housing and non-housing purposes 
 Co-developer: Where gaps are revealed in provision, social housing landlords might codevelop services with local service providers such as money advice budgeting schemes that
work together with other agencies to free local people from the grip of such problems as
predatory lenders 
 Owner: The final potential role for a social housing landlord is to develop in-house services.
This could involve in-house provision of debt and money advice, affordable credit and
home contents insurance. However, in-house provision means the social landlord has to
forgo working with external financial inclusion groups, which can create local political 
problems. There is also a sense that without external partners the service may be more
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costly and can be less effective, although this may not always be the case . 

6
www.friendsprovidentfoundation.org/hyde
4
In many cases, social housing landlords will take on various roles depending on the type of service
they deliver or aspire to deliver. For example, they may have an in-house home content insurance
scheme, whilst they may also have a referral system to external providers of affordable credit and
debt advice.
2.5
The Social and Economic Case for Financial Inclusion Activities
The Government recognises that financial exclusion imposes a cost to the excluded individual and
6
also to society itself . Furthermore, it accepted that if people become financially excluded due to
their indebtedness, they become more vulnerable to financial distress and a spiral of debt, poverty
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and hardship .
For some people there is an additional risk of poor health brought about and exacerbated by overindebtedness. Research from the Legal Services Research Centre has revealed nearly 90% of its debt
clients believe their health is being adversely affected “most or all of the time”.
“Credit Where Credit’s Due” (National Housing Federation – June 2007) indicated that “a core part
of the social purpose of Housing Associations (is to) address financial and other forms of exclusion”.
Whilst the various aspects of financial exclusion can be considered equally important and often
depend on a person’s individual circumstance, there can be little doubt that the most pernicious
aspect of exclusion is usually lack of access to affordable credit since this can often be seen as the
driver or engine of the exclusion. It is estimated that approximately 70% of the customers of highcost lenders live in housing provided by a social housing landlord, whilst social tenants also score
highly on other indicators of exclusion.
Without making an economic case for intervention, “Credit Where Credit’s Due” went on to suggest
that social housing landlords can “cut rent arrears, avoid evictions, reduce tenant turnover and save
money on management and legal costs by adopting financial inclusion strategies”. Until recently,
whilst there is an increasing body of evidence offering support to this opinion, there has been little
concrete work in providing challengeable evidence to support this economic case.
However, in September 2009, CFS published “Financial Inclusion Initiatives: Economic impact and
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regeneration in city economies – the case of Leeds” indicating an average return of investment of
£7.91 generated by financial inclusion activities for each £1 invested in these activities. From a
beneficiary’s perspective the return per beneficiary assisted was £475.92. More recently, work by
the Financial Inclusion Centre funded by Friends Provident Foundation built on this work to show
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how debt advice has net financial benefit for social housing landlords .
Generally inclusion is considered positive based on the ability (presuming the knowledge and
confidence exists) to use access to financial services to (better) protect households against risks and
“Promoting Financial Inclusion” (HM Treasury – December 2004)
Inclusion – a way forward” (HM Treasury - March 2007)
8 See www.communityfinance.salford.ac.uk/
6
7 “Financial
9
www.friendsprovidentfoundation.org/hyde published in the spring of 2012
5
to allow them to cope with fluctuations in income and expenditure which can often become a
tipping point from which mild exclusion can often become more entrenched and damaging.
Whilst much of the media coverage during the current recession concentrates on the ‘new poor’ generally asset-owning, over-borrowed, and recently redundant - there is a far higher concentration
of victims of the recession among those housed by social housing landlords. Hence, it seems
reasonable to extrapolate an inference from the research that, all things being equal, investment by
social housing landlords in financial inclusion activities should generate a corresponding return on
investment for them. It is this hypothesis that we are seeking to find a way to test.
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3.0 Review Methodology
Any assessment of financial inclusion activity usually involves at least two, if not three, parties.
Services can be viewed from the perspective of the customer or tenant (recipient of services),
landlord (service provider or commissioner) and the funder (commissioner or purchaser of services).
In many cases the commissioner and service provider will be the same, i.e. the social housing
landlord. However, through this theoretical distinction it is possible to isolate the indicators
necessary to appraise the overall service.
Figure 2: Tripartite Financial Inclusion Services Model
Customer /
Tenant
(recipient of
services)
Financial
Inclusion
Services
Funder
Landlord
(commissioner or
(service provider,
commissioner)
Purchaser of
services
Building on this acknowledgement and acceptance of differing and sometimes conflicting
perspectives helps further develop an evaluation framework that details these views, concerns,
opportunities and challenges. These can be translated into generic objectives:
a) Customer / Tenant objectives
 Generally wishes to be a good tenant (including meeting rent obligations amongst other
things) 

 Generally wishes to improve their situation (including financial situation personal cost /
benefit analysis amongst other things) 
b) Landlord objectives
  Improve the overall situation of its customer base 
 Deliver services as efficiently and effectively as possible 
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c) Funder objectives
Has specific desired objectives depending upon circumstances (might include
suchstakeholders as the Local Authority looking to improve the lot of its citizens or,
perhaps, a charitable foundation helping the landlord develop new services or refine existing
ones)
d) Financial Inclusion services objectives
 Effectively increase access to those necessary and appropriate financial products required to
function in a highly-connected modern society 

 Reduce financial exclusion both in terms of access to products and the harm exclusion can
confer on to the excluded person 

 Develop services that are both effective and in compliance with rules, regulations and best
practice 
 Services should be run as efficiently as possible 
These objectives can be measured in a number of ways, but if the focus of interest is the fiscal cost
benefit the three most common are return on investment return per beneficiary pre-costs and
return per beneficiary post-cost. All three comprise of many components and the approach adopted
in this work takes the following principles and factors into account:
Return on Investment

Return per Beneficiary
– pre costs

Calculated simply as the return generated following the
investment of £1 into financial inclusion services
This return consists of a mixture of cost savings (such as evictions
saved, and arrears reduced), income maximisation, and even an
element of commercial profit
 Social profit including increases in personal wellbeing and
community cohesion are not taken into account due to the
economic emphasis of this exercise
Accordingly, the return accrues to various including customers on
the basis that as customers of a non-profit distributing
organisation they ultimately (directly or indirectly) benefit from a
well-run organisation
 Wherever possible overlaps in returns are netted out and
assumptions are made based on a prudent to very prudent basis
 Wherever possible seeks to ascertain wastage (of internal
resources) and latent potential (if more services were provided
what other benefits might the customers / landlord expect)
The mix of services and their individual return on investment
coupled with their penetration within the customer base can
significantly impact on the overall picture when viewed from a
portfolio or organisational perspective
 Some financial inclusion workstream products or services are
more scaleable than others and have different cost / revenue
dynamics
Services should always be provided or commissioned based on
verified customer intelligence, but with the rider that available
resources tend to limit this capability
Views the products and services provided from the customer
perspective
Considers how much better-off she/he is having been through the
service
8


Assumes that services are provided in a bubble in that the
customer is unconcerned with who has paid to provide the
services
Does not allocate a cost to the time/effort required of the
customer (opportunity cost)

Return per Beneficiary
– post costs
Views the products and services provided from the customer
perspective
Considers how much better-off she/he is having been through the
service
Acknowledges that somebody has to pay to provide the services
(even if the costs are via a non-profit distributing social housing
landlord), and nets out the costs of service delivery with the
benefit generated per person i.e. what situation would the
beneficiary be in had he / she been required to pay for the service
required
 Does not allocate a cost to the time/effort required of the
customer (opportunity cost)
Not only is the opportunity cost missing from this approach it is also ignores the possibility that
another use of the money could have a better outcome. It only tells us what the service under
examination actually performs; it does not tell the social housing landlord if it would get a better
return if it adopted a different strategy. Taking account of this caveat the method used by CFS to
assess the financial cost and benefit of financial inclusion work is called the Business Intervention
Model (BIM).
Therefore, in summary the approach and methodology used in this research can be visualised as
follows:
Figure 3: Methodology Stages of Assessing Social Landlords Investment in Financial Inclusion Activity
• Customer (recipient of services)
• Landlord (provider / commissioner of services)
Perspectives • Funder (commissioner / purchaser of services)
Services and
Context
BIM
Modelling
and results
• Financial (Inclusion) Services
• Context (internal and external)
• Return on Investment
• Return per Beneficiary - pre costs
• Return per Beneficary - post costs
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3.1
Business Intervention Model (BIM)
CFS has now undertaken the BIM modelling process with a number of clients and the process is
somewhat unique to each client. This is primarily due to differences in service design, local delivery
mechanisms, management structures, associated cost bases and the amount/quality of tracking
done and performance management information (PMI) available and provided. However, an
abstract of the approach has been developed. A diagrammatic representation of the theoretical BIM
and its process may be found in Figure 4.
Figure 4 – Business Intervention Model (BIM) methodology
Programme Costs
Salaries, on-costs,
Programme Shape
pensions, mileage,
Existing
provision
management fees, general and specific
partnership
overheads, constraints and opportunity
demographics
costs
(where known)
Programme Delivery / Impact
1.
2.
Definition of target market
(Potential) Demand from target market
3.
Capacity to provide services (internally and
potential external partnership options)
Impact on target market / organisation:- reduction / increase in absolute costs
- reduction / increase in relative costs
4.
- increased / reduction in absolute income
- increased / reduction in relative income
Review, refine, (re) deliver
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options,
of
services,
beneficiary
and stated
needs
What the BIM methodology enables us to do is to measure a social housing landlord’s intervention in
terms of the net financial gains that can be achieved by investing in a range of financial inclusion
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activities. This view is underpinned by CFS’s groundbreaking work with Southern Housing Group
11
(SHG ) where, for the first time, it created an activity-level BIM for a social housing landlord that
was capable of providing a transparent and quantifiable cost-benefit analysis of the financial
inclusion services offered by SHG in purely monetary terms.
More recently, CFS’s creation of a BIM for financial inclusion services across the City of Leeds
builds upon the SHG model in a number of ways:-
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  It is covers multiple organisations 
  It works across-organisations: allowing for overlaps where feasible / where possible 
 It is cross-service: covering advice, (non-mainstream) financial services, housing, health and
utility providers amongst others 

It is cross-sector: involving public sector, third sector and even private sector interventions 

 Although the work only covers a sample of organisations (approximately 80% of all activity) it
is a macro-level model allowing for the up-scaling of benefits and costs to the City level 

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 It is complemented by an input-output model allowing for impacts and leakages across the
wider Yorkshire and Humber region 

 Whereas the SHG model sought to justify Return on Investment by looking at costs saved
(actual and likely) due to intervention, the Leeds model deals more with the other side of the
equation by considering additional income (of all types) generated for and saved for clients
and, to a lesser degree, also assigns value to peace of mind 

 Similarly to GGHT (and unlike SHG) the Leeds model was designed to work at a service
provider +1 level having been primarily modelled through PMI and based on income
maximisation rather than at an activity level. The GGHT model outlined within this report
seeks to identify income maximisation and some cost reduction / activity level analysis. In
this way, the GGHT model created for this exercise is the first dual-outlook BIM created for
a social housing landlord looking to balance income generated and cost reductions. 
In simple terms, the BIM works by calculating the net average benefits accruing to service users
return per beneficiary – pre costs’ (how much better-off the client is after the service has been
delivered than before) by receiving / using the financial inclusion services. Whilst beneficiaries are
usually ignorant of the costs of service delivery (even though they are a stakeholder group), the BIM
then goes on to consider the investment in services as a return per beneficiary – post costs’ (how
much better off the client would have been if they had paid for the service themselves). Allowing for
this being subsidised the difference between pre-costs and post-costs is the cost of delivery per
service user. This tends to allow for a better comparison of services than pre-costs. Finally, the
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12
For example: www.housingexcellence.co.uk/news/southern-housing-group-provides-financial-inclusion-service-181713
www.southernhousinggroup.co.uk
www.leeds.gov.uk/files/Internet2007/2009/43/report%20final%20web%20version.pdf
An Input:Output uses a matrix representation of a nation's (or a region's) economy to predict the effect of changes in one industry on
others and also by consumers, government and foreign suppliers. It depicts inter-industry relations of an economy. It shows how
the output of one industry is an input to each other industry.
13
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model considers delivery at a more macro level (return on investment) in what has been invested to
deliver the services and what has accrued to the service beneficiaries (per £1 invested in delivery).
This is useful both at an organisational level and that of a funder since it indicates the benefit
leverage a service generates.
Accordingly, BIM modelling involves:1. Understanding the roles, responsibilities and required activities of all relevant staff in terms
of delivering and managing the process/activities
2. Understanding the interaction and information flows between these parties (internally and
externally, with beneficiaries and also with other agencies);
3. Understanding the outputs and the outcomes of the interventions; both with regards to the
number of beneficiaries dealt with but also the net average return to the beneficiary as a
result of being involved in the process/activity
4. Calculating the cost of delivering and managing the services provided; at an organisational
level where appropriate, certainly at a unit level and also, where possible, and as
appropriate, at a unit cost-benefit-level per beneficiary
5. Understanding the organisation and its structure, the context it operates in, partnerships,
any key issues it faces and the services it provides -generally the internal dynamic
6. Understanding client behaviour and how he/she interacts with service providers – generally
the external dynamic
7. Calculating the average beneficiary benefit/loss of benefit per beneficiary (return per
beneficiary – pre and post costs)
8. Understanding the cost of delivery (per FTE equivalent at programme level) plus
management overview and contribution to core costs
9. Calculating return on investment in relatively simple terms: benefit or loss per beneficiary in
the ratio of £1 cost to run the service provided
10. Relying on actual information wherever possible, and prudent assumptions and forecasts
where necessary
11. Applying control factors to compensate for other dynamics (might be positive or negative);
at a service and organisational level
Methodologically and using the GGHT as an exemplar this involves:
i)
Identification of potential services to review
This involved considering all the services currently on offer to tenants and a small number of those
that have recently ceased to be on offer/were part of CFS’s earlier review. Each service can be
viewed as (almost) entirely self-sufficient within GGHT (such as the packaged furniture service) or
(almost) entirely dependent on external partners (such as the basic bank account service).
ii)
Consideration of a subset of services to review
Within the constraints of time and budget the review was never going to be able to review every
single service. Hence, a representative subset/qualitative decision was required. Full details of all the
potential service aspects of the review and those subsequently agreed for inclusion in the BIM can
be found in Table 1.
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iii) Agreement with key partners (internally and externally) (where appropriate) to participate
in the evaluation
Whilst the majority of the information required to undertake the review was generated and held
within GGHT, some of it was held beyond the direct control of the Financial Inclusion team (such as
the packaged furniture scheme) whilst some was held (almost) entirely outwith the organisation
(such as Insurance provision). Hence it was important that the core service delivery team positively
engaged partners, explaining the background and rationale for the review as well as introducing the
CFS project team. This was dealt with efficiently and successfully, with all key partners providing
timely responses to all requests for information posed. Particular thanks should be offered to staff
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and management at AON .
iv)
Field interviews
The majority of the GGHT field interviews were undertaken in May 2009 and February 2011 at GGHT
offices in Warrington. This was intended to ensure that the prime interviewee felt at ease, and also
had the opportunity to refer to partners, colleagues and files (paper or electronic) if needs be during
the course of the interviews.
By design, the interview process was semi-structured in that whilst it looked to broadly follow the
BIM methodology as outlined above, it would also provide the flexibility to investigate specific
aspects of the service and, in particular, inter-relationships between services in more detail (for
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example the role of GGHT Direct in supporting the Financial Inclusion team). Experience of similar
projects elsewhere has proven that the real value of the interview process is the opportunity to
tread a flexible path according to individual tendencies, organisational peculiarities but balanced
against project objectives. On average each service strand was discussed for approximately 3 hours
as had been previously forecast.
v)
Follow up information
At the end of each interview each interviewee was advised that there would be a small number of
questions according to how the interview had progressed. The number of questions posed ranged
from 2-3 for certain service strands to more than 10 for another.
vi)
Write up
The notes within this report accompanying each BIM (service-level and overall organisational-level)
are not designed to be a transcript of each key partner interview. They are, in effect, references to
and explanations of key points that came about either during the interview process or as a result of
the interview process and follow-up work.
vii)
BIM development
Spreadsheet development is the culmination of all previous stages although it often occurs
concurrently with section vi. Where possible we have sought to use similar frameworks for each
service strand; as is the case with a range of complementary but differing services this has not
always been possible although, often, parts of the individual frameworks have been mirrored across
delivery strands.
14
www.aon.com
1515
GGHT Direct is the telephone based support and advice service for tenants.
13
Whilst there are clear and obvious cross-references and inter-relationships between certain services,
the situation in certain circumstances is much more nuanced. Wherever possible the model has been
designed to flatten out these inter-relationships and overlaps. However, for the sake of prudence we
have also acknowledged this at an organisational level by controlling down net benefit generated
whilst maintaining costs at a steady level.
As always, where possible the calculations have, to a great extent, been based on live data provided
by the service deliverer and sometimes key partners. Where estimates and forecasts have been
made they are generally deemed prudent to very prudent.
By providing this BIM framework, it is intended that the model(s) can be used as a tool to provide
some strategic insight to both commissioners (primarily internal senior management but also
external funders as well) and deliverers (middle management and even service operatives) in order
to better help understand the likely impact and return on investment of financial Inclusion activities
across the organisation.
Longer-term the model can be refined to mirror changing trends in both the number and needs of
service beneficiaries, as well as the outputs and financial outcomes and maybe even the soft
outcomes and longer-term impact of providing said services. Furthermore, within GGHT it could be
developed yet further to encompass the full SHG side of the equation (cost savings) by better
evaluating what costs are saved by providing these services.
14
4.0 Business Intervention Model
in Practice – GGHT as a Case Study
To understand how the BIM works and to see what results it produces we will use the process used
when working with GGHT as a case study. This section explains the BIM process in action, while
section 5 details the results. For the purposes of this report the results are secondary to the
process, but they do show significant benefits for GGHT.
The GGHT financial inclusion service is a multi-dimensional set of services addressing various
elements and manifestations of financial exclusion with a view to actively promoting and facilitating
financial inclusion. In line with CFS’s earlier report, the strands can be broadly considered and
categorised as core financial services issues such as access to bank accounts and provision of home
insurance, through to non-core financial service issues such as energy poverty and packaged
furniture provision. At the time of the initial review the services in operation were as follows:
a)
Internally funded financial service strands
(i)
Money Advice service
(ii)
Basic Bank Accounts
(iii)
Home contents insurance
(iv)
Credit Union referrals system
(v)
Financial Futures
(vi)
Housing Benefit Liaison Officer
b)
Externally funded financial service strands
(i)
Furnished accommodation packages
(ii)
EBICO – fuel poverty work
(iii)
Pennies-go-round
The FPF funded Early Intervention Officer service (now to be referred to as the Be Sure To Secure BSTS) service effectively straddled the core and non-core strands, since it sought to approach the
clients from a more holistic angle looking to meet their needs either through direct delivery
themselves (basic budgeting advice etc) or signposting to more specialised services delivered
internally or externally.
Since the original analysis a number of the strands of the service expired, hence this work only
reviews certain aspects:
15
Table 1: Summary of GGHT Financial Inclusion Services (past & present)
Service
Expiry date
Reviewed
60+ Benefits Advice Service
Expired April 2007
No
Expired March 2008
No
Expired March 2009
No
Expired March 2007
No
Expired March 2007
No
Ongoing service
Somewhat
Project - due to
expired June 2009
Yes / Somewhat
Income maximisation service for people aged 60+
Credit Union development service
(link to credit union referral scheme)
Financial Futures
Review of pension provision and options for
Warrington BC citizens and employees working
within the boundaries
Ready to Earn
16
(Endeavouring to increase take-up of HMRC
products such a Tax Credits and Child Benefit. Longterm the goal was to help low income people with
child-care costs.) This is now a core service
incorporated within the money advice service.
Right Start
(Early intervention for new tenants funded by RBS
through Transact.) Incorporated within Be Sure to
Secure.
Basic bank account referral scheme
An initiative with a high street bank to provide basic
bank accounts to tenants linked to incentives to pay
by direct debit. (£5 incentive to tenants opening
new NatWest Basic Bank Accounts)
Be Sure to Secure
(FPF funded Early Intervention Officer service aimed
at new tenants) to help them sustain their tenancy
16
HMRC - Her Majesty’s Revenues and Customs
16
Credit union referral scheme
Ongoing service
Somewhat
Packaged furniture scheme
Core funded –
ongoing service
Yes
Home insurance scheme
Core funded –
ongoing service
Yes
Money advice service
Core funded –
ongoing service
Yes
Pennies Go Round
Core funded –
ongoing service
Yes
Project –expired
March 2010
Yes
Core funded –
ongoing service
No
Ongoing service
Yes
Core funded –
ongoing service
Yes
A service aimed at promoting and the benefits of
saving and borrowing at any age. (£5 incentive to
tenants opening new credit union accounts)
Aims to provide tenants with a low cost option to
insure their personal belongings (delivered by Aon)
Fuel poverty and fuel efficiency – aimed at the
elderly, disabled and vulnerable funded by WBC.
This became part of offer for stock transfer
Smart Start
(Previously the early intervention service aimed at
providing pre or early stage tenancy support to
those aged 18-24 years. Funded by FPF). Went into
Future Jobs Fund work.
Older Person’s Service
(Older Person’s Champion service. Grew out of the
credit union referral service and converted into
older persons services
Utilities – affinity scheme
(EBICO)
United Utilities
(Water rates collection scheme - but also a
subsidiary benefit via applications under its
charitable trust)
17
Financial Futures
Provide information for people nearing retirement.
Aimed at the self-employed and women over 50.
Core funded –
ongoing service
No
As can be seen GGHT have an extensive range of financial inclusion services. This makes it an ideal
site to examine the effectiveness of the BIM approach. However, where the table indicates that a
strand has only been reviewed somewhat this is, in general, an indication of lack of PMI being
available or a lack of focus in the marketing and administration of the scheme. Accordingly, whilst
the strand is included in the BIM the results are, at least, somewhat less than ideal.
17
In CFS’s first report it was considered that overarching the entire service, is the income
management objective of the business unit whose focus is ultimately on income collection. However,
the relationship between the financial inclusion service and income collection was and is much more
complicated and subtle than that of a mere hierarchy, since the work dictates, and the business unit
is managed in a way, that makes the financial inclusion service and income collection much more of
a symbiotic partnership in this objective rather than either foci necessarily being subservient to one
another all the time.
Diagrammatically the services were considered to interact as follows:-
17
This was a more specific report for internal consumption by GGHT only
18
Figure 5: Theoretical Income Management Business Unit
Income Management Business Unit
Rent Collection/social forces e.g. ‘if push came
to shove’
Revenue
Collectors
Financial Inclusion
Services
Core
Non-core
Early intervention
officer
Increasing Commercial Approach
Increasing social approach
This symbiosis is increasingly so as the business unit moves to its New Ways of Working (NWOW)
which seeks an integrated and overlapping way of delivering support and rent collection. Whilst
NWOW eventually involves an escalation of action, this is very much a last resort (account
administration) when all other methods and processes have been fully explored (relationship
management). The lines between traditional rent arrears function and the financial inclusion service
can, should and are becoming increasingly blurred and, possibly now, irrelevant; NWOW is a major
development involving the wholesale integration of financial inclusion services into the organisationwide rent collection protocols, and it is hoped that it goes on to generate the benefits GGHT is
looking to secure. Should it prove effective, it may well transform social landlord rent collection
methodologies in the UK.
19
4.1
Business Intervention Model (BIM) in Action
The evaluation work in this project involved a focused literature review, but as is the norm in BIM
development the primary focus of the research was through interviews with GGHT staff and
management coupled with iterative learning process as the researcher begins to understand the
process in detail and identify the costs and user benefits.
a)
As financial inclusion has become a more significant aspect of social policy there has been a
burgeoning literature on the topic. The desk research drew on these sources and the various
policy papers issued by the Government. There is less work on the role of social housing
landlords in addressing financial inclusion though this was supplemented by the authors’
extensive experience in this field.
b)
The interviews undertaken were in a semi-structured (a series of topic headings as prompts
followed by a in-depth exploration of the subject) manner rather than based on a specific set
of questionnaires, reflecting the heavily inter-related structure and working practices of
financial inclusion services within GGHT and, also, in order to better understand interviewees’
true thoughts on their work, its obstacles, issues and impacts. The interviews were often
complemented by the provision of related PMI and, in relation to certain initiatives this
information was supplemented by a small customer sample or survey instigated at our
request.
Due to constraints of time and budget we did not seek to analyse each initiative at an activity level as
we have sometimes done with other BIM’s: offering comprehensive feedback along the lines of
18
business process re-engineering . Rather, we reviewed each initiative with key informants
discussing service flows, trends, outputs and outcomes and cross-referencing and cross-checking
them accordingly. Whilst the project team reserved the right to speak with service deliverers
directly, for the purpose of this report it was only necessary to do so in a small number of instances.
Table 2: Analysis of Interviewees
Job description
Numbers
Business Unit Head
1
Income Management Team Leader
1
Related financial inclusion service staff
3
(various strands of work – internal and external
to GGHT)
Total
5
18
“An approach aimed at securing improvements by means of elevating efficiency and effectiveness of the business
process(es) that exist within and across organisations” (http://en.wikipedia.org/wiki/Business_process_reengineering)
20
All interviews/discussions were non-time limited to allow interviewees to feel comfortable with the
process and to be able to explore their thoughts and experiences. Whilst the bulk of the work was
undertaken with the GGHT Team Leader (probably at least 80% of total interview time), all
interviewees were assured of anonymity and, it is hoped, that this assurance led to open and frank
exchanges that will improve the veracity of this report.
The project team recognised that reviewing services at a level above that of service-delivery
(activity-level) ran the risk of being told how a service operates and the benefits it generated (what is
supposed to happen) than actually seeing first-hand how the service was delivered and the benefits
that really accrued to clients (what actually happens). However, this work was a follow-up review,
and in-depth appraisal of the activity-level work was undertaken in our first report (albeit indirectly
rather than with a view to the creation of a BIM). In normal circumstances we would be more robust
in testing the claims made.
Through the desk based review, the information provided by GGHT and the interviews it was
possible to analyse a range of the services provided. However, as each service provided had
different inputs, outcomes and in some cases partners it was necessary to draw evidence from
slightly different sources. A summary of these micro-methods is contained in Table 3:
Table 3: Overview of BIM Methodologies Applied
Organisation
Methodology employed
Basic bank accounts (referral
scheme)
a) Nominal Performance Management Information
provided
b) Some anecdotal evidence to supplement PMI
c) Development of a qualitative / subjective value
framework per intervention
d) Estimation of service delivery costs
Be Sure to Secure
a) Performance Management Information provided
(subject to issues raised – see below)
b) Cross-service utilisation of benefits and cost-savings
framework
c) Calculation of service delivery costs
d) Some beneficiary demographic trend analysis
Credit union (referral scheme)
a) Nominal Performance Management Information
provided
b) Some anecdotal evidence to supplement PMI
c) Development of a qualitative / subjective value
framework per intervention
d) Estimation of service delivery costs
21
EBICO
a) Performance Management Information provided
b) External cost-benchmarking information provided
c) Estimation of service delivery costs
Packaged Furniture Service
a) Performance Management Information provided
b) Development of external cost-benchmarking
information
c) Estimation of service delivery costs
Money Advice scheme
a) Comprehensive Performance Management
Information provided
b) Partner-level Performance Management Information
provided
c) Small scale random survey(s) undertaken underpinning
and supplementing Performance Management
Information
d) Creation of a comprehensive value framework per
strand / per beneficiary used across other services
(including drawing on the experience and results of
other CFS projects)
e) Comprehensive related / presenting beneficiary
(demographic) characteristics
e) Calculation of service delivery costs (direct and
indirect)
Pennies Go Round
a) New service therefore start-up costs distort financial
performance
b) Reasonably comprehensive Performance Management
Information provided and full year’s performance for
2009/0
c) Cross-service utilisation of benefits and cost savings
framework
d) Calculation of service delivery costs
e) Some beneficiary demographic trend analysis
Smart Start
a) Reasonably comprehensive Performance Management
Information provided
b) Cross-service utilisation of benefits and cost savings
framework
c) Calculation of service delivery costs
d) Good beneficiary demographic trend analysis
Portfolio-level

Additional layer to reflect co-ordination, management
and indirect (non-service delivery) costs within the
organisation
 Control factors to reconcile the risk of overlaps and
over-statements
22
 Absolute financial cost / benefit calculation 
 Return on Investment calculation (per service and at an
organisational level) 
 Benefit calculation at a per beneficiary level 

Once this information was collected the research team began the process of data entry. This
involved using a specially designed spreadsheet where the costs and income could be assembled.
These were then tested against previous BIM exercises to ascertain their reliability, while their
validity was enhanced through moderating for inefficiency and duplication (on average removing
19
a gross 20% of the benefit ). Once this was complete a draft summary spreadsheet was produced
detailing the overall outcome for each activity and the entire programme of work. This was then
discussed with GGHT and FPF before being amended following further information and the
subsequent final edition was produced. It is this that is detailed in the following section.
19
In any project of this nature the data is rarely perfect. Unfortunately it isn’t always possible to accurately
ascertain the proportion of this. In addition, systems often contain a degree of accidental double inputting. While
the model figures are exactly that, ideal types. To re-enter human fallibility into the end results we reduce the
final results by 20%. We recognise this is a slightly arbitrary figure (though it has proven fairly representative
elsewhere) but this approach does improve the realism of the final result. As the methodology around
calculating the financial cost of activities of housing associations improves it should be possible to establish a
more reliable figure.
23
5.0 Case Study Results
All the services offered by GGHT were analysed by the authors as part of this work. However, they
were at different stages of development so a direct comparison is not always accurate. But
examining the results it was possible to place into three categories:
1. Income generation for GGHT. In these cases GGHT receives either a commission or makes a
profit on its financial inclusion activity (furniture recycling and home insurance)
2. Cost saving for core GGHT business. In these cases GGHT employs staff to deliver financial
inclusion services but the net outcome is that through this work things link evictions and
court cases are avoided, which saves GGHT money (Be Sure to Secure, Money Advice,
Pennies-go-round and Smart Start)
3. Community investment by GGHT. In these cases GGHT is making usually modest investments
in activities to encourage positive habits among its tenants (bank accounts, credit union
support and EBICO). This work seeks a social rather than an financial return and is usually
run at a loss.
For the purposes of this report we will focus on one example from each of the categories. The
aforementioned services were examined using the BIM approach and the benefit to GGHT and the
tenant were sought. However, this report will concentrate on the return, if any, to GGHT.
5.1
Income Generation for GGHT – Furniture Resource Service
GGHT has been providing its tenants with access to an affordable packaged furniture service for
nearly 10-years now. The Furnished Homes manager personally speaks with every prospective
customer face-to-face, measuring up, showing samples and taking orders. Generally, if the tenant is
in employment the manager will recommend a white goods package, whereas if the tenant is not
currently working he will recommend a full package since, in these circumstances, it is not unusual
for the customer to quote: ‘have little else’. Where the prospective customer is not working, Housing
Benefit will usually meet the full cost of the package. It is estimated that some 90%-95% of the
current stock of customers meet this criteria. If appropriate, the Furnished Homes manager will
signpost towards a Community Care grant, although these are often budget-limited and usually for
not more than a couple of hundred pounds per household, or even towards another reliable local
supplier where they exist; for example YMCA furniture shops.
The scheme portfolio currently has nearly 600 customers, and the rate of growth seems to show
new customers increasing significantly over the last 2-3 years. Allowing for what is described as a
nominal drop-off or cancellation rate it seems that the intervention has dramatically increased in
attractiveness in this period compared to previous years or, perhaps, commitment to and marketing
of the scheme has improved immensely. External factors that may influence this include the
downturn in the economy or, perhaps, a changing socio-demographic of new tenants. Based on the
information available to us we are unable to comment as to which, or if any or all these factors
apply.
24
In terms of benefit to the customer-base it should be remembered that for the majority of
customers the facility to access the funding from Housing Benefit is only available since their
landlord is a registered social landlord. If, by any chance, they might have found themselves in the
private rented sector there is a very real possibility that they would have been required to pay a
higher level of rent for a furnished let, access funds to purchase the goods on the high street or
simply go without. On that basis it would be easy to simply assign the value of goods provided to
customers minus administration costs as the benefit generated under the scheme, but this fails to
reflect the true economics of the system (somebody has to pay). Hence we have not adopted this
approach. Furthermore, the scheme is yet more attractive since it does not involve the prospective
customer finding a deposit (possibly via a credit card or a high-cost lender).
The financial arrangements are such that the customer, often though housing benefit, pays GGHT,
GGHT pays the leasing company and the leasing company pays the furniture supplier. GGHT
estimated that that the goods supplied under each package are sold to the customer at a substantial
discount to what would be paid on the high street. We have accepted this as fact and built it into the
model. However, without more specific details on each package we have been unable to verify this.
Based on new lets and re-lets signing-up for the scheme, GGHT seems to generate approximately
£250,000 per annum of income under the auspices of the administration charge added to the base
value of the goods. Whilst, in most cases, this does not come from the customers’ own pockets
(mainly via housing benefit), it does affect the overall price of the package and, therefore, we have
reduced the benefit generated for each customer. The chosen approach is arguable, especially when
considered with the statements above about somebody has to pay. However, in these circumstances
we feel it is a valid standpoint.
The net financial effect of adding the administration charge to the provision of the goods is:
a) In reality a surplus of more than £100,000 post delivery costs being generated for the
benefit of GGHT as an organisation
20
b) Theoretically, the package being financed at an Annual Percentage Rate (APR ) to the
customer of approximately 26%.
This is not quite as bad as it might first seem, since even if the administration charge and other
charges were re-defined as interest or the like, the net overall cost to the customer is still in line with
20
APR refers to the annual percentage rate charge which is determined by a formula under the Consumer Credit Act. This formula seeks to capture
the total cost for credit. The APR thus allows the cost of one credit product to be compared with another. The calculation includes interest charges
and services charges plus other fees required to enter into the contract.
25
21
high street prices such as those levied by Argos under its in-house card scheme , and also broadly
reflects the rate now charged by an increasing number of credit unions looking to become more
commercially viable. Both of these are options that will, at best, be limited for the GGHT customer
base.
Accordingly, if we look at a more realistic scenario base-lining the cost of the package against a
22
market-leading personal-lending specific Community Development Finance Institution (CDFI ) we
start to understand that the deal on offer via GGHT is better than at first glance. Remembering that
there is no such CDFI provision in Warrington it seems likely that many prospective customers who
are balancing whether to sign-up for the scheme or look for alternative options on the high street
23
will consider a home credit company such as Provident Personal Credit charging a significantly
higher APR. Within the context of the BIM we have sought to apply the full benefit of customers
using GGHT rather than a CDFI service, and we have also tried to reflect that perhaps 1 in 3
prospective customers will approach the Provident first and approximately half of these will be
successful in their application and choose this route to furnish their homes.
Service delivery costs are relatively low for GGHT, although it is worth pointing out that increasing
24
demand is leading to an upsurge in overtime being required to service customers, whilst PAT
testing now accounts for roughly 38% of total delivery costs. It seems appropriate to keep pressure
on staff and service quality under review and, whilst we are unclear as to the specifics of the
arrangements under the PAT testing contract, it seems wise to monitor this carefully as the scheme
continues to expand. We are aware, that in certain towns and cities, this is a service provided by
some charities and this may be an avenue GGHT might wish to investigate.
The BIM summary findings show the following:
Table 4: BIM Summary for Furniture Resource Centre
Value generated for tenant base p.a.
£126,747
Typical commission paid to GGHT – p.a.
£250,713
www.argos.co.uk/webapp/wcs/stores/servlet/CreditAndInsuranceView?langId=1&page=Credit%20%26%20Insurance%20homepage|Cards|Argos%20Card&storeId=10001
21
22
These are lending providers which have been supported by the Government to provide credit and other support services to address
market gaps not being met by banks, building societies and other mainstream credit providers. Most CDFIs provide business finance
for small businesses and social enterprises. Some CDFIs also provide consumer loans and other forms of micro-credit to the selfemployed. Most are unregulated by the FSA, but are licensed by the Office of Fair Trading
23
Also known as home creditors, these are licensed moneylender providing small consumer loans on a weekly basis over short term periods,
ranging from 13 to 52 weeks. The credit charge includes the cost of weekly or fortnightly collection and APRs are typically over 150%.
24
PAT testing or Portable Appliance Testing is an important part of any Health & Safety policy. The Health & Safety Executive states that 25% of
all reportable electrical accidents involve portable appliances. The Electricity at Work Regulations place a legal responsibility on employers,
employees and self-employed persons to comply with the provisions of the regulations and take reasonably practicable steps to ensure that no
danger results from the use of such equipment. This in effect requires the implementation of a systematic and regular program of maintenance,
inspection and testing.
26
Proportion of contracts that conclude each year (this reduces the net commission rate
because clients have finished paying, but improves the clients’ financial situation for the
same reason) (6.56%)
£16,439
Total value to tenant base of providing service (combination of total value to tenants and
savings for those that have concluded their contract)
£143,186
Service delivery costs p.a.
£109,738
Net income for GGHT (commission less service delivery costs and control)
£124,535
Net benefit to clients/ opportunity saving to GGHT if service is removed (£143,186£109,738)
£33,448
Return for tenants against investment by GGHT (£143,186/£109,738)
£1.30
Return per beneficiary (pre costs)
£248.16
Return per beneficiary (post costs)
£57.97
Number of beneficiaries p.a.
577
Evictions saved p.a.
N/A
Court Hearings avoided p.a.
N/A
5.2
Cost saving for Core GGHT Business – Money Advice
The money advice service is the core of financial inclusion work within GGHT. It deals with nearly
1,000 tenants per annum primarily on a face-to-face basis as well as dealing with many more on the
telephone. Where applicable and appropriate, the service aims to come to an agreement in respect
of current and accrued rent liabilities and, in order that the customer is better placed to meet this
ongoing liability, the service provides a full review of income maximisation opportunities and debt
advice options.
27
From a financial standpoint its beneficiaries are well served and are likely to exit the service, on
average £1,300 per annum better (see Table 6) off with nearly 90% of this being recurrent income
that will have a lasting year-on-year beneficial effect. If we amortise forward over a three-year
period we can see the service user is almost £2,000 better off. The return on investment for service
users (post delivery costs) is just over £1,200 per beneficiary (see Table 6). This is highly impressive
both with regards to GGHT in isolation and when compared to similar interventions delivered by
other CFS clients elsewhere in the country with the GGHT money advice service generating
approximately 60% more monetary value for its customers pre-costs and a return on investment
nearly 6 times that seen in the furniture resource service although this should be tempered by the
recognition that like-for-like comparison is notoriously difficult.
In our experience GGHT is still amongst the minority of social housing landlords leading the fight
against financial exclusion through its involvement in a multiplicity of approaches. Following a review
of its income management procedures, a relatively radical re-think has taken place leading to a New
Way of Working (NWOW). NWOW places the tenant at the centre of the rent arrears issue; rather
than seeing the arrears as a debt to be recovered and the arrears process as the means to achieve
this, NWOW puts the focus on open and continued interaction (mainly telephone but to suit the
circumstances) with the tenant. By initiating and keeping this dialogue open a greater sense of trust
is created, and the Income Management operative is tasked with getting to the crux of the matter
rather than simply organising an (often) unsustainable payment plan for (only) rent arrears that
subsequently flounders within a couple of months.
The transition to the new operating system has involved staff dramatically altering the way they
worked. Some found this experience liberating and have maximised the opportunity to develop
more skills and provide a more engaged and holistic service to the client. Understandably, a minority
have found the transformation more problematic. However, we do not feel these concerns outweigh
the radical nature of the change being undertaken, particularly as the impact on things like rent
arrears is starting to become apparent. With regards to the BIM this somewhat reflects NWOW since
some of the underlying assumptions are made on PMI collated under NWOW and some predates the
change in practice. As the system develops the BIM can be updated with revised assumptions to
reflect the changing situation. Of course, this also highlights the weakness of the BIM, as it relies on
data both from before and during the transition.
Inevitably, as the individual arrears of any one tenant rise there eventually need to be an escalation
of activity both with regards to intensity (can we help, can we help put this right?), and also the
eventual acceptance that everything that can be done for the tenant has been done. As well as
25
meeting the increasingly stringent pre-court protocols demanded of social housing landlords, it
also means that GG can be reassured that it really did use every tool at its disposal to help maintain
the tenancy. Unfortunately, as CFS has postulated elsewhere in other research not every tenancy is
ultimately saveable.
25
www.justice.gov.uk/civil/procrules_fin/contents/protocols/prot_rent.htm
28
In terms of the understanding and dissemination of the results of this specific part of the BIM the
following is worthy of note:
Cash collected under agreements has been factored down to only 25% of actual cash collected, since
one might argue that this cash would have been collected by GGHT using other (non-financial
inclusion) resources if the money advice service had not existed or simply that the tenant might have
paid with no prompting, though this is less likely. Indeed, it is only recently that money advice
workers have been authorised to systematically agree repayment and debt restructuring schedules.
Conversely, the opposite side of the argument is that without the bespoke service provided by
money advice no or less rent payment would have been received. Either way, whilst we might
legitimately apportion costs also, for the sake of prudence the model carries full service delivery
costs whilst discounting benefit generated as explained.
NWOW is driven by the need and desire to come to an agreement with the client. Whilst the model
indicates that under NWOW an average of £2.84 per week is being received from clients against
what we understand to be a target (DWP) contribution of £3.25 per week (or 87% of minimum
target), it should be remembered that this is an average figure for all accounts including those that
have never paid and might continue nor intend to ever pay. The overall impact of the money advice
service on rent reduction was £130,256 for 2009/10 (17% of the total rent arrears presented by
clients), and for the first six months of 2010/11 was £44,798 (16%). Given that total cost of the
service is about £67,000 per annum these figures suggest that it pays for itself on rent arrears
reductions alone.
26
Charity awards work brings in more than £30,000 per annum for tenants at an average rate per
beneficiary of nearly £600 per year. Our analysis indicates that roughly 60% of this is received from
United Utilities under its trust fund scheme. We are aware from our work with other social housing
landlords that they too have now realised this is available, but in August 2010 United Utilities
responded by increasing the resources available to £2 million per annum.
27
Our work on related presenting characteristics is interesting although not a primary driver of value
within the BIM. Surprisingly it indicates that only 50% (or half) of money advice clients present with
rent arrears with an average arrears of some £973. This equates to 15 weeks on an average weekly
rent of £63.01 which in itself is not the best time to be commencing engagement with tenants.
However, the first six months on 2010/11 showed an improvement with the average arrears of £715
(equivalent to 11 weeks’ rent), which reflects the greater emphasis now being placed in reducing
arrears.
26
This activity is where GGHT work on behalf of tenants (or support them) to make applications to charities
for individual tenant support.
27
This involved examining a sample of the money advice service users to get a better idea of their needs.
29
One fifth of money advice clients also owe, on average, £914 in council tax arrears. However, and
perhaps from an outsider’s view even more worryingly, more than 20% present with other debts of
more than £4,000 across 2.69 creditors equating to an average debt per creditor of £1,591.
Compounding the situation is the allowance for overlaps; 8% of those with other debts have rent
arrears (total owing £5,200); whilst 7% have both other debts, rent and council tax arrears (total
owing £6,200). Unsurprisingly, few have council tax arrears and other debts but no rent arrears.
Previous work by CFS has posited that financial inclusion services help reduce rent arrears and
although this was not the case at GGHT during the first year of the service, a definite improvement
can now been seen. However, this is partially obscured by the many in which rent arrears have been
controlled. For a number of years GGHT placed emphasis on the outcome at the end of the financial
year. This resulted in a steady accumulation of arrears during the early part of the year, followed by
a concerted effort to bring it back under control after Christmas. Although, holiday expenditure and
the behaviour of the housing benefit office contributed to this outcome, it is also likely that
psychological reasons among GGHT housing officers (by reducing the intensity of the work following
the high pressure period) contributed to this outcome. With the introduction of new income
management workflow system that places money advice and client support at its heart there has
been a conscious effort to smooth out the arrears figures throughout the year. Unfortunately, the
beginning of 2010/11 was blighted by the delayed instillation of a new telephony system. Yet, the
underlying arrears figures for the year are better than the previous two years. Although, not all of
this is due to the money advice work at GGHT the incorporation of this activity within the income
management process does seem to be having a noticeable impact. If we compare the performance
at week 46 this year’s arrears position is £72,485 lower than the figure at the beginning of the year.
By contrast, last year at the same stage the arrears were £246,700 higher and the £643,759 in the
year before.
The improved performance coinciding with money advice is also apparent in the evictions and court
statistics (see Table 5). Here GGHT have made a conscious effort to reduce the number of cases
coming to court, which has made no difference in the proportion of cases being found for GGHT.
Indeed, the number of abandoned cases has declined to virtually zero, while the number of
suspended judgements and the adjourned orders are both now below ten per annum (in 2006/7
both were between 41 and 50).
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Table 5: Annual Court and Evictions Statistics
2006/7
2007/8
2008/9
2009/10
2010/11
(first 9 mnths)
Cases taken to
court
321
185
142
114
102
Possession
orders
108
72
47
52
35
Warrant
requested
174
102
54
52
45
Warrant
carried out
92
60
23
28
23
Abandoned
49
12
13
12
2
This improved performance has happened against a background where the general economy is
suffering a downturn and availability of affordable financial services is harder to locate. At this stage,
we do feel it reasonable to assume that the cash generated by money advice workers has helped
improve a tenant’s financial situation. Accordingly, income maximisation is now filtering its way
through to rent arrears and any upward pressure on arrears due to the economy is being countered
by GGHT financial inclusion activity.
A similar assumption can be levied for other interventions under review. For ease of cross-reference,
we have chosen to amalgamate the cost positive savings of the various services on the portfolio level
calculations. In calculating the cost positive savings for GGHT we have used the methodology and
many of the assumptions developed with Southern Housing Group (but this time on an even more
prudent basis) since time and internal pressures have dictated that this is the part of the evaluation
where we were able to make least progress. This is not unusual and, indeed, was initially mirrored
within SHG. Calculating the cost of an eviction or saved court hearing is difficult and often involves
many internal departments. The BIM allows for itself to be updated as and when further information
is secured. Accordingly, the BIM indicates a cost positive approach to saved court hearings and
evictions in the total of 8% of successful interventions and only 5% of total annual interventions (as
against the 22% of all tenancies in arrears ultimately being un-saveable as posited above).
The overall net BIM for the money advice service is shown below:
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Table 6: Overall BIM for the Money Advice Service
Value generated for tenant base p.a.
£1,082,493
Control for proportion of clients that would resolve matters without assistance (in cash
terms) Net annual effect on rent arrears p.a.
Sub-total
£13,027
£1,069,466
Cost savings for GGHT p.a. (evictions and court hearing avoided, plus arrears being
gradually repaid)
Total value generated for organisation p.a.
£92,319
£1,161,785
Direct Service delivery costs incurred by GGHT - direct p.a.
Net benefit to clients/ opportunity saving to GGHT if service is removed (£1,069,466 £66,777)
£66,777
£1,002,689
Return for tenants against investment by GGHT (£1,069,466/£66,777)
Return per beneficiary (pre costs)
Return per beneficiary (post costs)
£16.15
£1,196.27
£1,121.58
Number of beneficiaries p.a.
Evictions saved p.a.
Court Hearings avoided p.a.
894
13
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5.3
Community Investment by credit unions
This semi-formal referral mechanism has been in place now for some time. It seems fair to say that it
has had a chequered history of success, with the scheme flourishing between April 2007 and March
2008 when there was a dedicated project worker in post. During this period, it is estimated that
approximately 500 referrals were made/accounts opened. However, it is felt that there were no
Credit Union referrals/accounts opened in the last 6-7 months based on no £5 incentive (as is the
offer) being paid during this period.
It seems to us that there are a number of underlying reasons for this lack of continued activity:Lack of focus - with the natural expiry of the credit union referral project
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

 Competing priorities - for time resources 
 Lack of PMI being made available (number of accounts and usage of accounts) to help (re)enthuse GGHT to maintain the focus of the scheme 
 Gradual reduction in the number of (prospective) tenants without access to an account
(credit union or high street bank), although we believe that there where remains a
percentage of people still excluded to a lesser or greater degree 
Whilst partnership work is difficult and, on these occasions it would appear to have been at times
particularly difficult, we would suggest that any tenants operating without access to a transactionbased account will suffer more than they need necessarily do so.
In the absence of PMI, we have been unable to allocate any real value to the scheme, including
where customers have gone on to become relatively financially included by managing to accumulate
deposits of savings or move away from high-cost lenders to more affordable options. Hence we have
used the research undertaken by the Family Welfare Association / Save the Children in March 2007
as a proxy. However, the BIM has been developed in such a way that when other information does
become available it can be easily included to reflect this activity. Subject to the level and quality of
information that becomes available, the BIM can also be updated to reflect a different relative value
assigned to accounts properly utilised, somewhat utilised and those that are under-utilised. This
judgement is purely objective and we offer no equation to define such segmentation at this time.
Costs involved in running the schemes have been assumed as nominal, but can also be updated
within the BIM as the service develops and as information allows. The results are as follows for the
credit union BIM:
Table 7: BIM for Credit Union Service
Value generated for tenant base p.a.
£7,514
Value of cash incentive payments made
£375
Service delivery costs
£809
Total cost for delivering service
£1,183
Net income/expenditure for GGHT
£1,183
Net benefit / loss of service to tenant base
£6,331
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Return on investment (£1 spent / incurred generates £x for the target population)
£8.83
Return on investment (pre costs) per person
£95.19
Return on investment (post costs) per person
£84.41
Number of beneficiaries per annum
5.4
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Overall results
The examples above cover the three financial categories of financial inclusion work by housing
associations and detail how the data for the BIM was brought together. Taken with the other results
we can see in Table 8, even after central programme costs, GGHT financial inclusion work is cost
effective.
Table 8: Overall Results for all Financial Inclusion Interventions by GGHT
Direct costs savings to
GGHT
Bank accounts
Income generated*
Total costs of
delivering the
services
0
£0
£1,059
£34,145
£0
£34,497
Credit union
0
£0
£809
EBICO
0
£0
£9,249
Furniture
0
£250,713
£68,277
Home insurance
0
£5,684
£2,426
£92,319
£0
£66,777
-£2,377**
£0
£30,904
£41,141
£0
£30,904
Be sure to secure
Money advice
Pennies go round
Smart start
Programme costs
Total
£120,347
£165,228
£256,397
£365,804
Total net financial position for GGHT (savings and income less costs) £55,821 (=£165,228 +
£256,397 - £365,804)
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Notes: * This income is generated by user fees and commission
** Measured during the first few months of this service, so shows a deficit that should change as
the service matures.
The table clearly shows that even with the introduction of a new service (Pennies go round) that is
still being established and GGHT’s investment in certain loss-making services their financial inclusion
work is still generating an overall financial benefit. This reinforces CFS’s previous work that
demonstrated that investment in financial inclusion activity delivers a financial return to social
housing landlords.
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6 Summary and Conclusion
for Housing Associations
Through its work CFS has now proven that if a financial inclusion (action) plan is well- designed,
carefully managed and implemented effectively, it can work constantly to help alleviate the
pressures faced by socially and financially excluded people. Thus, in the longer-term, the
intervention can help maximise income (earned and welfare benefits); help maximise retained
income (using the money clients have more wisely); and, thereby, lead to a client base more able to
meet its liabilities (rent being one of them) and also allowing a reduction in the cost of staff time
spent dealing with these issues (financial and opportunity costs) and the legal costs incurred in
settling problems when they do arise and escalate.
The results show a mixed picture of activities that generate an income for the housing association,
those that deliver a cost saving to the housing association, and those that only generate a benefit
to the tenant.
Activities that generate an income
Only the second hand furniture service and the home contents insurance delivered any new income
for GGHT. This should not be surprising given that these were the only activities where the tenant
or a third party paid for the service delivered. Such an outcome can be beneficial for financial
inclusion activity if the money is reinvested. However, there is a risk that the focus on producing
profit becomes the primary objective (this will depend on the targets the staff working on these
projects are assessed by), but the opposite risk that of a demand by socially minded stakeholders to
reduce the profit made by this service. Managing these potential tensions requires a great deal of
skill and it may be prudent to operate for profit activity by another line manager. More importantly,
the generation of income suggests that financial inclusion activity need not be a high cost operation
and it may be possible to generate sufficient income to fund or part fund other activities. For social
housing landlords with limited funds this may be an attractive way forward.
Deliver a cost saving
The aim of this research was to assess the cost effectiveness of social housing landlord-led financial
inclusion activity and this outcome indicates a net benefit in some tasks. We found that the various
money advice and guidance services delivered significant cost savings to the social housing
landlords. In fact the cost savings at just below £200,000 covered over 80% of all costs in an
extensive suite of financial inclusion provision. These findings support our previous research with
GGHT and Southern Housing and seem to confirm that good quality independent advice can help
cut the number of evictions, and shorten and reduce arrears. It is evictions that involve the greatest
average cost to a social housing landlord, especially the legal fees and restoration for new
inhabitation, in then arrears and evictions process. So any mechanism that contributes to maintain
stable occupation can quickly pay for itself. This was certainly true in the case of money and debt
advice. Although arrears savings are less obvious, the evidence suggests that early intervention can
result in earlier re-negotiation which leads to faster repayment as the arrangement often
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incorporates larger and faster repayment. The problems usually arise when the arrears accumulate
and the advisor has little option but to negotiate an arrangement that involves slow repayments
over a protracted timeframe. By investing in dedicated advisors (this can be in-house or external)
the social housing landlord has shown this is an important tool in managing rent arrears, as well as
fighting financial exclusion. For the social housing landlord management, financial inclusion can be
seen as central to the delivery of successful business plan.
No cost saving but community benefit
There are a number of activities within the financial inclusion field that do not deliver any costs
savings for the social housing landlord, nor produce an income. These may be very important
services but they require continuous revenue funding. In this research these included provision of
bank accounts, links to the credit union, and access to affordable fuel. Although the cost of each
activity was relatively modest there was no evidence that they generated a financial benefit for the
social housing landlords. However, they all delivered a very impressive net return on investment in
terms of the beneficiaries assisted. For example, the £1,059 spent on access to bank accounts
enhanced the beneficiaries’ disposable incomes by £125.07 (after adjusting for costs). Normally the
assumption is that these types of outputs (cost to social housing landlord and benefit to tenant)
are to be expected when engaging in financial inclusion.
Conclusion
It is that word ‘engaging’ which is essential if social housing landlords are to realise the benefits of
financial inclusion. All too often social housing landlords are seen, both by themselves and financial
inclusion practitioners, as a cash cow for investment in services that allegedly benefit their tenants.
Instead we would argue that social housing landlords should take a more pragmatic view and expect
financial inclusion interventions to work for them as well as their tenants. This does not mean all
financial inclusion activities will all provide a return; our research does not support this assertion.
Equally, neither should the social housing landlord be expected to survive on goodwill alone. Rather
across a menu of financial inclusion interventions that a social housing landlord may wish to engage
in some may prove of benefit and others will not. This is not about placing one intervention in
accession to another; that is decision for an individual social housing landlord in a specific set of
circumstances. But social housing landlords should rigorously assess the financial case of each
activity and make decisions informed by this data. This research begins the process of valuing
financial inclusion activity in terms of benefit to a social housing landlord. It was based on a careful
examination of a set of historical records to produce a set of indicators to measure how a given
intervention affects the tenant, and the housing association (both in terms of income generation and
net saving). It can also be used as a tool to identify potential efficiency savings.
In the current economic environment social housing landlords are rightly being cautious about
supporting financial inclusion activity. We believe it would be short-sighted to withdraw investments
in this area, as with the right tools and service designed in an appropriate way it should be possible
to demonstrate real savings and an improved balance sheet.
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We have also developed a template for use by other social housing landlords and if you’d like an
electronic copy please contact Pål Vik at Community Finance Solutions, University of Salford on
[email protected]
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