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RBV in the post Universal Credit world

Blog Post12/10/2018
Business Credit Trends and Reporting Customer Analytics
Blog image for RBV in the post Universal Credit world

Since the development of RBV (Risk Based Verification) through 2008/2009 and its widespread adoption following the release of circular S11/2011 a lot has changed. And a lot hasn’t.

Let’s deal with what has changed first. Universal Credit (UC) has arrived, later than planned and not as universal as we were led to believe but it is here. Roll out has been slow, subject to many delays and there hardly seems a day go by when it’s not in the news and never for good reasons.

Pensioners were never intended to receive it but now a long list of claimants, like those in receipt of other common benefits won’t either. Even working age claimants claiming UC but in temporary or supported accommodation will have to continue claiming Housing Benefit (HB) via their council. In its rather diluted form the impact on Councils’ caseloads and HB on-flows will not be as dramatic as first predicted.

The other big change is the abolition of Council Tax Benefit and its replacement with Local Council Tax Support schemes (LCTS). Aside from giving councils the autonomy to create their own eligibility and entitlement criteria, its biggest impact is on local authority finances as councils wrestle with covering the cost of their schemes from the tax base. It’s fair to say that schemes have generally become meaner since their introduction, which will have had a small impact on caseloads as some taxpayers are pushed out of entitlement but for cash strapped councils every penny saved is important.

What does this mean for councils?

Taking these two changes together what is the overall impact on councils? Caseloads will be smaller but how much smaller? All pensioners and a larger than expected proportion of working age Housing Benefit claims remain with councils along with all LCTS claims. As before HB and LCTS are processed together but as separate claim parts. So in reality only UC claims with a housing element that don’t have an LCTS claim part are now missing from the council caseload. The council will still have to process an LCTS claim for any UC claims with a Council Tax liability if the claimant wants to claim a reduction.

Even with UC roll out gathering pace, from April 2017 to October 2018 we have seen only an 11% reduction in requests for an RBV risk score from councils using our RBV services. This is very different to the decimated caseloads that were predicted and which some councils may have banked on to enable cost reductions.

Of course, RBV is equally applicable and valuable to both HB and LCTS which leads us to the things that haven’t changed. The likelihood of a verification error on an LCTS claim is the same as it was for a CTB and the likelihood of a verification error for a pensioner is the same as it is for a working age claimant, that’s the same now as it was when our risk models were first developed. These facts means that RBV continues to be just as relevant to the retained caseload as it ever was.

The importance of safeguarding the gateway to benefits, be it HB, LCTS or UC for that matter hasn’t changed although we could now argue that it’s more important to councils for LCTS claims because of the way schemes are funded. The requirement for councils to make savings, protect revenues and guard against fraud and error certainly hasn’t changed. We believe that RBV remains as relevant and valuable to councils today as it was when it was first developed and to abandon it now will result in higher processing costs and expose councils to increased risks of fraud and error.

What the performance data tells us?

Councils tell us that the performance data available to them for the two claim parts: HB and LCTS doesn’t make it easy to see what the combined caseload is and how it’s changed over time. Looking at the reduction in HB caseload in isolation doesn’t give a true reflection of the work undertaken by officers because more often than not there is still an LCTS claim to process. We are working with councils to help them quantify and understand caseload change and the ongoing effectiveness and importance of RBV across both claim parts.

Performance data from 2017/18 showed that the overwhelming majority of our RBV customers achieved faster processing times than the national average and verification error detection amongst RBV customers exceeded the national average by 33%. RBV remains an effective tool as these performance figures and associated efficiencies testify. With the way LCTS is financed perhaps for Councils at least the importance has shifted from Housing Benefit to Council Tax revenue protection and with this in mind we at TransUnion are working to deliver even better outcomes for Councils in the future.

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