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Exploring the impacts of
welfare reform using policy
microsimulation and
administrative benefits data
LSE CASE Seminar, 20 November 2019
Deven Ghelani
Dr Ben Fell
Policy in Practice
Outline
www.policyinpractice.co.uk
Introduction
Method: policy micro-simulation and administrative benefits data
Modelling the impact of Universal Credit on living standards
Isolating the impact of the two child limit
Impact evaluation using retrospective matched controls
Universal Credit and financial resilience
www.policyinpractice.co.uk
Here’s how far you can
get with publicly
available data…
But so what?
Policy micro-simulation and administrative benefits data
www.policyinpractice.co.uk
Modelling the impact Universal Credit on
living standards
Combining administrative data and microsimulation, it is possible to proactively
identify which households will struggle with the transition to Universal Credit
www.policyinpractice.co.uk
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Benefit
awards
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Benefit
awards
- 2017/18 data
- Uprated to 2019
- Households not
claiming, but eligible
for UC
- n = 5,502
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Benefit
awards
- Models all mechanical
interactions of welfare
system
- Flexible scenario
modeling:
- E.g., ‘move’ households
onto UC
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Income
After
Costs
Total benefit
eligibility under
Universal Credit vs.
legacy system
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Income After
Costs:
Legacy system
Legacy vs. UC
Current vs. 2023
Benefit cap on/off
Two child limit on/off
Minimum income floor on/off
UC advance no/yes
...
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Family
Resources
Survey
Benefit and
Budgeting
Calculator
Legacy vs. UC
Current vs. 2023
Benefit cap on/off
Two child limit on/off
Minimum income floor on/off
UC advance no/yes
...
Income After
Costs:
Legacy system
Income After
Costs:
Universal Credit
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Definition % Average change in award level
Better off on Universal Credit 41% £132
No change (change less than £5 per month) 31% £2
Worse off on Universal Credit 28% -£208
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
● 3.3 million households, or 71% of the cohort yet to
move to Universal Credit, will face at least one of
these challenges.
● 1.2 million low-income households, around 26% of
the cohort yet to move onto Universal Credit, will
face two or more of these challenges.
● 150,000 low-income households, around 3% of
the cohort will face three or more of these
challenges.
Isolating the impact of the two child limit
We were able to identify in advance 18,000 children in 4,600 households across 19
councils affected by the two child benefit limit to help councils target support
www.policyinpractice.co.uk
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Administrative
HB/CTS data
Benefit and
Budgeting
Calculator
Income
After
Costs
(IAC)
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Administrative
HB/CTS data
Benefit and
Budgeting
Calculator
Income
After
Costs
(IAC)
- 2019 data from 19
local authorities
- 274,579 children in
138,793 households
claiming either HB or
CTS
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Measuring living standards: Income after costs (IAC)
Income/cost element Data source Example amount
Earnings Single Housing Benefit/Council Tax Support
extracts
£713.40
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Measuring living standards: Income after costs (IAC)
Income/cost element Data source Example amount
Earnings Single Housing Benefit/Council Tax Support
extracts
£713.40
Benefit income Benefit and Budgeting Calculator £185.00
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Measuring living standards: Income after costs (IAC)
Income/cost element Data source Example amount
Earnings Single Housing Benefit/Council Tax Support
extracts
£713.40
Benefit income Benefit and Budgeting Calculator £185.00
Housing costs Single Housing Benefit/Council Tax Support
extracts
-£483.31
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Measuring living standards: Income after costs (IAC)
Income/cost element Data source Example amount
Earnings Single Housing Benefit/Council Tax Support
extracts
£713.40
Benefit income Benefit and Budgeting Calculator £185.00
Housing costs Single Housing Benefit/Council Tax Support
extracts
-£483.31
Household costs Living Costs and Food Survey (ONS) -£274.36
Modelling the impact of Universal Credit on
living standards
www.policyinpractice.co.uk
Measuring living standards: Income after costs (IAC)
Income/cost element Data source Example amount
Earnings Single Housing Benefit/Council Tax Support
extracts
£713.40
Benefit income Benefit and Budgeting Calculator £185.00
Housing costs Single Housing Benefit/Council Tax Support
extracts
-£483.31
Household costs Living Costs and Food Survey (ONS) -£274.36
Income after costs (monthly) Benefit and Budgeting Calculator £140.73
Isolating the impact of the two child limit
www.policyinpractice.co.uk
Benefit and
Budgeting
Calculator
Legacy vs. UC
Current vs. 2023
Benefit cap on/off
Two child limit on/off
Minimum income floor on/off
UC advance no/yes
...
IAC:
Two child limit
Administrative
HB/CTS data
Isolating the impact of the two child limit
www.policyinpractice.co.uk
Administrative
HB/CTS data
Benefit and
Budgeting
Calculator
Legacy vs. UC
Current vs. 2023
Benefit cap on/off
Two child limit on/off
Minimum income floor on/off
UC advance no/yes
...
IAC:
Legacy system
Two child limit
IAC:
Two child limit
REMOVED
Isolating the impact of the two child limit
www.policyinpractice.co.uk
~21% of households (~4,600
households, ~18,000 children) whose
families face a cash shortfall under
the Two Child Limit would no longer
face a cash shortfall if the policy were
removed, gaining £366 on average
Impact evaluation using retrospective
matched controls
Using longitudinal administrative data it is possibly to track the impact of policies and
interventions, and measure their effectiveness using retrospectively matched controls
www.policyinpractice.co.uk
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Challenge: impact evaluation for social policy interventions is hard
● Support is often reactive (don’t know who will need support in advance)
● Collecting pre-/post-test data is costly, difficult and can introduce bias
● Ethically unjustifiable to withdraw support from control cases
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Solution: administrative benefits data
● Routinely collected for at-risk cohort (low-income households)
● Longitudinal - allows pre/post comparison and tracking long term outcomes
● Control cases can be retrospectively matched
Step 1: Identify cohort
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Step 2: Engage households (and record service use)
E.g.,
● ‘Reimagine Debt’ (project with Cabinet Office) - ongoing & personalised debt
advice in two Local Authorities (~40 households)
● Legal support (project with Legal Education Foundation) - three support services
offered by law centre - add numbers
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Step 3: Track cohort
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Step 4: Match control sample
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
Step 5: Compare outcomes
Impact evaluation using retrospective matched controls
www.policyinpractice.co.uk
What would you do with this data?
Quick demonstration of LIFT Dashboard
www.policyinpractice.co.uk
Thank you
Dr Ben Fell
ben@policyinpractice.co.uk
Deven Ghelani
deven@policyinpractice.co.uk
hello@policyinpractice.co.uk
0330 088 9242
www.policyinpractice.co.uk

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Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data

  • 1. Exploring the impacts of welfare reform using policy microsimulation and administrative benefits data LSE CASE Seminar, 20 November 2019 Deven Ghelani Dr Ben Fell Policy in Practice
  • 2. Outline www.policyinpractice.co.uk Introduction Method: policy micro-simulation and administrative benefits data Modelling the impact of Universal Credit on living standards Isolating the impact of the two child limit Impact evaluation using retrospective matched controls
  • 3. Universal Credit and financial resilience www.policyinpractice.co.uk Here’s how far you can get with publicly available data… But so what?
  • 4. Policy micro-simulation and administrative benefits data www.policyinpractice.co.uk
  • 5. Modelling the impact Universal Credit on living standards Combining administrative data and microsimulation, it is possible to proactively identify which households will struggle with the transition to Universal Credit www.policyinpractice.co.uk
  • 6. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards
  • 7. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards - 2017/18 data - Uprated to 2019 - Households not claiming, but eligible for UC - n = 5,502
  • 8. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Benefit awards - Models all mechanical interactions of welfare system - Flexible scenario modeling: - E.g., ‘move’ households onto UC
  • 9. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Income After Costs Total benefit eligibility under Universal Credit vs. legacy system
  • 10. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Income After Costs: Legacy system Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ...
  • 11. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Family Resources Survey Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... Income After Costs: Legacy system Income After Costs: Universal Credit
  • 12. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Definition % Average change in award level Better off on Universal Credit 41% £132 No change (change less than £5 per month) 31% £2 Worse off on Universal Credit 28% -£208
  • 13. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  • 14. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  • 15. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk
  • 16. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk ● 3.3 million households, or 71% of the cohort yet to move to Universal Credit, will face at least one of these challenges. ● 1.2 million low-income households, around 26% of the cohort yet to move onto Universal Credit, will face two or more of these challenges. ● 150,000 low-income households, around 3% of the cohort will face three or more of these challenges.
  • 17. Isolating the impact of the two child limit We were able to identify in advance 18,000 children in 4,600 households across 19 councils affected by the two child benefit limit to help councils target support www.policyinpractice.co.uk
  • 18. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Income After Costs (IAC)
  • 19. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Income After Costs (IAC) - 2019 data from 19 local authorities - 274,579 children in 138,793 households claiming either HB or CTS
  • 20. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40
  • 21. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00
  • 22. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31
  • 23. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31 Household costs Living Costs and Food Survey (ONS) -£274.36
  • 24. Modelling the impact of Universal Credit on living standards www.policyinpractice.co.uk Measuring living standards: Income after costs (IAC) Income/cost element Data source Example amount Earnings Single Housing Benefit/Council Tax Support extracts £713.40 Benefit income Benefit and Budgeting Calculator £185.00 Housing costs Single Housing Benefit/Council Tax Support extracts -£483.31 Household costs Living Costs and Food Survey (ONS) -£274.36 Income after costs (monthly) Benefit and Budgeting Calculator £140.73
  • 25. Isolating the impact of the two child limit www.policyinpractice.co.uk Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... IAC: Two child limit Administrative HB/CTS data
  • 26. Isolating the impact of the two child limit www.policyinpractice.co.uk Administrative HB/CTS data Benefit and Budgeting Calculator Legacy vs. UC Current vs. 2023 Benefit cap on/off Two child limit on/off Minimum income floor on/off UC advance no/yes ... IAC: Legacy system Two child limit IAC: Two child limit REMOVED
  • 27. Isolating the impact of the two child limit www.policyinpractice.co.uk ~21% of households (~4,600 households, ~18,000 children) whose families face a cash shortfall under the Two Child Limit would no longer face a cash shortfall if the policy were removed, gaining £366 on average
  • 28. Impact evaluation using retrospective matched controls Using longitudinal administrative data it is possibly to track the impact of policies and interventions, and measure their effectiveness using retrospectively matched controls www.policyinpractice.co.uk
  • 29. Impact evaluation using retrospective matched controls www.policyinpractice.co.uk Challenge: impact evaluation for social policy interventions is hard ● Support is often reactive (don’t know who will need support in advance) ● Collecting pre-/post-test data is costly, difficult and can introduce bias ● Ethically unjustifiable to withdraw support from control cases
  • 30. Impact evaluation using retrospective matched controls www.policyinpractice.co.uk Solution: administrative benefits data ● Routinely collected for at-risk cohort (low-income households) ● Longitudinal - allows pre/post comparison and tracking long term outcomes ● Control cases can be retrospectively matched
  • 31. Step 1: Identify cohort Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  • 32. Step 2: Engage households (and record service use) E.g., ● ‘Reimagine Debt’ (project with Cabinet Office) - ongoing & personalised debt advice in two Local Authorities (~40 households) ● Legal support (project with Legal Education Foundation) - three support services offered by law centre - add numbers Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  • 33. Step 3: Track cohort Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  • 34. Step 4: Match control sample Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  • 35. Step 5: Compare outcomes Impact evaluation using retrospective matched controls www.policyinpractice.co.uk
  • 36. What would you do with this data? Quick demonstration of LIFT Dashboard www.policyinpractice.co.uk
  • 37. Thank you Dr Ben Fell ben@policyinpractice.co.uk Deven Ghelani deven@policyinpractice.co.uk hello@policyinpractice.co.uk 0330 088 9242 www.policyinpractice.co.uk