Councils in the UK are under increasing pressure to continue delivering the services we need with decreasing budgets. Improving the rates of council tax collection is one action that councils can take to improve revenue streams. Since the introduction of council tax in 1993 – over £2.7 billion remains unclaimed by English Councils.
To tackle the problem of non-compliance for this year’s accounts, the London Borough of Haringey took the step to engage our team at The Behaviouralist to apply our unique skills and insights from behavioural and experimental economics into their council tax recovery process.
Between the months of April and June 2016, we conducted a large-scale natural field experiment reaching over 13,000 households. This involved the re-designing of existing council tax letters, experimental design and detailed analysis of outcomes.
We started by randomising households in arrears against this year’s account to receive either one of our two different redesigned letters (framed using behavioural science), or a control letter (i.e., a typical council reminder letter). All letters were sent to households over three stages of the recovery process: at first reminder, second reminder and final reminder. At the end of the experiment, we compared the outcomes from each of the treatment groups to the control group to identify the impact of the intervention.
After 75 days, the households that received our re-designed letters paid over £110,000 extra than the control group, a statistically significant result. If we project this same effect over the full year, we would equate an annual projected increase of tax revenues of over £400,000. This does not include the costs of court to the council and households. Looking further into the data we also found some remarkable insights into the reactions from different communities across Haringey.
This work demonstrates how simple and innovative applications of behavioural science can deliver substantial measured returns for councils. We hope this is just the beginning – we want to help many more councils generate millions of pounds worth of extra revenue.