London Borough of Barking and Dagenham: Using data and behavioural science to proactively support residents in debt

During most of 2020 council tax collection in London Borough of Barking and Dagenham (LBBD) was paused due to the COVID-19 pandemic. In February 2021 the council began collections again, but many residents were in arrears. The council made proactive calls to residents at summons stage for council tax arrears to see if they could set up a payment plan or needed support. This increased the numbers of payment plans set up and residents appreciated the approach. 

The challenge

Following the first year of the pandemic, much of LBBD’s collection activity had been paused. When collections restarted in early 2021 there were many more households in arrears than usual. The pandemic had caused many residents financial issues and they were struggling to pay off their arrears. However, many were ignoring reminders to pay instead of engaging with the service. This is a common behavioural response to debt that people feel they cannot afford. But it is also a sub-optimal response given costs that are added to debts as well as the potential for court and bailiff action. In addition, there was anecdotal evidence that many residents did not realise they could make a payment agreement with the council at an affordable rate.

The solution

LBBD wanted to engage with residents in a different way. Too many would switch off if the communication, in whatever format, was deemed to be about council tax arrears. So, they decided to make calls to check in on people. The officer would start asking how the resident was doing. The officer would bring up the arrears but it would be framed as ‘let’s resolve this before it gets to court’ rather than ‘you need to pay’. LBBD used its data science platform, One View, which combines a range of data from across the council to target people that looked as though they would be able to afford a payment plan. But if the call unearthed needs such as requiring debt advice or even safeguarding, officers could pass them on to the relevant teams for support.

The impact

They attempted to call 210 people and reached 68. Of these, most were happy to speak to the council tax team about their debt and 30 set up a payment plan.

The results from this intervention were compared to the outcomes from a similar group of residents that the council did not attempt to call. This showed that the residents we called were 50 per cent more likely to have made a payment or set up a payment plan than residents that did not. This meant that fewer residents that were called went to court or were referred to bailiffs. Both of these outcomes increase the debt the resident owes.

The pilot showed very good value for money as well as improving outcomes for residents. The costs of staff time to deliver the pilot was just over £1,000 while the pilot brought in circa £30,000 of extra payment plans and lead to several residents avoiding court, bailiffs and costs associated with this enforcement.

There are two important caveats to this result:

1. Some residents will default on their payment plans and so the full £30,000 may not be realized. But even assuming a high default rate of 30 per cent, the pilot still represents very good value for money.
2. The residents that were not called were more likely to pay off their entire debt following court. This might be because more of these residents went to court and this is not an uncommon outcome from court. However, there are questions about how sustainable this behaviour is as some payments were made on credit cards so may leave residents with financial pressures in other areas.

How is the new approach being sustained?

LBBD have moved into a second pilot which aims to target higher needs residents and offer wider support eg debt advice. In the long term they would like to build an element of proactive outreach into business as usual within their revenues and benefits service.

Lessons learned

1. Involvement of a third-party team added complexity
   
   Residents were sometimes confused why a team that was not the council tax team was calling them about council tax. The council also did not have enough council tax officers in the pilot. This meant that some people who were put through to the council tax team did not get through. 25 per cent (13) of the people that said they would like to be put through because of this were lost as a result. To overcome these issues, the aim is for specific teams to do outreach (eg council tax team or debt advice team) in the future so that no hand overs are needed.
   
    
2. Which residents should get this and when?
   
   For a relatively intensive intervention better outcomes might be achieved by targeting residents in greater need and engaging with them before summons stage.
   
    
3.  Experiment with lighter touch outreach to contact more residents.
   
   This will test whether texts and emails with similarly constructive and relational messages would enable you to reach more residents and scale up the impact that was achieved.