Using behavioural insights to convert taxpayers to direct debit – Medway Council

Between January and June 2017, Medway Council worked with the Behavioural Insights Team and their Test+Build platform to increase the number of council tax payers signed up to direct debit. The project, which tested two different letter inserts, significantly increased direct debit sign-ups.

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The challenge

Many local authorities struggle to collect all the revenue owed to them. Increasing compliance, while important for the council’s financial health, can be costly: if residents fail to pay council tax after multiple reminders, this may result in a court summons or enforcement action by bailiffs. Increasing direct debit sign-ups is therefore one way that councils may be able to improve their collections. Besides the possible benefits to collections, direct debit provides councils with a revenue stream that is more predictable and reliable. It is also less expensive for councils to process these transactions, relative to other payment methods.  

Test + Build is an online platform created by the Behavioural Insights Team that helps users design communications that draw on behavioural science and supports them in testing the effectiveness of those communications with a randomised controlled trial (RCT). RCTs are considered to be the gold standard research method, as they allow you to show how effective your new communications are relative to the old ways of doing things through the introduction of a control group.

Medway Council was an early adopter of Test + Build and was the first local authority to run an RCT using the platform. The council’s goal was to convert 5% of council tax payers not currently signed up for direct debit to sign up for it within one month of receiving their annual billing notice.

Together with Medway Council, we designed two letter inserts to be sent to households. These inserts were part of a larger packet of annual billing materials that taxpayers received by post. We then used an RCT to test the two inserts against a control (business-as-usual) of no insert. Both letter inserts significantly increased direct debit sign-ups, and one letter achieved Medway Council’s target goal, converting 5% of taxpayers not currently signed up for direct debit to sign up for it.

The solution

Medway and the Test + Build team designed two letter inserts drawing on various behavioural science concepts. Both letters clearly communicated how easy it was to sign up for direct debit payments for Medway council tax, but across the letters, the justifications for signing up were framed differently.

  • Social norm/Easy insert – This design encouraged recipients to join more than 70,000 taxpayers in Medway already signed up to direct debit. It also framed the act of paying bills with direct debit as something that is easy.
  • Loss aversion insert – This insert highlighted the inconvenience of having to remember to pay Council Tax each month. It referenced the extra hassle, or losses, that can be associated with forgetting to pay (e.g. reminders, a possible summons, and penalties).

The impact

We found that both interventions significantly increased sign-ups to direct debit. The best-performing insert (Loss aversion) increased sign-ups by over 42% relative to the Control.

Combined, we estimate that our new interventions converted an additional 286 taxpayers to Direct Debit in just one month.

Additional secondary analysis revealed that Medway Council taxpayers living in higher banded properties in our sample were more likely to sign up for Direct Debit. In each band, at least one of our treatment interventions significantly increased sign-ups relative to the Control.

medway council council tax direct debit

How is the new approach being sustained?

As part of the Test + Build process, Medway Council gained access to a wealth of material and guidelines developed by the team. They will be able to use these again when designing their communications.  Medway is exploring other ways to use behavioural science within the council.

Lessons learned

Through this trial, we found that the Test + Build platform is a viable way for local authorities to implement their own RCTs and achieve real results that meet their internal goals. Even though the inserts tested were not the primary focus in the materials sent to taxpayers, they were still effective enough to encourage a significant number of taxpayers to switch to direct debit.


Medway Council: Patrick Knight

Test + Build: Miranda Jackman