Work in fraud, error, and debt, and especially tax compliance and collection, has always been a core part of what the Behavioural Insights Team (BIT) does. One of our favourite pieces of work is still that first HMRC trial that told taxpayers with outstanding debts that ‘nine out of ten people pay their tax on time.’ That trial significantly increased the rate at which people paid their taxes, bringing forward £3 million in tax debt. It’s a result that has since been replicated worldwide.
In recent years, we’ve worked on dozens more trials in tax and collection – both in the UK, working with HMRC or local governments, and overseas, in countries like the US, Guatemala, and Poland. Encouraging people to pay their taxes on time and in full is important for many reasons: it increases the odds that residents feel that the system is fair, and it provides the lifeblood of public services without which residents or future generations could suffer. One BIT trial, conducted with Medway Council in 2015, recently was nominated for a local government innovation prize. It tested various messages and estimated that the most effective one would bring forward £2.7 million for the Council annually.
Though all these trials have been in very different contexts and situations, they all employ similar insights and involve running trials to test which letter is most effective. And this got us thinking. Could we build a tool that would enable us to automate lots of the process, while also helping organisations to build their own capabilities? We are pleased to say that the answer is, yes.
Our new tool is called Test+Build, and it aims to hugely increase the use of behavioural science in tax collection by helping people design and run their own randomised controlled trials. Test+Build does this by guiding users through the four stages of BIT’s TEST methodology – Target, Explore, Solution and Trial – and provides them with guides, case studies and videos developed by the team that relate to compliance and enforcement. Test+Build also brings in support from BIT researchers to offer advice, conduct randomisations, and analyse and interpret the results. It provides organisations with the tools to run their own trials, and in doing so, increases the organisation’s level of expertise for implementing them in the future.
By letting users work through the process themselves, with support from BIT researchers at key points along the way, we’ve significantly reduced the cost to organisations of running a BIT trial – by about 50 per cent. Of course, the all-important question for us is – as always – does it work?
We’ve just completed the pilot of the new product – working again with Medway Council on a trial to increase the rate at which council taxpayers sign up for Direct Debit. We tested two new messages – one which drew on loss aversion, and one which drew on social norms – against a business-as-usual control of no message. We found that both new messages significantly increased sign-ups and that the loss aversion arm works slightly better especially for houses in high tax bands.
Direct Debit sign-up
Sign-ups by property band (TOT)
Patrick Knight, Finance Operations Systems Manager at Medway Council, said;
The Test+Build platform was so easy to use and so informative. It helped us clearly define our project objective and design the interventions. Additionally, the Test+Build team provided excellent support, sage advice and carried out the complex analysis giving us confidence that the excellent results were real and not just a mere coincidence.
If you’re interested in working with Test+Build, please register your interest here. If you would like to learn more about the project or just want to have a conversation, we can be reached at email@example.com.