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Transforming the Council's approach to debt support

Could proactive outreach boost Council revenue and support vulnerable residents in debt?

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Background

Poverty and debt are significant issues in Barking and Dagenham, one of England’s most deprived local authorities. We have one of the highest rates of unemployment in England and among the highest number of in-work Universal Credit claimants, a measure of in-work poverty. Poverty drives a reliance on borrowing and this often means high interest credit. We estimate 6,000 households in our Borough access 20,000 new loans each year which shockingly translates into repayments of around £16.7m for some of the poorest people in the country. Spiralling debt also leads to other poor outcomes such as mental health issues, domestic abuse, use of social care and homelessness. 

Problem

The pandemic exacerbated financial difficulties for many residents, leading to a surge in council tax arrears. Many residents were ignoring reminders to pay instead of engaging with the service, which is a common behavioural response to debt that people feel they cannot afford. In addition, a review of existing practices showed an overly rushed arrears ladder, where the service only properly engaged with residents at crisis points. This isn't an effective or sustainable approach to debt collection.

Theory of change

Our initiative aimed to proactively identify and assist residents in financial distress. Local authorities have live data feeds on council tax and engagement with other council services, meaning we can see people falling into debt in real time; which could be leveraged to identify residents that might need support. Arrears need to be paid off but threatening people who cannot pay (and may have additional challenges in their lives) not only produces worse outcomes for those people but it also does nothing to improve council finances. We hypothesised that proactive outreach and support would not only improve outcomes for residents but also enhance revenue collection for the council.

Design process

A multidisciplinary team, comprising a service designer, behavioural scientist, and data analyst, came together to redesign the debt support service.

  • Conducted workshops with frontline staff and managers to understand current processes and user needs

  • Identified archetypes of people in arrears to develop a tailored intervention strategy - the 'can't pays' and 'won't pays'

  • Analysed data to understand which indicators best identified vulnerable groups

  • Co-designed and implemented the new process including setting up digital systems, governance and drafting behaviourally informed messaging

  • Ran a randomised control trial to test the efficacy of the new approach

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New service implementation

We piloted a new proactive outreach process, leveraging our predictive analytics platform, One View, to identify vulnerable residents and offering personalised support via text messages. Residents who opted in received assistance from our debt support service, the Homes and Money Hub, helping them set up affordable payment plans and access benefit support.

We ran an RCT to test this new approach: the treatment group received the new outreach process and the control group flowed through the usual process. We tracked outcomes of both groups to measure the difference and guage impact of the pilot.

Impact

​​The results of our pilot were remarkable:

  • Engagement: Over 26% of contacted residents engaged with the support offered, demonstrating the effectiveness of personalised outreach.

  • Interventions: 127 support interventions were delivered to residents in the treatment group, significantly higher than the control group (chart below).

  • Financial Benefits: Additional benefits totalling £400,000 were secured for residents in the treatment group, highlighting the impact of proactive support.

  • Debt Repayment: Residents engaged in the proactive approach paid £75,000 more in arrears compared to the control group.

  • Recovery Action Reduction: The approach led to a decrease in court and enforcement actions, benefiting both residents and the council.

Interestingly, the data identified many residents that were not well known to the Council even though they were vulnerable. Often, they were eligible for support but did not know it and would not have received it in the absence of the pilot.

Future Directions

The success of the pilot underscores the potential for integrating proactive support into standard practice. By shifting focus from reactive to proactive interventions, we aim to further improve outcomes for vulnerable residents while optimising revenue collection for the council.

In summary, the pilot has been a phenomenal success. It has demonstrated the power of data-driven, human-centred approaches in tackling debt and supporting residents in need, resulting in tangible benefits for both individuals and the community as a whole.

“Client explained that this has lifted a weight off of her shoulders. She said that the support she has had has really helped as she was suffering with bad depression and was afraid to open any letters from the council but has now opened them all and has been trying to deal with them.“

- Frontline Officer in the Homes and Money Hub

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