Public sector fraud, error and debt cost the UK government billions of pounds each year, costs that are borne by law-abiding taxpayers and firms. Insights from behavioural science can form an integral part of the government strategy to reduce this cost and the tax gap.
This document is intended to offer a practical guide to those who design and administer taxes and fines, and whose job it is to make such systems simple and easy to use for businesses and citizens. This is the first time that the Government has explicitly sought to draw upon behavioural insights to tackle fraud, error and debt in a systematic way. The insights outlined in this document, applied in a range of different contexts and settings, show that not only is it possible to apply behavioural insights to reduce fraud, error and debt, but also that it can be done in a highly cost-effective way.
Part 1 summarises the academic evidence and sets out seven key insights that can be applied in practice. It illustrates that behavioural insights can offer useful new perspectives on these familiar challenges, as well as the potential to move interventions ‘upstream’ by encouraging early and easy payments to prevent debts accruing in the first place. Part 2 describes eight trials which demonstrate that it is possible – and important – for public services to adopt a ‘test, learn, adapt’ approach. This is important not only because the effectiveness of interventions will depend heavily on the context in which they are applied, but also because the use of such methods ultimately rests on public acceptability and trials allow this to be tested. Policymakers should innovate, but should do so with humility about the limits of current knowledge, and with respect for what is acceptable and helpful to the public whom we serve.
We would like to thank colleagues in HMRC, the Ministry of Justice, DVLA, HMCTS, Manchester City Council and local government for their help in conducting the trials and producing this document. We would also ask you – the reader – to help to improve it, and our collective understanding, by sharing results that you may have or trials that you may be undertaking.