Capita's associate director of housing Anna O'Halloran and behaviour change expert Steven Johnson discuss their collaboration on our pioneering new 'Nudge' initiative to reduce rent arrears in the social housing sector...
What’s led you to develop this project together?
AO'H: I’ve worked in social housing for 30 years now and for a great deal of that time I’ve been involved in the thorny topic of rent arrears – either as an employee trying to collect rent myself, as a manager trying to inspire staff, as an Inspector trying to identify the need for improvement or as a consultant finding a way to deliver improvements.
During all of that time not a lot has really changed around how organisations are dealing with one of the biggest issues in our industry....first send letter 1 to a tenant in arrears, then send letter 2, maybe send a text or email, then visit or phone...you get the picture!
A few organisations had tried to set up incentive and reward schemes – some successfully, others not so. In fact I tried it myself in about 2001 – successfully, I might add! But something needed to change – at a more fundamental level.
Then Steven got in touch...
SJ: I’d worked with Anna on a number of previous programmes, so I knew she’d be the perfect person to get behind a concept like this: an extremely ambitious project that has the potential for significant impact, not just for the professionals and providers involved, but for the sector generally.
I’ve been researching and designing behaviour change programmes for over decade, working in the UK and internationally on a wide range public health, sustainability and community empowerment agendas. When I first began working in the social housing sector about 3 years ago it was immediately clear that behaviour change was an urgent challenge that culturally and practically, it wasn't equipped to deal with.
Fundamentally, the most urgent challenges we face as businesses, communities and even as a species, are challenges related to human behaviour. The problem is that despite the massive and urgent need to affect behaviour change, in so many contexts little progress is being made.
Programmes are all-too-often built on the common sense assumptions of officers within organisations, rather than on an evidence-base of strong community insight, behavioural theory and robust testing.
That’s why I see this project as such an opportunity for everyone involved—a real opportunity to be part of something new, something different and—with the right providers on board—something that could really make a dint.
Why is now the right time?
AO'H: I think what’s interesting to me is how the housing industry is at last really learning from other industries and from social theory, and I think this project exemplifies that.
There are fascinating examples of how changes in behaviour have been achieved, and more importantly sustained, through understanding how people REALLY behave, rather than how we THINK they behave. We want to apply these concepts to rent arrears or rent payment approaches. Now is critical – there’s a potential disaster for the industry coming over the horizon in the shape of universal credit.
SJ: Anna’s right. Now is not the right time, now is the only time! Too many providers are sleepwalking into the unchartered, hostile territory that welfare reform is creating and they’re going to get eaten alive if they don’t start taking action to protect themselves.
Interestingly, there are number of familiar behaviour mechanisms at play in this dynamic:
For me, it’s fascinating—on the one hand we have organisational behaviours and on the other we have tenant behaviours and in most cases we need to address the former, before we can have a meaningful impact on the latter. Again, that’s what I find exciting about this project—it’s as much about how we need to start doing things differently as organisations and as a sector as much as it about new approaches to rent arrears.
The good news is that there is a wealth of existing empirical evidence and trialled approaches that we can transpose into this context; approaches that have had already massive impact on debt collection and payments in government and public sector contexts. If social housing is behind the curve on behaviour change and running out of time on revenue protection, then we need to jump on a fast track. And that’s exactly what we want this project to offer.
Why is it interesting to Capita?
AO'H: as I’m relatively new to working at Capita, I’m still learning about all the things that it is involved in, and one of those ‘things’ is the collection of the TV licence fee! Behavioural Insight (or ‘Nudge’) theory was used – and we’ve probably all responded to it. There are some really compelling statistics:
We also have our own behavioural insights and intelligence team, so it’s bread and butter for us. But we wanted to work with a specialist more used to working with the typical client group that the housing industry works with, and so I’m really pleased that Steven is working with us.
SJ: 90% of my behaviour change work has been focussed on reducing inequalities in deprived communities across the UK and beyond.
I grew up on a deprived estate in Lancashire and I know first-hand the norms, values and priorities that define many of our more hard-pressed communities—the very people that will face the biggest challenge in adapting to Universal Credit and other welfare changes. The question for me is how we can help people help themselves? We may talk about Nudge, Shove, Smack and Hug, but for me this is fundamentally about empowering tenants and communities.
Behavioural economics and empirical social psychology will be foundational to this project. But that is only one side of the coin. This must be complemented by rich and robust community insight that allows us to apply those scientific principles appropriately, ethical and, most importantly, effectively.
What will participants get from the project?
AO'H: I’d hope that at the very minimum, a reduction in rent arrears! But also reduced costs on what is now commonly known as negative expenditure – resources spent on doing things that in an ideal world shouldn’t need doing, like sending out rent arrears letter 1!
SJ: the primary metrics will be built around revenue and size / profile of arrears. But I think we can also have a significant impact on the operational costs associated with implementing complex escalation pathways – the negative expenditure that Anna mentions.
In fact, it’s surprising to me how many providers don’t know how much it costs to run their escalation pathway. In terms of VFM, I feel this is something we need to get a handle on and something this project will help participating providers model—financial impacts are about cost savings as much as increased revenue.
Will you share the results?
AO'H: yes, of course we’ll share the high level findings, but the project is just the start of a longer approach that we think could really end up being a game-changer.
SJ: if we are to survive and thrive in this emerging social, political and economic landscape, we need to think differently and do differently… and quickly.
This project is about developing evidence-based and rigorously-tested interventions based on behavioural science and community insight. It’s not just about what we do; it’s fundamentally about how we do it. This is new for the sector and culturally very different to how most providers are used to approaching their challenges. We have ambitions for a project that will trigger disruptive innovation. And we believe the experience of being part of it will create mindsets and build skills that can applied more generally across the sector, to everyone’s benefit.
Anna O'Halloran is associate director of housing at Capita. Steven Johnson is a writer, speaker and freelance consultant specialising in behaviour change and social marketing. He is a director at Collaborative Change, founder of the Considered Creative project and recently served three years as a trustee of the global advertising organisation, D&AD. Over the last decade he has been responsible for leading insight and design on a vast range of award-winning behaviour change projects addressing health, community sustainability issues.
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