Skip to content
Menu

Smarter delivery on policy can reap big gains for the next UK Government – even with constrained finances

  • Blog
  • 3rd Jul 2024

Tomorrow the UK heads to the polls to choose their next government. In anticipation, Lucy Makinson, BIT’s Head of Policy, considers how an incoming government can deliver impact, even in the face of fiscal constraint. 

If the Conservatives and Labour have agreed on one thing this election, it’s that money is tight. UK government borrowing is the highest it has been since the Second World War, and any incoming government will have to work hard to balance the books. This can make it feel like the parties are hamstrung, constrained to middle-of-the-road policies because the finances don’t allow for anything more exciting.

But no money doesn’t have to mean no ideas. BIT (the Behavioural Insights Team) was set up with a sunset clause: make 10x your cost in government savings, or get shut down after two years. The project that delivered the biggest savings early on (tax payments) also won us the Civil Service Innovation award. Good ideas don’t have to blow the budget.

Over the last 15 years, as behavioural science has spread globally, the methods and impact have evolved far beyond those early successes. And almost always at low cost.

So what can three successes from our behavioural science work teach a new government about delivering impact from tight coffers?

1) Cut unnecessary process

The success: Pension auto-enrolment

Almost all UK employees are now automatically enrolled into their employer pension scheme, following measures introduced in 2012. Saving rates have skyrocketed: over 90% of employees now save for a pension, either with their employer or separately. The biggest impact has been on the most vulnerable. Before auto-enrolment, just 22% of the most financially vulnerable were saving for a pension. Now 90% are – almost indistinguishable from higher earners. 

In a public policy rarity, the programme was cheaper and more successful than anticipated.

The takeaway

Seemingly small frictions (such as needing to opt-in or sign–up to a programme) can have disproportionate negative impact. The greatest harm is to the most vulnerable, who are more likely to be time poor, and less likely to have the resources to navigate complex systems. 

Yet automatic enrolment was a rare success – too many government schemes are still marred by complexity, excluding the very people they aim to help.

New opportunities: 

Introduce auto-enrolment for key benefits, including childcare subsidies and Free School Meals status

Measure government ‘sludge’, and make tackling it a key priority

  • UK citizens spend an estimated 3bn hours on government-related admin every year – averaging nearly an hour-and-a-half per adult, per week. Tackling this should be at the heart of improving public service delivery.
  • Other countries are leading the way. A year after the US Burden Reduction Initiative (2022), the programme had estimated the total administrative burden across the US government. The Department of Homeland Security reduced its burden by over 10%. New South Wales, Australia has developed Sludge Audits to help departments improve their processes. One audit saw a 24% increase in children attending key health checks by streamlining the process.
  • An incoming government committed to tackling sludge could drive considerable impact within a single term. The success of auto-enrolment also means the vast majority of UK adults now have a savings buffer. We should make it work for them.

Extend pension pots to rainy-day savings

  • Nearly a quarter of UK adults have less than £100 in savings, placing them one unexpected bill away from spiralling debt. Saving for your pension is important, but urgent debts should be settled first. 
  • One option is to incorporate a regular  savings account into workplace pensions. This would be a smaller pot (say £1000) that is topped up  via the pension deduction from employees’ salaries. They could then  draw down on it when needed. If the pot is unused, the savings will roll over into their pension. 
  • An initial pilot by Nest (who facilitate auto-enrolment) found the scheme was particularly popular amongst those that struggled to save. It could also further boost pension participation rates, by reassuring savers they can still access money in emergencies.

2) Shift the market

The success: Sugar Tax

It is much easier to eat healthily when we have healthy options in front of us, rather than needing to constantly restrict our own behaviour. With this in mind, the Soft Drinks Industry Levy (SDIL) or ‘Sugar Tax’ was designed to encourage drinks’ producers to reformulate their products with less sugar

By 2019, four years after the levy was announced, the sugar content of eligible drinks had fallen by 44%. Recent studies suggest the Sugar Tax is already reducing childhood obesity and tooth extractions, and the Institute for Government says the policy has a “rare status as a win-win policy for both public health and industry”. Far from costing money, the Sugar Tax generated £355m of government revenue in 2022/23

The takeaway

Our behaviour is strongly shaped by our environment. Approaches which help to shape markets deliver disproportionate impact, far beyond just health. 

New opportunities

Introduce supermarket nutrition targets

  • Soft drinks form a relatively small part of our diet. To truly tackle obesity (and its £98bn annual cost) the success of the Sugar Tax needs to be expanded.
  • Health targets for supermarkets – proposed by our Nesta colleagues among others – would create similar incentives to provide and promote healthier alternatives. Supermarkets would be fined for selling disproportionately unhealthy food across their ranges but, as with the sugar tax, the aim is to drive change, not to punish, so the expectation is that very few fines would ever be handed out. Instead the targets would help to rebalance the current incentives for supermarkets in favour of healthier food, while giving them freedom in how they promote healthier choices.

Require job adverts to publish pay ranges

  • Only around half of UK job adverts provide information on pay. This is a nightmare for jobseekers, who are essentially shopping blind, but also dampens competition between firms and stems the flow of workers towards more productive firms.
  • In Colorado, a new law requiring job adverts to list salary expectations increased actual salaries by 3.6% – an impact any government should be pleased to see. Several other states have followed suit, and the EU is bringing in its own legislation.
  • More ambitiously, HMRC-held data on pay could be used to publish statistics on retention and pay progression within organisations, creating market pressure to foster and develop talent.

Develop quality metrics for key markets

  • We take for granted that cars come with safety ratings and electrical goods have energy ratings. Yet in plenty of critical markets, consumers have little information to go on. We have written extensively on how to “deshroud” markets, but housing – a notably broken market and key priority area – is a good start. New builds, where buyers often purchase off-plan, are particularly risky and the CMA has called for better quality metrics based on homebuilders’ past performance. Under the current system – self-regulated by the Home Builders Federation – not a single company scores less than four stars. There is also a strong case for clearer labelling on AI tools and edtech products; markets which are experiencing huge growth but where consumers are often inexperienced.

3) Design systems that support instead of stress

The success: Jobseeker support

In one of BIT’s earliest trials, we worked with job centres in Essex to redesign meetings between job coaches and job seekers. This included massively streamlined paperwork in the first session, so that they could focus on building rapport; shifting the focus for subsequent meetings onto the week ahead, not the week passed; and incorporating goal-setting and motivational activities. 

Job seekers who received the new support were 3% more likely to find jobs quickly. Across the UK, that would equate to about 50-100m fewer days spent on benefits each year. 

A side benefit of the work with job centres was that job centre staff were also better off: they were nearly twice as likely to say they were happy at work, 30% more likely to feel their job was worthwhile, and reported lower anxiety. With retention crises across the public sector, understanding what motivates staff – as well as service users – is critical.  

The takeaway

Stress and poverty often exacerbate our behavioural biases, so behavioural design matters even more when designing systems for the most vulnerable. Yet there is still low-hanging fruit in how these systems are designed.

New opportunities

Give universal credit (UC) claimants more choice over how their payments are disbursed (extend ‘Scottish Choices’)

Measure and reward rapport with job coaches (and wider public services)

  • Our changes to jobcentre processes worked, in part, by creating space for job coaches and jobseekers to build rapport – one of the best predictors of whether a jobseeker finds a job. But rapport-building is about a lot more than process. If policymakers really want to shift how job coaching is delivered, they should start by measuring relationship strength through surveys of service users, and rewarding coaches who are able to build supportive relationships.
  • A simpler measure, which could be collected across many services, is relationship continuity – for example, how many times your social worker, or job coach, or GP changes – as a step towards building relational public services.  

Conclusion

There’s no denying that fiscal pressures pose a significant challenge for any incoming government, with numerous areas crying out for increased investment. However, this financial constraint makes it even more crucial to seize low-cost, high-impact opportunities where they exist.

The examples and proposals outlined here demonstrate that effective governance isn’t always about massive spending. Rather, it’s about smarter delivery – achieved through a keen understanding of how citizens interact with services and respond to their environment. While that may not be the catchiest campaign slogan, we should hope that once the election dust settles, there’s a genuine appetite for evidence-based effectiveness in policy making.

Authors