Direct Debit campaign secures savings of nearly half a million (£) for London local authorities

The significant level of savings that local authorities can achieve, simply by converting more council tax payers to Direct Debit, has been demonstrated by an innovative initiative by Bacs Payment Schemes Limited (Bacs) and the London Revenues Group.

The campaign, which brought together 20 local authorities in London to promote Direct Debit to council tax payers, produced outstanding results with Direct Debit conversion rates increasing by between 15% and 600%+. It has so far delivered 43,500 additional Direct Debit payers and an estimated saving of £435,000 per annum across the participating local authorities.

Mike Hutchinson, head of marketing at Bacs, said: “Following a cut in funding from central government, local authorities must now deliver savings of up to £1.1bn and all routes must be explored in order to achieve this target. The success of this campaign, and the long term savings that have been achieved in a short space of time, illustrates the valuable contribution that increasing Direct Debit take-up could make towards achieving this goal.”

The central focus of the campaign was the creation of a £25,000 prize draw, which was made possible as a direct result of the 20 local authorities working together on a collaborative campaign, rather than on an isolated basis. Bacs developed a compelling marketing package that sold the benefits of Direct Debit and utilised the prize draw as a method of motivating cheque and cash payers to convert to Direct Debit.

The outstanding success of the campaign by Bacs and the London Revenues Group meant that the average cost per new Direct Debit customer was just £2.37, enabling participating local authorities to recoup their investment in the project within, on average, just three months. In addition to realising short term financial benefits, the conversion of council tax payers to Direct Debit will continue to deliver savings for those local authorities year-on-year, increasing as the number of Direct Debit payers grows.

Mike continued: “Direct Debit is widely acknowledged as the most cost effective method for local authorities to collect council tax payments, with figures showing that local councils can save around £10 per Direct Debit customer, per year, converting existing cheque or cash payers. If this collective marketing approach was applied more widely then the scale of savings that could be achieved would make a significant contribution towards the £1.1bn figure.”