'Nudge unit' sold off to charity and employees

A government unit aimed at "nudging" people into making better life choices has been part-privatised.

The Behavioural Insights Team - known as the "nudge unit" - has been spun-off into a mutual joint venture.

Charity Nesta, employees and the government will each own a third of the new business.

It is the first time a government policy team has been partially sold-off in this way but officials said "large numbers" of others could follow.

Civil service unions have attacked the idea as "backdoor privatisation".

The nudge unit - a pet project of Prime Minister David Cameron - was launched in 2010 to find innovative ways of changing public behaviour.

It uses insights from behavioural psychology to look at how people make bad choices - from filling in their tax forms late to drinking too much alcohol - and then tests small changes to the way these choices are presented to improve lives and save taxpayers money.

Its biggest success to date, according to officials, has been recruiting 100,000 more people to carry organ donor cards by making small changes to the wording of messages on a website for people applying to renew driving licences.

Other projects include using personalised text messages to boost the payment of court fines, and exploring the impact of alcohol unit pricing to tackle binge drinking.

The unit, which took its nickname from a 2008 book Nudge by academics Richard Thaler and Cass Sunstein, who pioneered the concept, claims to have saved the government more than £300m.

Cabinet Office Minister Francis Maude said its insights were now in demand from governments around the world, although its main customers, initially, would be UK government departments and other public sector organisations, such as local authorities.

He said: "There is loads of evidence that employee-owned and led companies outperform their competitors. The government has retained a stake so that if it is spectacularly successful, as we hope it will be, the government has an interest in the upside."

The 16 behavioural psychologists and economists in the nudge unit will now move out of the Cabinet Office into Nesta's central London headquarters.

He declined to say how much Nesta, which is run by Geoff Mulgan, a former aide to Gordon Brown, had paid the government for its stake in the unit, insisting it was "commercially sensitive" and could undermine similar future deals.

Mr Mulgan said: "We're convinced that there's huge potential to grow the Behavioural Insights Team's work - and to deliver impressive results - and are looking forward to helping them make this happen."

David Halpern, formerly the team director, has been appointed as the chief executive of the new company,

He said a major motivation for setting up the joint venture company was "staff retention" - staff will not be bound by civil service pay grades and able to earn bonuses.

Nesta - or the National Endowment for Science, Technology and the Arts - was set up by the previous Labour government in 1998, with £250m of National Lottery cash, to promote innovation and science.