Civil servants set to be given chance to profit John Lewis-style from their advice if 'Nudge Unit' is privatised

Behavioural Insights Unit to become John-Lewis style firm

Staff will move from public sector to take a share of profits

Private firm is being sought to take a stake with the government

Unit uses tricks to persuade people to pay fines and insulate lofts

Labour warns of conflict of interest when also working for private firms



A team of government experts which tries to ‘nudge’ the public into changing their behaviour without them noticing is to be turned into a profit-making business.

The Behavioural Insights Team will be spun out of Whitehall to become a John Lewis-style mutual, making money for employees, a private firm and the government.

But fears were raised of a conflict of interest at the heart of government, with the new firm advising ministers while also bidding for contracts from companies who want to influence laws.



End of the road: The move to transfer civil servants into private companies will signal the end of the traditional view of the Whitehall mandarin

The unit uses a mix of psychology, advertising tricks and commons sense to coax people into losing weight, paying court fines and having their lofts insulated.

The move means the UK taxpayer could benefit from lucrative contracts advising other governments, companies and charities.



But it raises the prospect of it advising ministers on public policy while being employed by private firms who want different things.

John Trickett, Labour's shadow cabinet office minister, said: 'They are going to start bidding for non-government work. Immediately here is a question to be asked about a conflict of interest.

'What happens if they are nudging people into stopping smoking and then start bidding for work from people in the tobacco industry or pharmaceuticals.

'There are major issues about policy advice being done like this. I cannot see how they will be resolved. Policy advice should be neutral and disinterested.'



The move could also pave the way for thousands of civil servants to be shifted into the private sector

In the past, governments have privatised state-run services like British Rail but today’s announcement marks the first time a group of policy experts have been hived off to become a company.

The unit, run by former Labour adviser David Halpern, uses random tests and trials to see how small changes in policy can influence behaviour The so-called Nudge Unit of around 10 civil servants was created in 2010 to find ways to save money and persuade the public to be healthier, greener and more law-abiding. Dismissed by some as a 'nutty indulgence', it claims to have raised millions of pounds by coaxing more people into paying tax and court fines on time. For example, when personalised texts were sent to people who owed court fines, payments rose by a third. The Behavioural Insights Team is separate from the Downing Street Policy Unit which has attracted criticism this week after David Cameron appointed a string of old school friends to his political inner circle. The Prime Minister announced that Jo Johnson, the Old Etonian brother of London Mayor Boris, is to head the policy unit. Mr Johnson will be joined by Christopher Lockwood, former U.S. editor of The Economist magazine and a personal friend of the PM.

FROM LOFTS TO LUNCH: HOW WE ARE NUDGED WITHOUT KNOWING The Nudge Unit has been dismissed as a 'nutty indulgence' by some in government, But since its creation in 2010 it claims to have saved millions of pounds by using psychology to persuade people to pay fines, look for work or save energy. Ideas backed or highlighted by the Behavioral Insights Team include: Offering loft clearance services to persuade people to take up free insulation

Smaller plates at hotel buffets cut food waste by 20 per cent

Texting people who owe court fines increased payments by a third

Planning a jobseekers’ life for two weeks meant they were up to 20 per cent more likely to be off benefits three months later

Sending drivers caught without insurance letters which include photos of the vehicle on the road

Changing tax letters to say ‘nine out of 10 people in Britain pay their tax on time’ saw a 15 per cent rise in people meeting the deadline

The nudge unit is staffed by civil servants, lead by psychologist David Halpern, who ran the Labour government’s strategy team.

It currently costs £520,000-a-year to run, but ministers claim it has come up with ideas which have saved the taxpayer millions of pounds. It was set up in 2010 for two years.

Under the plan, a private company will be sought to provide investment into the new company.

The government will retain a stake and the staff of around 10 civil servants will become shareholders in the same way that employees at John Lewis receive bonuses based on company profits while they work there.

It is expected that the staff will retain a share of at least a quarter in the company as a blocking minority stake, able to decide how the firm is run.

A competition will be announced today to find a business partner for the nudge unit.

The idea is being pushed by Cabinet Office minister Francis Maude, who wants to massively increase the productivity of the public sector by giving staff a financial incentive.

Mr Maude said: 'We are in a global race for the jobs and opportunities of the future.



'To get Britain back on the rise we must find innovative models like mutuals and joint ventures, which can deliver services better and more efficiently, while supporting growth in the economy.

'The Behavioural Insights Team is world-renowned and under a joint venture business model we will combine the benefits of private sector experience and investment with the innovation and commitment from staff leadership to develop a sustainable growth business.'

Public sector productivity flat-lined from 1997 to 2010, he added.

But unions said there was little appetite among civil servants to become mutuals.

PCS general secretary Mark Serwotka said: 'There is nothing mutual, co-operative or employee-led about what Cabinet Office minister Francis Maude is trying to do.

'The first mutual in the civil service was imposed by Maude's Government against a backdrop of strikes by the staff who wanted to remain as civil servants.

'Improving public services requires investment, not gimmicks and back-door privatisation.'

But Matthew Fell, CBI Director for Competitive Markets, said: Turning the Nudge Unit into a profit-making enterprise through a joint venture partnership is an innovative way of commercialising Whitehall expertise.



'This will give the new enterprise the freedom to drive greater efficiency and to compete for new business, generating savings and potential new revenue for the Government.