Nesta has been a key partner to BIT as it has evolved. As a founding shareholder in 2014, we helped BIT spin out of government. We’re now pleased to announce that we’ll be partnering in a deeper way, as BIT becomes a wholly-owned subsidiary within Nesta. So what makes me so excited about this collaboration?

Some of the biggest challenges facing the country, from productivity and climate change to tackling poor health and education, depend to a large extent on the decisions, behaviours and relationships made by people. Yet historically, public policy has paid too little attention to gaining a detailed understanding of what will motivate and engage teachers, parents, patients or consumers. The traditional tools of government, such as laws, regulations and taxes are critical, but policies and services can be far more effective if designed in a way that is informed by an understanding of human behaviour.

In its early days, BIT became well known for 'nudges' – low or no cost solutions that help shift decisions or behaviours. Changing the messaging in HMRC tax reminder letters brought forward hundreds of millions of pounds of tax payments, and has been replicated in many countries around the world.

Replacing the usual compliance-focused interviews conducted in job centres with forward-looking conversations focused on setting goals and specific actions was trialled with over 110,000 people in the UK. The results showed a 3 per cent improvement in the number of unemployed people becoming independent of income support and was scaled up across the country. A study of 126 nudge trials covering over 27 million people in the US, from BIT and one other organisation, showed that on average 'nudges' improved outcomes by 8 per cent.

A common criticism of 'nudge' interventions is that they deliver small improvements rather than life-changing solutions. But it is worth pointing out that 60 per cent of the interventions in the 126 trials in the US could be delivered at zero marginal cost. Small, highly cost-effective and scalable interventions are even more valuable given that so many public policy interventions are costly and either lack evidence of effectiveness, or show no effect when evaluated. Indeed, one of BIT's most important achievements has been to raise the standards of evidence in public policymaking. In conducting over 700 randomised controlled trials, BIT has shown how rigorous standards of evaluation can be delivered in a timely and cost-effective way, and therefore become standard practice.

Nudges are just one aspect of behavioural science. The field draws on rich insights from psychology, social psychology, sociology, economics, marketing and other disciplines. Some behaviours, from violence and conflict to obesity, are not driven by inertia or small frictions, but the combination of incentives, identities, relationships and norms. That can require a much broader set of tools to influence behaviour.

For example, BIT's own work in the soft drinks levy in the UK was based on the view that reshaping the food environment was more viable and effective than targeting individuals with healthy eating messages. BIT's work in reducing violence in schools in Tanzania reflected the need to entirely redesign the way teachers were taught. As behavioural science evolves, BIT and Nesta will continue to harness the power of simple, cost-effective nudges, while also looking at more radical changes to address larger, more intractable challenges.

Our vision for how the organisations will collaborate is that BIT and Nesta will remain two distinct organisations. Nesta will remain a charitable foundation with an endowment, focussing on mission-driven innovation. BIT will remain a purpose-driven company providing consultancy to a range of clients. However, we will partner in a number of ways.

First, we’ll share our capabilities and expertise. BIT brings deep expertise in behavioural science and conducting experiments. Nesta has capabilities in data science, design, experimentation, collective intelligence and arts and culture. Putting these together will help us achieve more impact and push the field of behavioural science forward.

For example, we believe there is huge potential to use machine learning in conjunction with behavioural science to create more personalised interventions. The average effect from a given intervention often conceals substantial variation. By working out what works for whom, we can create more life-changing solutions. Similarly, design and behavioural science can be highly complementary – with the former bringing an emphasis on prototyping, and designing products and services that are intuitive, and captivating.

Second, our partnership will bring together four different funding sources. Nesta's endowment can support exploratory research which can be tested and scaled. As an independent research organisation and charity, we also have the potential to access academic funding and philanthropic grants. BIT brings consultancy revenue, enabling it to support partnerships with a large number of organisations and in many countries. The profits from this consulting will be reinvested in BIT and Nesta activities to drive our organisations forward.

Third, our partnership will bring together our networks and relationships with governments, local authorities, charities and non-profits, both in the UK and internationally.

Fourth, knowledge. COVID-19 has been a compelling illustration of how critical it is to draw on lessons from others. BIT works in a range of international locations, with plans to expand further. By sharing subject matter expertise and insights across geographies, we hope we can challenge the parochialism of public policy debates in many countries.

By sharing expertise, resources, networks and knowledge, our aim is to increase the breadth and scale of our work across the innovation lifecycle. Too much innovation suffers either because of the pressure to jump straight into solutions, without enough scope for exploration and prototyping, or because proven solutions are not supported on their journey to being scaled. Similarly, we hope that our work can bridge the boundaries between academics, practitioners, policymakers and entrepreneurs – for example, ensuring insights from lab or field trials are shared in both directions; using research insights to support new ventures; and ensuring empirical research is answering questions relevant to policymakers in a more timely manner.

Our belief is that this partnership will lead to innovations and social change that improves the lives of millions of people, in the UK and globally. The scale of the challenges facing many countries requires a commitment to innovate and experiment, and see ideas through to large-scale deployment. Our vision is to do exactly that.