Tag Archives: John Lewis

MyCSP becomes first public sector mutual spin-out

By David Bicknell

An article on the Daily Telegraph website suggests that this week will see the creation of the government’s first public sector mutual spin-out. 

MyCSP will be spun out from the Department for Work and Pensions (DWP) and “transformed into an independent mutual that will give staff an unprecedented say in how the business is run and the chance to share in the new company’s profits.”

A 25% stake in MyCSP will be divided between the agency’s 500 staff, with a 40% sold off to a major player in the financial services industry. The company will try to win new business from the public and private sectors.

The Telegraph reports that ministers believe mutualisation will halve MyCSP’s administration costs. Although staff will become members of the private sector, they will retain their public sector pensions.

MyCSP has signed a 10-year contract to administer the civil service pension scheme, which has around 1.5 million members. At the end of this contract, the new mutual will have to compete against other private sector pension adminstators to run the scheme.

Lord Hutton of Furness, a former Labour minister, will be the chairman of the MyCSP. He said he hoped this was the “first of many” mutuals to be spun out of the public sector.

“Creating mutuals are a very exciting way for people on the front line of the public sector to take ownership and responsibility for the services they provide,” said Lord Hutton.

“They get a voice on the board and a share of any profits. I hope this model will lead to better performance and better value for the taxpayer.”

He argued that the old model of public sector monopolies were “not fit for the 21st century”, and added that the greater squeeze on taxpayers’ money ensured that poor performance in the public sector could “no longer be tolerated”.

“There is no such thing as a status quo in the public sector worth defending – we must have a relentless pursuit of excellence,” he said.

“I am a very strong supporter of what this Government is trying to do with public service reform particularly with a view to mutualisation.”

MyCSP’s private sector partner will be the Equiniti Group’s Paymaster business, which will hold a 40 per cent stake, with the government holding 35 per cent and the employees 25 per cent under a model based on the much-quoted John Lewis model of mutual ownership , which rewards employees with profit-related bonus schemes.

Related articles

Mutualised civil service pension service is launched

Hutton to head up Whitehall mutual

Equiniti Group’s Paymaster business partners with first central government mutual

FT: ‘Lessons from the house that John Lewis built’

By David Bicknell

John Kay’s column in the FT yesterday on the need for pluralism in business structures (that include mutuals) was a good read.

In “Lessons from the house that Lewis built”, he argues that we need to find more robust capital and governance structures that permit wider forms of commercial activity. Worth a read (you may need to register or find “Lessons from the house that Lewis built” via Google)

The column refers to a recent report by the Ownership Commission chaired by Will Hutton. You can read the report here

David Cameron launches £600m Big Society Fund

Rights to Provide plans focus on “potential offered by mutual models” to improve services

By David Bicknell

The Government has detailed how it is developing and implementing Rights to Provide to “empower front line staff across the public sector to take over the services they deliver,” possibly through the creation of new mutuals.

The Government said it has identified local authorities’ services, fire services, probation and adult social care as some of the areas for developing new mutuals. This it says, will be backed by enhanced support available to staff through the Mutuals Information Service and the Mutuals Support Programme.

In announcing an updated discussion paper David Cameron said increasing parental choice in schools, extending personal budgets so people can choose how they spend money on services and increasing the transparency of public service performance and user satisfaction are all part of the next steps to improve public services by opening them up.  The paper updates the Open Public Service (OPS) White Paper published last summer.

Launching the new paper, Cameron said: “Nearly two years on from coming into office, brick by brick, edifice by edifice, we are slowly dismantling the big-state structures we inherited from the last government. We are putting people in control, giving them the choices and chances that they get in almost every other area of life. There is still a way to go and this kind of change will not happen overnight. But no one should doubt my determination to make our public services better, by opening them up.”

Specifically on mutuals, the paper says:

“Alongside the focus on digital delivery, and as a core part of work to reform the Civil Service, Government Commercial Teams are working with individual departments to identify where new commercial models would accelerate reform and improve services. In some cases, this may involve high-quality in-house delivery; in other cases outsourcing may offer best value.

“We are particularly interested in the potential offered by mutual models, including mutual joint ventures, that give employees much greater say in the way their organisation is run, for example the model being considered for MyCSP.

“To ensure that the benefits of mutualisation are available across the wider public sector, we are giving public sector staff new Rights to Provide – empowering employees to form public service mutuals to bid or request to take over the services they deliver. This will empower millions of public sector staff to become their own boss,freeing up untapped entrepreneurial and innovative drive.

“Public service mutuals are now well established in community healthcare, with thousands of public servants working in new mutuals with contracts worth almost £1 billion. We have extended these rights to new areas, including adult social care and NHS trusts, and we are looking to go further, in areas such as youth services, probation services, children’s centres, and fire and rescue services.

“We have been actively working with fledgling mutuals on the ground, for example through the Mystery Shopper service and the Mutuals Information Service; and we are supporting some of the most promising and innovative mutuals to reach the point of investment readiness, through the Mutuals Support Programme – a fund of more than £10 million to contract for support in the form of business and professional services to groups of staff who want to form mutuals or existing mutual organisations in the public sector. A steady stream of applications is developing into a pipeline of projects.”

The Government said all its departments will put in place a Right to Provide to empower employees in public services for which they are responsible to s pin out to create new public service mutuals. Public sector workers who want to formmutuals or co-operatives to deliver public services will be given a Right to Provide.

The Government will look to reflect these commitments in departmental business plans where appropriate.

Information from the Mutuals Information Service will inform departmental policy development, the new paper says.  

It points out that “the Department of Health’s Right to Request is near completion, with 40 services now operating as independent social enterprises and further projects to go live by April 2012. The Right to Provide has generated interest across NHS trusts, foundation trusts and adult social care.

“The Department of Health is already exploring opportunities to support social enterprises and mutuals spinning out from the NHS, social care and adult social work. The status of other government departments is as follows:

Department for Business, Innovation and Skills (BIS) Further Education – now starting

Home Office – not yet started

Ministry of Justice – now starting; commitments will be reflected in the Department’s business plan 

Department for Work and Pensions – not yet started

Department for Education Youth Services, and Social Work – now starting

Department for Education Children’s Centres – not yet started.

Other Links

Cabinet Office news release

Mutuals likely to be focus of Government Right to Provide plans expected today

By David Bicknell

The Government looks set to make an announcement about mutuals today as part of ‘Right to Provide’ plans due to be unveiled by David Cameron. The likelihood of an announcement appears to have been leaked.

Here’s today’s Daily Mail’s take on the proposed announcement.

More details to follow

Updated: Rights to Provide Plans focus on “potential offered by mutual models”

From The Sun: “Run fire service like John Lewis”

By David Bicknell

It’s not often that the prospects for mutuals – or John Lewis, for that matter – make it into The Sun. But this story takes the mutuals bandwagon into areas it hasn’t been previously.

The Sun’s story – ‘Run fire service like John Lewis – refers to the Cleveland Fire Brigade, which reportedly ‘plans to turn itself into a mutual — just like John Lewis stores where staff share profits.’

The story quotes Cleveland’s chief fire officer Ian Hayton saying: “Combining a public service ethos with an entrepreneurial drive for growth will empower our staff.”

It also quotes Cabinet Office Minister Francis Maude saying, “We are opening up public services to get more bang for the taxpayers’ buck.

“Frontline workers know best how to do their job. That’s why mutuals can be the best way to run things.”

However, an article on Public Finance makes the point that the ‘mutual option’ was always a non-starter for public audit.

It argues that the Audit Commission’s abandonment of the ‘mutual option’ for audit follows a weekend disclosure that police forces are being pressured by the Home Office ‘to outsource great swathes of front as well as back-office work.’

Audit Commission: the feeling’s not mutual

Never knowingly undersold: the John Lewis ‘mutual model’

By David Bicknell

They say there’s no such thing as bad publicity. Just publicity. Well, unwittingly, John Lewis is getting plenty of it. It’s gone from being a retail store, to being the mutuals model, to being associated with care homes, and now, as this article suggests,  its name is being linked with schools.

Is there something in this? Have we truly stumbled on a new way of doing things in the public sector? Or, is it that we are all, as is our wont, looking for a label that we can apply for mutuals, and John Lewis seems to fit the bill?

When we have all finally moved on and gained greater ‘mutual maturity’, so to speak, other models will be more frequently cited. Until then,  you can probably expect that in a conversation where mutuals are cited, John Lewis is likely to be mentioned too.

Part equity models for mutuals could revive outsourcing sector

By Robert Morgan

Few can be in any doubt of the coalition government commitment to worker inclusive mutuals and the potential for not only smaller government as a result but a revival of the outsourcing services industry.  This model acts as a template to appease European workers councils who have long held back the greater use of outsourcing in country like France and Germany.

Headline grabbers like ““Ministers are poised to launch one of the biggest experiments in public sector reform … a John Lewis-style mutual – the first to be created in central government”, and “… three or four more Mutuals THIS year …” and “…1,000,000 public sector workers in Mutuals by 2015” in the Financial Times this week has not been picked by the bulk of the popular press. But they and the continental press soon will.

Francis Maude, Mutualisation’s marketing guru has said of the MyCSP mutual ““I don’t … view this as the ultimate model … we have learnt … The next one should be easier to do”. The award of the MyCSP contract, rumoured to be ten years with a break clause at year seven, will administer 1.5m government pensions, transfer 500 DWP staff into the SPV, see CEO compensation capped at 8% above average employee salary, net profits shared with the supplier but only after 1% going to charity and 1% going to apprenticeships, and employees interests will be represented by an externally advertised director. So part of the model are clear – a new form of privatisation with Jon Lewis style employee participation and share ownership and a “caring” social charter.

But has government learnt from Labour’s disasters in PFI / PPP – you know the £120 to change a light bulb stories. Key questions need answers:

  • To what extent will the mutual be given freedom to operate?
  • At least in the short-term, a mutual remains tied to its public sector background and delivery and is therefore subject to the rigours and constraints of regulation, OJEU and accountability to the Auditor General. Will these restrictions be “officially loosened” any time soon?
  • Everyone agrees that the public sector will continue to shrink and by definition therefore, so will a dependent mutual’s service revenues, this throws up questions on it’s ability to survive – and to attract external revenues, and so …
  • … will the choice of partner be heavily dependent on their demonstrated ability or commitment to develop such services?
  • What penalties are there for NOT securing external business?
  • How might the Mutual formula vary and evolve between different circumstances?

More importantly for the outsourcing industry is, are more commercial models going to spring up and be accepted. The consensus of clients I have spoken to is “yes”, but this needs to be balanced with the fact that there was not a single tier one outsourcer (IBM, CSC, HP) in the short-list for MyCSP.  Demand says “yes” and Supply says “yawn”. 

Robert Morgan, formerly the founder of Morgan Chambers and now director of outsourcing advisory Burnt Oak Partners, is delivering a speech on Part Equity models for commerce on Wednesday 8th February 2012 at Berwin Leighton Paisner – the event is free and tickets can be coordinated via  shan,murad@blplaw.com  – yes it is a comma!

Robert also writes the influential Outsourcing Lex column at


DWP civil servants get ready for MyCSP mutual leap

By David Bicknell

An article  published yesterday in the Financial Times has focused on the move of 500 civil servants to form a mutual.

The 500 staff, currently in the Department of Work and Pensions (DWP), will leave the public sector in March and become stakeholders in MyCSP, a privately held company that will handle the retirement funds of 1.5m civil servants.

The FT calls the move to create a so-called John Lewis-style mutual, “one of the biggest experiments in public sector reform.”

It writes that under the MyCSP model, profits will be shared between a private sector provider, which will hold a 42 per cent stake; the government, with 33 per cent; and employees, who will own 25 per cent of the shares. 

A shortlist of 16 private sector providers has been whittled down to four – Xafinity, Capita, JLT and Wipro – with the winner due to be announced next month.

In light of the ongoing row over executive pay, the FT points out that the chief executive’s compensation will be capped at 8 per cent above the average employee’s salary while 1 per cent of net profits will be paid to charities and a further 1 per cent used to create apprenticeships.

You can read the full FT article here (subscription required)

Stephen Kelly – the man at the coalface of the Big Society

Rounding-up coverage of David Cameron’s planned Co-operatives Bill

By David Bicknell

Prime Minister David Cameron’s announcement of  a forthcoming ‘Co-operatives Bill’ to consolidate outdated pieces of legislation governing co-operatives and mutuals into a single statute has been heavily commented on in recent days.

Cameron said the Co-operatives Bill would cut red tape and help to build a fairer economy, ensuring that co-operative members can share in the benefits of enterprise. 

Here is a round-up of coverage in the last few days about the planned bill and about co-operatives and mutuals.

Co-operatives UK

The Daily Telegraph

The Guardian

The Economist

Transition Institute

Clegg speech renews Coalition mutuals and employee-ownership focus

By David Bicknell

Deputy Prime Minister Nick Clegg has advocated greater employee-ownership.

In a speech yesterday to the Corporation of London, he described employee share ownership as “a touchstone of liberal economic thought for a century and a half and a hugely under-used tool in unlocking growth.”

As this report explains,  he suggested that employee-owned firms could end the ‘standing feud between capital and labour’.

“We don’t believe our problem is too much capitalism: we think it’s that too few people have capital. We need more individuals to have a real stake in their firms.”

It could be the latest kick-start the mutuals and employee-ownership initiative needs. (And John Lewis’s marketing department must be wallowing again in the free publicity)

Not all coverage of Clegg’s speech has been positive, however, with Nils Pratley in the Guardian calling the employee share-ownership  ideas ‘half-baked’.  Pratley says the speech raised more questions than answers.  But in fairness, I don’t think Clegg’s intention was to lay out a complete White Paper for action. It was merely to continue to put employee ownership on the agenda for discussion.

Text of Nick Clegg’s speech