Under a blood red sky: the challenges facing local councils over mutuals and social enterprises

By David Bicknell

The longer the waiting goes on for the open public services white paper to provide some clear direction on the Coalition’s up-to-date thinking, the more the mystique around mutuals grows.

Local Government Chronicle has just carried a blog by Chris Brophy, a partner at the Capsticks health and social care law firm, which discussed the potential of mutuals and social enterprises.

Brophy makes some good –  and certainly descriptive – points, suggesting for now that “there is a certain ‘quiet before the storm feeling’. You can sense the sea being sucked back, the birds have gone quiet, the sky is red-stained, there is no breeze, as those interested in new business methodologies wait anxiously to hear whether there is a panacea for financial, staffing and service problems.

“Breathing becomes more steady as anxiety is anaesthetised by contemplating the difference between mutuals on the one hand and social enterprises on the other and then you can start settling down to really understanding what is going on, and settle down you must as you realise you really need to understand this beast before heading back to base and being enveloped by the day to day issues.”

He goes on to make some excellent points about the challenges facing local authorities:

‘One of the difficulties for local authorities developing social enterprises is the time, funding and resources needed to just to consider change, never mind working up business plans including engaging with staff and thinking about the identification and transfer of significant businesses. Despite the difficulties all Councils have, everyone knows this process needs to be commenced, and now, as deadlines start to loom more large and the need to stay in control of the process becomes the main line on the forehead.

‘In many ways Local Authorities have it more difficult than PCTs. At least PCTs knew essentially what services they were looking to transfer as part of the Department of Health’s “Transforming Community Services programme and pursuant to their Right to Request” to take their provider services. The scope of the businesses for the LAs to think about is potentially very extensive and there is also the question of how to package businesses together.

‘Should all the businesses in contemplation be transferred to one social enterprise or would those businesses not work together and need to be packaged in different ways. They might for example have very different kinds of beneficiaries or users of the service and the stakeholders may be very different and therefore it might be more difficult to align the governance of the organisation with the business objectives if they were all combined. However scale is important and of course funding and income is crucial. It serves no useful purpose to set up a business which has no viable business plan. Whatever happens you need to identify the services, the assets, the staff and the support that will be involved and at the same time you will looking to satisfy yourself about the potential management team, its capabilities and skill-sets and then developing the business plan to see if it can all work.

A useful and informative piece. You can read the whole post here

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