Could mutuals provide an innovative model for public sector IT delivery?

By David Bicknell

What are the implications for IT delivery of creating public service mutuals and what part might they play in the public sector?

One public sector IT director I spoke with recently suggested that there are areas where mutuals will work exceptionally well. And some  are already beginning to do so. Some may get private sector sponsorship, while others will get charitable status.

These, however, are smaller scale mutuals or social enterprises, and a distinction must be made between those and large scale organisations where, for example, you could set up a mutual company for the whole of IT in a county or region.

There is a belief that the oft-quoted ‘John Lewis co-operative model’ could be an effective one.  One possibility is a shared services model along those lines  as an alternative to outsourcing or a private sector partnership.

That offers the prospect of developing a public service partnership of different organisations, effectively a sort of mutual or co-operative, where everyone who joins the co-operative has a slice of the cake irrespective of their size. The co-operative shares common infrastructure and services, but operates on a semi-commercial basis, possibly working with a private sector partner. Although the model doesn’t yet exist in IT, it is said to work well in agriculture.

Arguably the model overcomes a number of the issues raised by outsourcing and big public-private sector partnerships where there has been financial pain when things go wrong.  The mutual model offers the prospect of a better way, though there is a large difference between this scale of model and smaller mutuals in terms of risk outlook and management.

The IT director said he believe there is an opportunity for mutuals to insist, ‘We’re better than the private sector. We are very responsible about the risks, and we have a public service ethos.  For us ,  it’s not just about making money. We have the discipline of commercial business rigour and the safety net that protects vulnerable adults, for example, in the case of care homes.’

Some local authorities are already considering using mutuals to provide some ICT services. For example, the London Borough of Hammersmith & Fulham has become a Mutuals Pathfinder and proposed a pilot scheme with partners Kensington and Chelsea and Westminster to set up an employee-led mutual to deliver IT services to schools and the council, with the council planning to commission some services from the mutual for a four year period.  The scheme is due to get underway early next year.