Why the private sector is keen to be a Good Samaritan to new mutuals

By David Bicknell

There is a growing trickle of blogs, comments and discussions emerging around the idea of mutual joint ventures.

The mutuals concept has captured the imagination, even if precisely how they are going to be created; fund themselves; stand on their own two feet and compete in the commercial market has yet to evolve fully. And it will take some time.

Never one to pass up an opportunity, the private sector is now keen to offer itself as a Good Smaritan, lending a helping hand in helping mutuals get off the ground.

As a recent well-written paper from the Business Services Association puts it,  “…several barriers exist to realising the Government’s vision for mutuals. New mutuals spinning out of the public sector will face significant resource challenges – in terms of both expertise in areas such as human resources, finance and business planning, and start-up capital. Raising necessary capital will be a persistent problem for staff looking to form a mutual but lacking a trading history.

“A recent survey of British employee-owned companies found that one-third had difficulty accessing finance. Similarly, a number of studies have noted the “steep learning curve” faced by public sector employees when having to create a business plan, plot income generation for future years and develop marketing strategies – skills commonly required in the private sector. Partnering with a private sector provider through a mutual joint venture could offer a way of overcoming these barriers.”

Inevitably, there is a degree of self-interest here. As the Business Services Association guide  states, “there is a clear appetite amongst BSA members to enter joint venture agreements with, or as part of, new mutuals spinning out of the public sector.

“At the BSA-Pinsent Masons LLP 2011 annual lecture, Minister for the Cabinet Office, the Rt Hon Francis Maude said that the Government was open to hearing about new models from private providers partnering with mutuals to deliver public services. This put the ball firmly in the private sector’s court to consider how to rise to the Government’s challenge.”

It adds that the aim of the paper is therefore to be constructive, not to issue a list of requests for clarity or new demands of the Government, but rather how to work with the existing legislative landscape to make mutual joint ventures happen.

Nothing wrong with that idea. Joint ventures with the private sector may well turn out to be the way forward, provided the key words are mutual and joint. It is in no-one’s interests for a joint venture to be dressed up as a takeover.  As the title of the BSA’s document appositely puts it, it’s about “Making Mutuals Work.”

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