Category Archives: employee ownership

Cornwall Council votes for more time to consider outsourcing plans

By Tony Collins

Councillors in Cornwall voted unanimously today (23 October 2012) for a joint venture with BT to be considered more carefully, and for other options to be investigated, without any pressure to finalise a deal by the end of next month, which was the original intention.

The motion passed by the council was that the “current proposals for shared services shall not progress to the ‘invitation to submit final tenders’ stage until they have been debated and unless approved by a meeting of full council”.

The motion called on the Chief Executive [Kevin Lavery] to “investigate fully and as a matter of urgency all reasonable methods of delivering council services covered by the proposals for the strategic partnership which addresses the need to make efficiency savings and generate income”.

Councillors expect Lavery to investigate a “thin” joint venture in which the council and a partner share ownership of a new company.  There would be no early, large scale transfer of Cornwall Council staff into the company.  Cornwall Council would continue to receive its shared services internally. As the joint venture company won new work  – if it did – staff would transfer into it.

Councillors also want Lavery to investigate an in-house option and forming a mutual, which would win the support of central government.

BT, meanwhile, has said it will keep its offer to the council open until the end of its financial year in March.  Jim Currie, Cornwall’s leader, has taken over responsibility for leading the shared services discussions. He says he wants more and better information on the proposals. Most of the information has so far come from BT which has “guaranteed” to save the council money, increase investment, transform services and add at least 500 jobs. In BT’s small print it points out that its commitments to the council are “draft” or, at this stage, “non-binding”.

At the full council meeting this morning one councillor called for an investigation into whether proceeding with one supplier BT – CSC having withdrawn from the bidding in part because of a “confused” political situation in Cornwall – would meet EC tendering rules.

Councillors have set no deadline on when they will come to a decision on the BT proposals or on other options.

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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

Mutuals: “lean, people-focused businesses” trying to “climb a wall of technical complexity”

By David Bicknell

There are some insightful comments from Co-operatives UK’s secretary general Ed Mayo and the London Borough of Hammersmith & Fulham’s Andy Rennison on mutuals in this piece by People Management.

Mayo is quoted as saying, “At the moment we are asking people in public services to climb a wall of technical complexity, and the most urgent task for the mutuals programme is now to simplify it.”

He highlights taxation and procurement as the areas in most need of attention, and would ultimately like to see public sector mutuals given the same special dispensation as they have in Italy.

Rennison, Hammersmith & Fulham’s mutual lead, provides an interesting description of a well-attended bidders’ day held where 28 private organisations expressed an interest in being backers of the tri-borough’s (Westminster City Council and the London Borough of Kensington and Chelsea are also involved) schools IT services mutual project.

 “The feedback from one organisation was that we had too many people, we’ve got to cut this and cut that. But we felt that, actually, no, we’re already quite lean with a clear business plan which we’re confident we can deliver. That demonstrated their lack of understanding about what this business does – it’s a people-focused business.”

Why nations – and organisations – fail

By David Bicknell

I just came across an excellent piece by Craig Dearden-Phillips on why nations – and organisations – fail.

In it, he discusses a book,  ‘Why Nations Fail’, by Daron Acemoglu and James Robinson.

He writes: “The opener of the book contrasts two halves of a city, Noglales which straddles the Mexico-US border. One sits in the region on Sonala, Mexico, the other in Arizona, US. Here the people, culture, climate and operating conditions are the same. On one side of the border, incomes are many times higher, there are good public services and crime is uncommon. On the other, people are mostly poor, there are few public services and crime is rampant because the state isn’t in real control on the ground.

He continues: “Perhaps what has capitivated me most, though, is the read-across to why certain types of public services fail, despite wonderful resources and high levels of native talent. Analogous to the extractive and exclusive institutions described at state level in this book could be placed the large public sector monopolies which still dominate much of public service in Europe and certainly in the UK.

“Here, power is often monopolised and change, even ‘good change’ does run against the interests of many of those involved. Initiative is often powerfully suppressed. It is hard, frequently impossible, to set up in business against these monopolies and there are often few political processes which can be used to break these systems down.

“What am I thinking of here? Well, if you haven’t guessed, I am alluding to many of the organisations from which spin-outs do or don’t emerge.

“The truth of the matter, and I see this every day, is that setting up a new business to deliver public services feels like it probably does to set up any ordinary business in parts of the developing world. You need the buy-in of a variety of power-brokers, all of whom need to see their interests satisfied. You need to go through all sorts of bureaucratic processes to show you’re not a risk and are ‘worthy’ of delivering services.

“From there, you need to make all sorts of promises to the system that its interests will not be threatened and create opportunities for the system to have it’s say even when the business is up and running.

“All of this, of course, creates a massive disincentive for any sane person in public services who wants to change things. The risks are massive – to career, to sanity, to reputation – that most people, quite understandably either stay put or move out. Those that try to start a public service business have to run a gamut that looks far more like something you’d see in Mexico than in Midshire, UK.”

Dearden-Phillips makes some excellent points and the whole piece is worth reading.

Some mutuals reading and listening

By David Bicknell

I just came across a couple of items on mutuals: a piece by Kevin Jaquiss from the Cobbetts law firm about how to register as a mutualised service provider  and a piece on the Baxi Partnership website about a documentary showcasing employee-owned enterprises, including Mondragon.

If you’re interested in Mondragon, there is a BBC radio programme which you can also listen to.

Local government committee considers mutuals’ role in ‘the co-operative council’

By David Bicknell

Just spotted a tweet from Allison Roche from Unison on Twitter about the Communities and Local Government Committee’s inquiry into ‘the co-operative council’, including the services role played by mutuals.

You can read more about the inquiry here

The Committee is seeking answers to the following questions:

  • What is the difference between a co-operative council where services are supplied via not-for-profit businesses and other local authorities?
  • What arrangements need to be put in place to deliver services by not-for-profit businesses such as employee-owned mutuals? More specifically, what are the barriers to establishing not-for-profit businesses to supply services; what role does the local authority have in promoting and incubating a not-for-profit business; and where does accountability lie?
  • What are the advantages of and drawbacks to providing services via not-for-profit businesses?
  • Where services are delivered by a not-for-profit businesses what difference will the local resident and local taxpayer see?

The closing date for submissions is 11th May.

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