Category Archives: mutualisation

Would-be mutuals must overcome fear of failure and embrace risk

Posted on 07/07/2011 | Leave a comment

By David Bicknell

A lack of confidence and fear of failure must be overcome if the government’s goal of seeing employee-led mutuals take off is to be achieved.

The government believes that by 2015, one in six public servants could be involved in mutuals. The problem is giving them the confidence to use their undoubted knowledge of public service delivery and take advantage of the flexibility that running your own business brings, as opposed to the frustrations of years of a ‘can’t do’ approach that meekly says ‘..but we’ve always done it this way.”

As a number of speakers at the Civil Service event – including Peter Marsh, vice-chair of the Mutuals Task Force, My CSP head Phil Bartlett, and Mitie’s chief executive Ruby McGregor-Smith – suggested, those within the public sector, and especially the Civil Service – do have the ability to overcome their fears of failure, and indeed, as it emerged from one mutuals seminar, their worries about competing against the private sector or their discomfort about having some ‘conflict of interest’ within the wider public sector about using their knowledge to set up a mutual. As was pointed out, using that knowledge and embracing the flexibility of running your own (employee-owned) ship, is just what the Cabinet Office wants them to do.

More on Civil Service Live to follow. In the meantime, the Guardian is carrying an excellent piece on fear of failure and the acceptance of risks in mutuals.

You can read it at http://www.guardian.co.uk/social-enterprise-network/2011/jul/06/fear-failure-public-service-mutuals

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

Mutuals bring relief after the public sector moratorium

Posted on 05/07/2011 | Leave a comment

The public sector landscape is likely to be dominated by mutuals in the future.  In this guest blog, John Pendlebury-Green and John Jones of Landseer Partners discuss the outlook for service providers in this mutualised world and argue that their approach must be both innovative and flexible.

Last year was a difficult one for service providers to the public sector given the moratorium and general economic slow-down.  Despite a relatively slow start 2011 is looking significantly brighter for existing and new entrant market players.  The Government’s plans to achieve cost savings, develop mutual organisations, and use SMEs and the third sector to develop new ways of delivering services, are moving rapidly from theory to reality.  So, with the white paper on Open Public Services due out in July, now is the right time for both large and SME service providers to look at themselves and work out how they should be playing in this new world.

We wrote about the concept of mutualisation in early 2010. It has taken the Government longer to get to this point than we expected but the number and variety of public sector organisations looking at mutualisation in one form or another is impressive. The opportunities are starting to appear: from Camden Council looking at how all of its services can be delivered to Cleveland Fire Service receiving approval to finalise a business plan and a structure to establish an employee-owned mutual.   In central government the announcement that My Civil Service Pension is going to be placed into a mutual joint venture is the first major “spin out” of a central government service giving employees the opportunity to take a stake in their business.

So with Francis Maude now talking about an expectation of up to a million public sector workers being in mutual organisations by 2015, the scale of the government’s ambition for mutualisation is clear.  With these types of numbers being talked about it makes it obvious that a one-size-fits-all approach by service providers is doomed to fail.

Our view is that service providers, including possible new entrants, will need to invest time and money now by discussing with existing and new clients the art of the possible: what can be achieved in setting up mutual organisations in order to deliver jointly and successfully services that will provide the right outcomes to the customers of the mutual.

This is most likely to be in the form of working with the public sector organisation to help define the vision and outline structure, and identify the stakeholders – from users to the Cabinet Office – who need to agree the idea.  Then the service provider is ideally positioned, given its private sector experience, to help develop the business plan.  The plan needs to cover the services to be provided, the market opportunity to provide additional services and the resourcing and finances needed to make the new business work.

How this works in practice will be closely examined and no doubt later mutuals will learn from any mistakes in setting up the initial ones.  So the success of the pathfinder mutuals and high-profile examples such as My Civil Service Pension will examined very carefully.   It is clear that how the successful private sector service provider and any third sector organisations become part of these new entities, and how the governance, structure and profit share will work, will set the tone for subsequent mutuals.

Now at mid-year in 2011 it is still early days for new ways of working with the public sector.  If events to date have not spurred service providers to action the July white paper should certainly do this. Either this, or the significant number of re-tenders now coming onto the market, should provide some welcome relief compared to the slow down in 2010.

For more details, read the white paper or visit Landseer Partners’ website

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Posted in Campaign4Change, mutualisation, mutuals, public sector

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Parliamentary Committee to discuss the role of mutuals this week

Posted on 04/07/2011 | Leave a comment

By David Bicknell

Parliament will discuss the prospects for mutuals at a meeting of the House of Commons Public Administration Select Committee tomorrow morning.

The session, the Committee’s fifth instalment of its Big Society Inquiry, will focus on the Government’s intention to diversify the provision of public services by opening them up to charities, social enterprises, mutuals and the private sector. The Committee will hear from representatives of the voluntary sector and the TUC, Professor Julian Le Grand and Ed Mayo from the Cabinet Office Mutuals Taskforce, and Shona Nichols from business process outsourcing company Capita.

The Committee’s questioning is likely to cover

  • obstacles to voluntary sector organisations delivering public services;
  • the work of the Government’s Mutuals Taskforce in driving forward employee ownership of public services; and
  • the role of the private sector in the Big Society.

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12 good reasons to mutualise

Posted on 01/07/2011 | 1 comment

By David Bicknell

There are 12 good reasons to mutualise, according to City law firm Field Fisher Waterhouse (FFW)

FFW has advised on the restructuring of NHS Hull’s community health services to became an example of how public services could be transferred to an employee led social enterprise, City Health Care Partnership CIC.

12 months into the project, says FFW, City Health Care Partnership CIC is enjoying the benefits of becoming a social enterprise which demonstrates that the drivers for social enterprise and public service mutualisation are as valid as ever.

These benefits, FFW says, include:

  1. Improved staff motivation
  2. Improved customer (i.e. patient) satisfaction
  3. Leaner and more efficient structures
  4. More responsive services
  5. Real teamwork
  6. Opportunities to grow the business
  7. Strengthened connection to the community
  8. Flexibility and agility
  9. Less red tape – ability to introduce better ways of
    working, more quickly
  10. Greater sense of inclusiveness and participation
  11. Control of destiny
  12. Ability to contribute to the wider needs of target
    communities

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Could a new mutuals model work for trading standards?

Posted on 30/06/2011 | Leave a comment

By David Bicknell

A mutuals-like model for trading standards has been proposed by Consumer Focus, the statutory consumer champion, which in a paper, discusses the future of trading standards in light of spending cuts, the Government’s new empowerment strategy and changing consumer power.

The paper, ‘Hard times or our mutual friend’, by Paul Connolly,  is an excellent read and argues that the Trading Standards community should engage with another Government agenda:  mutualisation.

It says:

“Cabinet Office Minister Francis Maude wants to see mutuals widely adopted. He suggests within 10 years they will become ‘one of the major types of organisation providing excellent public services’ in a redistribution of power and ownership comparable with 1980s reforms.

“His reasoning is clear. First, he wants to continue the process of public service reform by ensuring direct ‘in-house’ delivery continues to be ‘contested’. In the past this primarily meant outsourcing. Plainly under this administration private providers will continue to feature in service delivery. However, the Government has indicated it wants a more diversified range of providers, including more small and medium enterprises (SMEs).

“Further, creating mutual structures can contest services, while empowering staff and short circuiting the public/private antagonism.

“Indeed, workforce empowerment is key. Mutualisation and outsourcing to SMEs, cooperatives and charities, are both connected with Big Society thinking. Government wishes to divest itself of direct responsibility for state delivery, but to do so in ways which spread associated commercial opportunities to those who have not benefited previously.

“This includes giving opportunities to existing public sector staff. Indeed, enthusiasts for mutuals believe workforce energies can be harnessed to support reform. Frontline staff understand their services, but are often inhibited from innovating by constraining bureaucracy.

“Decoupling mutuals from bureaucracies and giving staff stakes that link productivity to personal rewards encourage entrepreneurship and improve standards.

“Mutuals are not a ‘fluffy’ option. They are run as businesses. But the staff engagement model of mutuals, where rewards are linked to innovation, service improvement and productivity gains, means there is a real prospect of harmonising the interests of service producers and the individuals and communities they serve.

“There are many challenges associated with mutualisation. Is the largest public sector retrenchment in history the ideal moment to encourage people to risk a semi-commercialised model of delivery? Should staff downsizing precede or follow mutual incorporation? And how on current trends will the numbers mutualising substantiate Maude’s claims of an importance comparable with privatisation?

“The 12 pilots on the Cabinet Office website are pretty small, niche services, mostly in the health and social care arenas. Small and mutualisation might be perceived as a natural match, but there’s nothing to stop a whole agency, hospital, or local authority mutualising, John Lewis-style, or a series of small thematically-linked mutuals being incorporated under a franchising umbrella, like the Co-Op. Whatever, a substantial increase in adopters will be needed to match Maude’s ambitions. That will mean lots of services taking a risk. The danger for this intriguing agenda – which has attracted interest across the political spectrum – is that it doesn’t fly because volunteers are few.

“Nevertheless, Government continues to signal its intent in this area. Mutualisation is being strongly encouraged in areas of health, such as community care. The Public Services (Social Enterprise and Social Value) Bill is intended to put wind in the sails of mutualisation, while the Localism Bill calls for staff-managed approaches to be among the options considered in re engineering local services.

“The Trading Standards profession could do Francis Maude and themselves a favour by ‘going mutual’. Under the leadership of the Trading Standards Institute (TSI) – itself already in effect a social enterprise – and the Trading Standards Policy Forum, with possible input from Local Better Regulation Office (LBRO), one of two approaches could be adopted: a national super-mutual, covering England initially, but evolving to the devolved contexts following suitable negotiations, could be formed.

“It would be a single incorporated body. It would have a national head office. It would co-ordinate the use of any resources it received from central Government (the implied new BIS monies for instance) to address complex, nationwide and international threats. It would oversee and co-ordinate the delivery activities of suitably located regional, sub-regional and local offices.

“The mutual’s services would be purchased by local and central Government to meet statutory Trading Standards obligations.

“A second option, perhaps more realistic given that some Local Authority Trading Standards Services (LATSS) partnerships have already incorporated as businesses, would be for TSI and the other players to create a mutuals confederation. This would be a franchise support hub for a national network of local mutuals, each created as and when individual LATSS departments chose to incorporate. The hub would again attract funding for national projects and but would also co-ordinate the activities of the network, providing mechanisms for collaboration between local mutuals, and new sub-regional and regional structures, where appropriate.”

It is intriguing to see the mutual model being considered in this way. I hope for those considering creating mutuals, that the Consumer Focus trading standards paper might offer some useful ideas. It’s certainly worth a read – and we’d be interested in your comments.

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NHS users should require mutuals to deliver more benefits than in-house, says NAO

Posted on 24/06/2011 | Leave a comment

By David Bicknell

The National Audit Office (NAO) has highlighted risks to value for money associated with the Department of Health’s programme aimed at enabling its staff to take the lead in leaving the NHS – or ‘spinning out’ – to set up health social enterprises or mutuals.

The NAO’s  Report recognises that, at this early stage of the ‘Right to Request Programme’, it is too early to assess its costs and benefits. But it makes the point that the Department of Health has not set measurable objectives specifically for the Right to Request Programme against which to evaluate its success. PCTs expect social enterprises or mutuals to deliver more benefits than other providers, but did not generally contract for them to deliver savings or any other additional benefits.

The NAO’s report points out that many risks and liabilities still reside with the PCTs and will need to be managed if value for money is to be achieved. In the last resort, the trust or its successors will be responsible for ensuring that essential services continue to operate. For a time, social enterprises will be highly dependent on work and cash flow from their respective PCTs. They will also be operating in an ‘increasingly competitive market’ owing to changes in health legislation currently going through Parliament. So PCTs or their successors will need to have a clear idea of how they will react if enterprises run into financial difficult or fail.

Amyas Morse, head of the National Audit Office, said, “There are many risks to be managed if the Department is to get value for money from the £900 million contracts awarded to social enterprises. The Department needs to reassess its approach, when contracting with social enterprises, of not requiring efficiencies over and above what would have been achieved if the services had remained within the Department.”

You can access the full report here

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Third Sector: “Pathfinder mutuals suffering mixed fortunes and need more support mechanisms”

Posted on 24/06/2011 | Leave a comment

Third Sector has taken a look at the fortunes of the current mutual Pathfinders and concludes that they have been suffering mixed fortunes.

Plans for lecturers to take over Newton Rigg College in Cumbria were hit when the college was taken over by another institution.  And a project to spin out youth services in three London councils has been held up because the councils – Westminster, Hammersmith and Fulham and Kensington and Chelsea – are currently negotiating to merge many of their services as a result of the financial squeeze on local authorities.

Many mutuals, though, are making good progress, and some have already been launched successfully, Third Sector says. However, although the government has created a lot of buzz around mutuals, the piece argues that mutuals need more frameworks and support mechanisms in place.

That particularly includes a framework for council workers to take over services, which will be partly solved when a ‘right to challenge’ is enshrined in the Localism Bill towards the end of this year. However, many observers feel the right as it currently stands is not strong enough.

Third sector has also interviewed Julian Le Grand, who is leading the government’s Mutuals Taskforce. He suggests there are five key issues that the taskforce must help mutuals tackle:

  • Business Planning
  • External opposition, notably from unions
  • Procurement
  • Money issues
  • Getting start-up funding

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

Posted on 21/06/2011 | Leave a comment

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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Will private sector involvement in mutuals make for a perfect partnership?

Posted on 16/06/2011 | Leave a comment

Although The Times today has been reporting that the Coalition might be getting some cold feet about its plans for public service reform – the Public Services Reform White Paper now looks as if it may be delayed in the wake of  recent discussions about NHS reform – there is little doubt that the role of the private sector in partnerships is being discussed.

The Guardian recently carried a piece in which Craig Dearden-Phillips, founder and chief executive of Stepping Out, a business helping parts of the public sector become a social enterprise, wondered  whether the marriage between public manager and the private sector will work?

“One concern is the compatibility of each side’s goals,” he says. “So far, public sector mutuals tend to be more focused on social rather than commercial aims. Few appear to have share capital financially worth much to staff. They tend to be defined by a passion for people, place or profession, and they often aspire to stay local and be more personal. Every person I have met who leads a spun-out organisation is motivated by social purpose. They identify strongly with public sector values – albeit ones that see a mutual or social enterprise as the appropriate vehicle for this.

“A private company, however, will, quite rightly, be mostly concerned with its shareholders’ or directors’ interests, and that will include a strong focus on growth, either by merger or acquisition and on cutting costs quickly.

“These are legitimate goals, and, arguably, the only way to create large organisations. But you can see a potential tug-of-war here, with one side driven by a growth agenda and the other living in fear of becoming remote from its community – and of losing control to a private partner.

“Can both sides meet at least somewhere in the middle, with private investors accepting the potential constraints on return introduced by being partly employee-owned and former public managers bowing to some of the commercial imperatives of  investors?

“As someone working every day alongside public managers, I hope we can find ways to bring necessary investment and expertise to the table. Unlike in continental Europe, this is unlikely to come from the state. So we need to examine closely how to do this while ensuring the values we hold close are upheld.”

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How to set up an employee-owned mutual

Posted on 12/06/2011 | Leave a comment

By David Bicknell

There was a useful piece in the Guardian on Saturday about how to set up a mutual.

The article, ‘From councils to co-ops: how public workers can form a mutual’, suggests “employee-owned mutuals offer an attractive third way to the cuts programme”, and offers an eight-point plan on how to set one up.

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