Category Archives: mutualisation

Mutualism: “perhaps the most flexible and beneficial way of transforming our public services”

Posted on 07/10/2011 | Leave a comment

By David Bicknell

Phillip Blond, director of the ResPublica think tank has discussed the future role of mutuals in Serco’s Ethos journal.

Blond suggests mutualism “represents perhaps the most flexible and beneficial way of transforming our public services. Happily, the government is committed to this model: Francis Maude, Minister for the Cabinet Office, has stated that he would like to see a million public sector workers employed in mutuals by 2015. In simple terms, mutualism is based on principles of reciprocity, equity and fairness. It is a system that allows for equity (what you put in and therefore can take out), be that in terms of finance or services, to be realised in any number of ways.”

To achieve the positive transformation of our public services, he says, “we need to find new models of mutualism fit for the 21st century. This means creating innovative ways of bringing together public and private capital, enabling private companies to make a fair return from their capital investments, while at the same time giving all those involved a stake or return of some sort.”

An example, he suggests, comes from the energy sector. “In Denmark, a community will often allow an incinerator to be built in their neighbourhood (in Britain the very idea would provoke mass protest) but they get cheaper electricity in return, often around 30%. The incinerators, designed by the very best architects, cut down radically on waste disposal and landfill. In addition, house price values increase for those on the local energy network because bills are cheaper, and the strategy is seen as ethical. To me, this type of reciprocal economy is a form of mutualism.”

As to whether the government’s goal of seeing a million public sector workers in mutuals by 2015 is achievable, Blond says this,  “It is possible but the challenges are considerable. Many public sector workers are driven by vocation, and if they see that they can provide a better service within a mutual framework, then mutualism in the public sector can succeed.

“But employees can’t be offered risk for no return; you have to offer certain guarantees if you want them to move to a new platform. The offer to public sector workers has to be geniune. It has to be based on an equity stake, on the security of a viable business model (which means good contracts for the initial spin out companies) and on the genuine option of learning new skills, while also letting people share in the efficiencies that result.”

You can read Blond’s piece, plus a response from Jane Dudman here

The Journal also carries a piece on implementing the Open Public Services White Paper

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

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Office for Public Management discusses mutuals agenda

Posted on 06/10/2011 | Leave a comment

This blog from the Office of Public Management sets out the possible landscape for mutuals over the next few months now that the consultation period for the Open Public Services White Paper has come to a close.

It suggests that a follow on report explaining how departments will take open public services forward should be expected in November.

There is some background on OPM and mutuals here. The organisation is also organising an event  at the 2011 National Children and Adult Services (NCAS) conference around the local authority spinning out of  children’s and adults’ services.

Socitm response to the Open Public Services White Paper

Hammersmith & Fulham Pathfinder expected to launch in January 2012

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

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Mutuals: IT group’s white paper response warns of risk of ‘fragmented and disconnected IT systems’

Posted on 05/10/2011 | Leave a comment

By David Bicknell

In its response to the Open Public Services White Paper, Socitm,  the association for all IT professionals working in local authorities and the public and third sectors, has said it welcomes the prescription for strong local government set out in the White Paper.

“Greater freedoms from central control, devolution of functions, funding following the individual, power and control to neighbourhoods, enhanced local democracy, community budgets and commissioning combine to create a vision of the future” consistent with its own strategy for IT-enabled local public service reform launched by earlier this year.”

But, it argues, “this liberating, optimistic future is at variance with much of the current commentary about the future of local public services which is based on analysis of the likely impact of actual policies that have been put in place.”

For example, it says, the recent NLGN report, Future Councils, envisages four types of council emerging by 2020:

Clustered – federations of local authorities sharing many services;

Residual – councils that have followed strategic commissioning to its logical conclusion, divesting themselves of all direct service provision;

Commercial – entrepreneurial councils, selling services to other local authorities and the private sector;

Lifestyle – local authorities which establish a particular brand for their area and focus their energies on promoting that brand.

Socitm’s view is that all these models would have a detrimental impact on the ability of local politicians to shape local services in response to local needs in the ways envisaged in the Open Public Services White Paper. None, it argues, would enthuse local government employees with a sense of purpose nor, consequently, commitment to the proposals presented.

It insists that it is not arguing for maintaining the status quo. On the contrary, it says, change is essential if the relationship between the public and public service is to be rebuilt. Reform would be founded upon greater collaboration, redesign and innovation in which local public services organisations continually renew themselves. Local authorities would play a key role by becoming ‘reforming’ councils.

However, Socitm doesn’t appear to be too keen on mutuals and new service providers playing a role. Its response says, “Reforming councils recognise that much of their ability to transform is enabled by developments in information handling and technology deployment. Merely implementing technology is not in itself the change needed. Fundamental changes to processes, organisational structures, job roles and cultures are also required across localities and public service organisations. This will be essential if citizens and neighbourhoods are to be empowered, rather than confronted by a plethora of fragmented and disconnected information systems run by mutuals and other new and existing service providers.”

In the past, Socitm has criticised central government ICT strategies for being too focused on central government and for failing to include local government effectively enough in its thinking.

Socitm says, “Socitm supports the principle of anytime, anywhere, any place availability of public services referenced in section 7.9 of the White Paper.

“The new Government Digital Service (GDS) is presented as the agency that will drive this development. However, the scope of the GDS, as set out in the White Paper, spans central government only; this is at odds with our understanding that the intention of GDS is to cover all public services.

“Four billion of the five billion citizen-government transactions that take place annually are estimated to involve local public services. Consequently, devolution of central government services and their digital delivery will require close integration with local public services if they are to make any sense to the citizen and other service users in localities.

“This issue not mentioned in the White Paper and Socitm is aware of a number of current initiatives supporting distributed service access and digital by default where the centralist, top-down, large scale, standardised, single supplier approach to implementation continues to dominate.

“The hugely important ID authentication and Universal Credit projects fall into this category – local public services have not yet been consulted on these projects despite the extensive experience and know-how they have in establishing service users‟ identities and of taking benefits to the most vulnerable and excluded in our society.”

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

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Making the right noises about the social economy

Posted on 03/10/2011 | Leave a comment

By David Bicknell

Andrew Tyrie’s comments about the Big Society perhaps haven’t been overwhelmingly helpful when it comes to promoting  the growing role of mutuals and co-operatives. Hopefully when David Cameron gives his keynote speech at the Conservative Party Conference in Manchester on Wednesday, he’ll have some more  positive things to say about open public services, and specifically something about the well-flagged funding and procurement issues.

These issues have been well summed up in two recent blogs I came across by Craig Dearden-Phillips, and by Matthew Taylor from the RSA. They’re worth a read.

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Posted in Campaign4Change, managing change, mutualisation, mutuals, public sector, public services, social economy, social enterprise

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Coalition will learn lessons from Pathfinder pilots before expanding mutuals programme

Posted on 28/09/2011 | Leave a comment

By David Bicknell

Given the references to mutuals at the recent Lib Dem conference and some comments at fringe meetings at the Labour Party conference, it might be reasonable to expect that at next week’s Tory Party conference, we could expect some forward thinking on taking the mutuals agenda forwards from a practical perspective.

Two areas that might be worthy of further discussion are procurement including competition and lengths of service delivery contracts, and mutuals financing,  which are issues that those who want to spin out from the public sector – and those that already have done – are now facing.

According to this story reported by Civil Service World, the Government has said it will take close account of what is happening with the Pathfinder ‘pilots’, before rolling out the mutuals programme more widely.

Although Ed Davey’s comments were actually from last week, they still make interesting reading. Civil Service World reports him as saying the Coalition “has an ambitious agenda” on mutuals and there will be “lots of things we need to learn from [the Cabinet Office’s mutual] pathfinders before we can have confidence to roll it out more widely.”

Davey quoted a study from Cass Business School which found that employee-owned organisations perform better in downturns, and highlighted the importance of employee empowerment. “It is not simply about ownership, it’s also about involvement and engagement; just giving people shares isn’t [enough],” he said.

Davey also highlighted the challenges of attracting finance for mutuals, and of helping them to secure service delivery contracts. Some new mutuals will initially need three- or five-year contracts, he said, to allow them to get established and provide “reassurance” for members.

Cabinet Office tells mutuals future is bright

Hammersmith & Fulham Mutual Pathfinder expected to launch in 2012

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

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Mutuals: a small component helping make the German economy tick

Posted on 27/09/2011 | Leave a comment

by David Bicknell

Against the backdrop of the Labour Party conference in Liverpool, there has been much talk about how to energise the economy. One solution being mooted is to take a leaf out of the Germans’ book.

This article suggests that mutuals – admittedly, mutuals in this context are not explicitly defined – are one important component in the German economic engine. The reference to mutuals is only a passing one, but it’s perhaps an interesting suggestion.

“No one is in any doubt that Germany is the engine of the European economy. What makes it tick are the small businesses of the Mittelstand – often family firms or mutuals with an eye for detail, a well-deserved reputation for financial caution and longstanding co-operation between bosses and employees.”

Businessweek: Germany’s Mittelstand still thrives

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Planning for and overcoming the challenges to mutuals in town halls’ mixed models

Posted on 26/09/2011 | 2 comments

By David Bicknell

Two pieces written around mutuals which might be worthy of a read this morning. The first is an examination of the ‘Oldham model’  in the Guardian’s Northerner Blog, which quotes an interview with Oldham Council leader Jim McMahon discussing the pros and cons of the outsourcing of services to co-operatives and mutuals.

The other is a discussion by PA Consulting’s Karen Cherrett for the Guardian’s Public Leaders Network which argues that without preparatory work, there is a risk that the ‘current enthusiastic but rather naïve rush to establishing mutuals to transform public service delivery will lead to wide-scale mutual failure.’

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

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Civil Service too risk averse at a micro level

Posted on 23/09/2011 | 1 comment

 Faced with big challenges, the Civil Service thought small thoughts.  [Tony Blair, memoirs]

A report by the House of Commons Public Administration Committee has warned that the Coalition Government needs a more transparent and flexible Civil Service when it comes to commissioning public services from charities, social enterprises, mutuals and private companies.

The Committee’s report says the Civil Service needs to transfer power out of Whitehall and into communities and as a result fundamentally change the way it works.

It says the challenge of this new role will be compounded by the need to meet sizeable reductions in administrative budgets set out in the 2010 Spending Review.

Its conclusions are that while the Government seeks to embrace change, it has failed to recognise the scale of reform required or to set out the change programme required to achieve this reform. It says there is a reluctance to produce what they see as the latest in a long line of reform initiatives in Whitehall. This antipathy to a plan for reform fails to take note of the critical factors for success in Civil Service reform initiatives and wider corporate change programmes: coordination from the centre and strong political leadership. As a result, it warns, key policies like the ‘Big Society’ agenda and decentralisation will fail.

The Committee says: “We have recommended that the Government should produce a comprehensive change programme articulating clearly what it believes the Civil Service is for, how it must change and with a timetable of clear milestones. Such a change programme would enable real change in Whitehall and avoid the fate of previous unsuccessful reform initiatives.

“Such a change programme must also include proposals for the Civil Service to retain and to develop the new skill sets required to meet the demands of the Big Society policy agenda, and to address long-running concerns about the decline in specialist expertise in Whitehall, the failure to innovate and to take risks, and the failure to work across departmental silos. Such a plan is required to combat inertia and deliver government policies where Ministers and departments may otherwise be unwilling or unable to drive change.

“To reflect the changing role of the Civil Service, we have also recommended that the Government should consider the development of a new Haldane model of accountability which can sustain localism and decentralisation; or they must explain how the existing model remains relevant. The new realities of devolving power out of Whitehall to local government and elsewhere should be codified in the Civil Service governance structures.

“Ministers seem to believe that change will just happen. It is essential that the Cabinet Office take leadership of the reforms and coordinate the efforts in individual departments and across Whitehall as a whole. The scale of the challenges faced by the Civil Service calls for the establishment of a world class centre of Government, headed by someone with the authority to insist on delivery across Whitehall.”

In particular, the report says the main change of task, which will affect many but not all departments, will be an increase in commissioning and contracting. More onerous and time-consuming, however, will be monitoring the contracting process and dealing with problems and complaints arising.

The report says Whitehall has traditionally performed three core roles: policy advice, the management of public services, and the supervision of public bodies. If the Civil Service is to connect with Ministers’ ambitions for public service reform a fourth capability will need to be added to this trio: the ability to engage with groups from the voluntary and private sectors through the contracting and commissioning process. Every government department must focus on developing this fourth capability, and the Cabinet Office must ensure that this is embedded in the Civil Service change programme across government.

The report explains why SMEs have made so few inroads into government work. 

It goes so far as to depict ministers as not understanding Civil Service inertia, which means they cannot come up with a plan to do anything about it. Cabinet Office Minister, Francis Maude, described a paradoxical situation where Government took huge risks at a macro level, but at a micro level tended to be very risk averse and hostile to innovation.

He added, “You do not often hear of someone’s career suffering because they preside over an inefficient status quo, but try something new that does not work and that can blot your copybook bigtime.”

 An example of one SME’s innovative ideas

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Posted in Campaign4Change, change management, government, innovation, managing change, mutualisation, mutuals, public sector, public services, SME

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EU rules should be changed to give mutuals chance to run public services before full open competition

Posted on 22/09/2011 | Leave a comment

By David Bicknell

A post by Third Sector has made the case for public spin-outs such as mutuals to be exempted from EU procurement rules.

The piece quotes Stephen Lloyd, head of charity and social enterprise at City of London law firm Bates Wells and Braithwaite, who said that EU procurement rules were  currently based on the concept that public service provision was done either by the state or the private sector.

Lloyd said, “We want to move services out of the state and into a social economy, and the rules are not set up to support that. If you set up a new social enterprise to deliver something that was previously delivered by the state, and it has to compete with big business from day one, it won’t work.

“There needs to be a transition process. These organisations need to be protected. The government needs the agreement of the EU that it’s allowed to do so, and this is its opportunity to get it.”

Third Sector says that the Government’s response to the European Commission green paper is that employee-led spin-outs should have time to run services before having to compete with big business.

In its proposals to the European Commission, the Government says, “The revised Directives should make clear that, in circumstances, such as the development of employee led organisations/mutuals, employees should be able to gain experience of running public services for a period of, for instance, three years, prior to full and open competition.”

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Cabinet Office tells mutuals future is bright despite Central Surrey Health struggles over NHS deal

Posted on 20/09/2011 | Leave a comment

By David Bicknell

The Cabinet Office has encouraged would-be mutual and social enterprises to see the government’s plans to open up public services as a positive move that yields new opportunities despite a flagship mutual reportedly losing out on a major contract to a commercial organisation for NHS services.

The Financial Times reported yesterday that Assura Medical has been named as preferred bidder for a five- year contract worth about £90m a year for community health services in Surrey, beating a bid by Central Surrey Health, the flagship social enterprise that runs services in the neighbouring area.

A Cabinet Office spokesman was quoted as saying: “This is not the end for Central Surrey Health; they continue to provide critical services for the people of Surrey. Across the public sector we have started to see the emergence of a new wave of mutuals.

“The government has ambitious plans to support front-line staff who want to form mutual organisations and take control of the services they provide. We are working to ensure that all organisations bid for contracts on a level playing field. We are currently conducting a listening exercise on the Open Public Services white paper, it’s vital that mutual organisations contribute to the discussion.”

The government wants to see the fledgling mutual and social enterprise sector grow to encourage a million staff to leave the public sector and sell services back to local government and the NHS.

In a press release issued by Social Enterprise UK, Peter Holbrook, the organisation’s chief executive encouraged the government to create a financial level playing field and give mutual and social enterprises the chance to gain a foothold in the commercial world:

“If Central Surrey Health, the government’s flagship mutual social enterprise, which has demonstrated considerable success in transforming health services and increasing productivity can’t win, what does this say for the future of the mutuals agenda?

“Central Surrey Health reinvests all the profits it makes locally. It is difficult to imagine how Assura, with shareholders expecting a financial return, could do more to benefit people in Surrey.

“It is not enough for government to open up markets; it needs to create fair markets that benefit society. Some of the financial criteria used in contracts create an unequal playing field in which social enterprises are unable to compete because they may not have the same financial backing as private sector providers.  Unless swift action is taken to address this we will see social enterprises and mutuals lose out to the private sector.

“Public sector workers will be understandably anxious about spinning out from the NHS and setting up a social enterprise on the back of this news. The government needs to take action to reassure them that they will not be operating in markets weighted against them.

It has been argued by unions that mutualisation hides a privatisation agenda with mutuals at risk of losing out to commercial operators as contracts come up for renewal. Central Surrey’s own contract is reported to be up for renewal next year.

Central Surrey Health was the UK’s first social enterprise to leave the NHS and set up as an employee-owned business four years ago. Central Surrey Health is contracted to deliver community nursing and therapy services on behalf of the NHS and other organisations (e.g. Surrey County Council) to the 280,000 population of central Surrey. It is owned by the nurses and therapists it employs, who each own a 1p, not-for-dividend share.

It has been selected by the Cabinet Office to help mentor employee-owned organisations coming out of the public sector. Twelve fledgling public service spin-offs have been chosen by the Cabinet Office to be ‘Pathfinders’ for the rest of the public sector. As mentors, Central Surrey Health will work with and support staff on Pathfinder projects to help them develop sustainable, efficient and pioneering employee-led services. Last November it was also named as the Prime Minister’s first Big Society Award winner.

Hammersmith& Fulham Pathfinder to launch in 2012

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Posted in Campaign4Change, mutualisation, mutuals, NHS, public sector, public services, social enterprise

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