Category Archives: mutuals

‘The Budget’ measures for mutuals

By David Bicknell

The Cabinet Office has produced a document on the Mutuals Information Service site detailing the Budget measures that may impact mutuals.

You can access it here

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Tri-borough mutual plans to save £1m in costs for London councils

By David Bicknell

Council staff across three London boroughs who are setting up their own employee-led mutual to take over school support services expect to save a million pounds over four years.

The three councils – Hammersmith & Fulham, Westminster and Kensington & Chelsea – already share several services, which they say is enabling them to reduce back office costs to help protect frontline services from the public spending squeeze.

Now, a statement issued by Hammersmith & Fulham for the three councils says the staff involved in supplying support services for schools across the boroughs are “putting the finishing touches to plans to set themselves up as an employee-led mutual.”

Andy Rennison, assistant director in Hammersmith & Fulham children’s services, who has been leading the mutual project, said, “Staff in these areas have experience of trading with schools and are excited about the new challenge. We feel that having more control, flexibility and being able to develop a more commercial approach will benefit schools, the mutual staff and the three councils.

“If the venture is successful, and we have every reason to think so, the councils will receive 50% of the mutual’s net profit to reuse in providing educational opportunities.”

The mutual will pilot the new arrangements for four years, with support from a joint venture independent sector partner, currently being selected through European procurement processes.

Hammersmith & Fulham says an open day for potential bidders held on January 24 attracted around 60 delegates.

The project is being supported by the Cabinet Office which picked Hammersmith & Fulham to be a Pathfinder  to explore new ways of delivering public services more efficiently. The services include financial management support and budget planning, IT and building development projects, as well as strategic advice to councils.

Francis Maude, Minister for the Cabinet Office, said: “Front line staff know what local people want from public services. The mutual model being pioneered in Hammersmith & Fulham will give staff the power to do things the way they know works best. The evidence is clear, when staff have a real stake in their business productivity rises and customer satisfaction grows.

“This Pathfinder mutual is particularly groundbreaking as staff are forming a ‘joint venture’ with a partner organisation that will help to develop the business further. I commend the staff leading this exciting project for their achievements and hope many more will follow their lead.”

“We are very pleased that staff across the Tri-borough area are excited about this opportunity and taking the lead in this Pathfinder. After the initial four years, the service will be retendered on the open market to ensure that taxpayers continue to get the best possible value for money in the longer term,” said Hammersmith & Fulham cabinet member, Cllr Helen Binmore.

Independent adviser OPM was asked by the Cabinet Office to provide expert support to Rennison and his team as part of the Pathfinder programme.

OPM chief Executive Hilary Thompson said; “Elected members, managers and staff at Hammersmith and Fulham have shown real commitment and energy throughout the process of developing the staff mutual. This is an innovative example of a council recognising and seeking to realise the potential of employee ownership and new ways of working.”

It has emerged that academies and free schools will provide a future opportunity for the mutual to extend its services. There are currently two free schools and two academies in Hammersmith, with more in the pipeline.

Further background information on the mutual is being made available in a Hammersmith & Fulham Cabinet report.

(Thanks to Ian Makgill of government contracting specialist Govmark for his help with this story)

Related Links

Hammersmith & Fulham Pathfinder tender hints at September start for schools mutual

SMEs – when to choose them and when not

Public services can be delivered by knights and knaves mutually

Osborne’s Budget speech may provide update on Coalition’s mutuals plans

By David Bicknell

Will Wednesday’s Budget bring further news on the Coalition’s plans and prospects for public sector mutuals?

Yesterday’s Independent believes it might. An article by Business Editor James Ashton suggests that Chancellor George Osborne  is likely to “talk up the progress made in Whitehall reforms” in his Budget statement.

It argues that “thousands of civil servants will be transferred into the private sector under a blueprint to shake up Whitehall that will be unveiled next month.”

Ashton suggests that new recommendations on spin-outs are due to be outlined  in a report by Stephen Kelly, the Cabinet Office’s Crown Commercial Representative.

The report is expected to say that “there are numerous government operations that could be potentially commercialised, either through forging partnerships with outside firms or seeking capital injections.”

Related Link

Stephen Kelly – the man at the coal face of the Big Society

London Borough of Hammersmith & Fulham mutual process ‘continuing’

By David Bicknell

The London Borough of Hammersmith & Fulham told Campaign4Change today that the council is continuing to work its way through tenders received in January in response to an invitation to tender (ITT) for  “an innovative independent sector partner (ISP) to participate and invest in the creation of a Mutual Joint Venture Company.”

The mutual, which is due to be up and running in September 2012, will cover services to schools across three London boroughs working together: Hammersmith & Fulham, Kensington & Chelsea, and Westminster City  Council.   

In response to a Campaign4Change call checking on progress, a spokesperson for the London Borough of Hammersmith & Fulham said the tender evaluation process was ‘continuing’, as normal.

The ITT which closed in January, had indicated that “the ISP will take responsibility for the creation of the joint venture company, whose shareholding will be shared between the ISP and the employees (held on the employees’ behalf in a trust). The Contracting Authority will have a contractual arrangement with the Mutual Joint Venture company to provide some of the services, supplies and works listed….. for a period of not less than 4 years.”

Hammersmith & Fulham Pathfinder tender hints at September start

SMEs – when to choose them and when not

By Ian Makgill

The key to giving business to SMEs is to understand when SME suppliers can meet the needs of government and when it is best not to try and resist the gravitational pull of a large supplier.  

Some of this is obvious.  You wouldn’t expect the government to award banking services or insurance contracts to an SME. On the other hand, there is no real reason why legal services or consulting contracts can’t be provided almost entirely by SMEs, with only a couple of larger providers required for national programmes with multiple sites. In fact, it is a great shame that Government Procurement Service’s (GPS) new tender for consulting services does not utilise the regional model that they’ve previously used for temporary medical staff.

GPS has scored a couple of hits with SMEs, firstly with the appointment of Redfern Travel as the preferred travel management provider and secondly, with the choice to let the G-Cloud IT framework. It may be that Redfern ceases to meet the exact criteria of being an SME once the contract is fully embedded in Central Government, but that’s the whole point, to drive growth through smaller businesses. The G-Cloud framework provides a meaningful opportunity for SME suppliers to sell complex services to government, and may also help government to break their addiction to monolithic, large scale IT projects (as typified by the CSA’s latest IT tender with 90,000 specified requirements.)

Cloud services offer a remarkable opportunity for small teams to serve millions of people. A good example is 37signals, a Chicago web design company that created a project management tool called Basecamp. Its team of 32 staff currently service three million customers.

It is equally important to know when not to try and counter market forces.

Take agency staff.

We’ve been doing some very detailed work in this area, and there is an inexorable move towards using large, national suppliers. These suppliers can provide much more competitive margins and better services and data to public bodies. The market is healthy in terms of competition and there is room for smaller suppliers to become second tier suppliers to some of the national companies. Clearly the option to become a second tier supplier, or to lose their existing business is not good news for smaller suppliers, but with such strong benefits available to public bodies it would make no sense to try and resist developments that are affecting the whole market.

There needs to be a much deeper understanding of the characteristics of contracts that can be fulfilled by SME suppliers and a comprehensive strategy to follow up on that work, and to prevent government issuing restrictive tenders that see SMEs unnecessarily barred from doing business with Government, or spin-out mutuals facing procurement hurdles that are inappropriate to them. Until that strategic work is done, then there is a risk that the appointment of SMEs to government contracts will be haphazard, with a few notable successes and far too many failures.

Ian Makgill is the Managing Director of Govmark, researchers who specialise in government contracting.

Download Govmark’s report into agency staff in local government

From The Sun: “Run fire service like John Lewis”

By David Bicknell

It’s not often that the prospects for mutuals – or John Lewis, for that matter – make it into The Sun. But this story takes the mutuals bandwagon into areas it hasn’t been previously.

The Sun’s story – ‘Run fire service like John Lewis – refers to the Cleveland Fire Brigade, which reportedly ‘plans to turn itself into a mutual — just like John Lewis stores where staff share profits.’

The story quotes Cleveland’s chief fire officer Ian Hayton saying: “Combining a public service ethos with an entrepreneurial drive for growth will empower our staff.”

It also quotes Cabinet Office Minister Francis Maude saying, “We are opening up public services to get more bang for the taxpayers’ buck.

“Frontline workers know best how to do their job. That’s why mutuals can be the best way to run things.”

However, an article on Public Finance makes the point that the ‘mutual option’ was always a non-starter for public audit.

It argues that the Audit Commission’s abandonment of the ‘mutual option’ for audit follows a weekend disclosure that police forces are being pressured by the Home Office ‘to outsource great swathes of front as well as back-office work.’

Audit Commission: the feeling’s not mutual

Worth reading on mutuals: “Are public sector spin-outs on shaky ground?”

By David Bicknell

For those contemplating setting  up public sector mutuals, the headline on a piece by Craig Dearden-Phillips in the Guardian about their legal and contractual prospects may start ringing alarm bells.

“Are public sector spin-outs on shaky ground?’ sounds a very pessimistic view in the wake of a successful action by Michael Lloyd to prevent 3000 NHS staff being transferred into Gloucestershire Care Services, a new social enterprise.

The outcome of the case, as Dearden-Phillips points out, is likely to affect the way in which the NHS and local councils approach the question of how they set up mutuals and social enterprises.

“Last week’s events in Gloucestershire were, without doubt, a setback for the mutuals agenda in the NHS and councils,” he says. “Lloyd may well rue the day he took the action he did, particularly if those NHS services end up in the hands of for-profit operators. But Gloucestershire was not a decisive reversal. What events there showed was not that spin-outs from public bodies cannot be engineered, but that those leading them need to navigate the law, and public opinion, with care.”

Links

Leigh Day & Co Solicitors’ statement

Stroud Against the Cuts statement

Stepping Out

Never knowingly undersold: the John Lewis ‘mutual model’

By David Bicknell

They say there’s no such thing as bad publicity. Just publicity. Well, unwittingly, John Lewis is getting plenty of it. It’s gone from being a retail store, to being the mutuals model, to being associated with care homes, and now, as this article suggests,  its name is being linked with schools.

Is there something in this? Have we truly stumbled on a new way of doing things in the public sector? Or, is it that we are all, as is our wont, looking for a label that we can apply for mutuals, and John Lewis seems to fit the bill?

When we have all finally moved on and gained greater ‘mutual maturity’, so to speak, other models will be more frequently cited. Until then,  you can probably expect that in a conversation where mutuals are cited, John Lewis is likely to be mentioned too.

Le Grand: ‘Public services can be delivered by knights and knaves mutually’

By David Bicknell

Mutuals taskforce chairman Julian Le Grand has written this piece in the Guardian, which argues that when it comes to the delivery of public services, no one type of provider  i.e. the public monopoly, is suitable for all services.

Neither is a private firm nor a social enterprise automatically the best alternative. Even employee-led mutuals, he argues, are not appropriate in all circumstances: they may not be suitable for services that are natural monopolies, for instance.

He adds that it is of fundamental importance to consider what motivates those who work in the service. Only if they are appropriately motivated, he suggests, will those working in the public services deliver the quality of service that governments hope for and that users expect.

Mutuals: a novel means of driving down demand for public services?

By David Bicknell

A recent piece in the Guardian local government network has come up with the intriguing idea that mutuals can help drive down demand for public services.

The article, by Ross Griffiths, a partner at law firm Cobbetts,  suggests that if  as a service user, you are dealing with a provider that is your mutual, you are more likely to think twice about the demands you are making on it, and the effect that might have on the service and other users. It argues that this is the ‘Holy Grail’ of the mutual project – allowing providers to deliver services more cheaply not by making cuts, but by reducing demand.

The piece asks whether in today’s local government, where efficiency must be a big part of any changes to services, this is something that mutual structures can deliver. Or are they, as the article asks, ‘little more than a frivolity that should be saved for less straitened times?’

Links

http://www.guardian.co.uk/local-government-network/2011/dec/08/new-mutuals-pick-winners

http://www.number10.gov.uk/take-part/public-services/start-a-public-service-mutual/