By Robert Morgan
Few can be in any doubt of the coalition government commitment to worker inclusive mutuals and the potential for not only smaller government as a result but a revival of the outsourcing services industry. This model acts as a template to appease European workers councils who have long held back the greater use of outsourcing in country like France and Germany.
Headline grabbers like ““Ministers are poised to launch one of the biggest experiments in public sector reform … a John Lewis-style mutual – the first to be created in central government”, and “… three or four more Mutuals THIS year …” and “…1,000,000 public sector workers in Mutuals by 2015” in the Financial Times this week has not been picked by the bulk of the popular press. But they and the continental press soon will.
Francis Maude, Mutualisation’s marketing guru has said of the MyCSP mutual ““I don’t … view this as the ultimate model … we have learnt … The next one should be easier to do”. The award of the MyCSP contract, rumoured to be ten years with a break clause at year seven, will administer 1.5m government pensions, transfer 500 DWP staff into the SPV, see CEO compensation capped at 8% above average employee salary, net profits shared with the supplier but only after 1% going to charity and 1% going to apprenticeships, and employees interests will be represented by an externally advertised director. So part of the model are clear – a new form of privatisation with Jon Lewis style employee participation and share ownership and a “caring” social charter.
But has government learnt from Labour’s disasters in PFI / PPP – you know the £120 to change a light bulb stories. Key questions need answers:
- To what extent will the mutual be given freedom to operate?
- At least in the short-term, a mutual remains tied to its public sector background and delivery and is therefore subject to the rigours and constraints of regulation, OJEU and accountability to the Auditor General. Will these restrictions be “officially loosened” any time soon?
- Everyone agrees that the public sector will continue to shrink and by definition therefore, so will a dependent mutual’s service revenues, this throws up questions on it’s ability to survive – and to attract external revenues, and so …
- … will the choice of partner be heavily dependent on their demonstrated ability or commitment to develop such services?
- What penalties are there for NOT securing external business?
- How might the Mutual formula vary and evolve between different circumstances?
More importantly for the outsourcing industry is, are more commercial models going to spring up and be accepted. The consensus of clients I have spoken to is “yes”, but this needs to be balanced with the fact that there was not a single tier one outsourcer (IBM, CSC, HP) in the short-list for MyCSP. Demand says “yes” and Supply says “yawn”.
Robert Morgan, formerly the founder of Morgan Chambers and now director of outsourcing advisory Burnt Oak Partners, is delivering a speech on Part Equity models for commerce on Wednesday 8th February 2012 at Berwin Leighton Paisner – the event is free and tickets can be coordinated via shan,firstname.lastname@example.org – yes it is a comma!
Robert also writes the influential Outsourcing Lex column at
Posted in Campaign4Change, mutualisation, mutuals, outsourcing, procurement
Tagged Berwin Leighton Paisner, Burnt Oak Partners, Francis Maude, John Lewis, mutuals, MyCSP, outsourcing, PFI, Robert Morgan
By David Bicknell
I just read an excellent piece by Craig Dearden-Philips in the Guardian today about the politics involved in the spinning out of a public sector mutual.
He argues that if you, as a public manager, want to ‘step out’, you’ve not only got to do the numbers, you’ve also got to do the politics.
He suggests that politicians, or very senior executives, need three things. Firstly, they need to know if this fits in with the general tenor of where they see things going more widely in the organisation. Secondly, they want to know that the numbers add up.
And finally, and perhaps the most interesting, “politicians and senior managers need to know that they can influence the new body. For councillors and top executives, who are used to directly managing services, a spin-out can present a big operational and financial threat. They can no longer just recover a deficit elsewhere by plundering your budget. Nor, if they are no longer in charge, can they, in the event of a bad headline, tell voters they are putting a rocket under you! Again, the answer here lies in giving them a place at the table and moving the relationship from one governed by command and control to one where influence is exercised through a contract.”
Guardian Public Services Summit
Posted in Campaign4Change, managing change, mutualisation, mutuals, Politics, private sector, public sector, public services
Tagged Craig Dearden-Phillips, mutualisation, mutuals, poliitics, public sector
By David Bicknell
Campaign4Change has kept a watch on the progress of the Pathfinder Mutual at the London Borough of Hammersmith & Fulham, which is looking to create a mutual for school support services.
The mutual will actually cover services to schools across three London boroughs working together: Hammersmith & Fulham, Kensington & Chelsea, and Westminster City Council.
Now a tender opportunity for the project has been listed on the Londontenders.org website. The anticipated start date for the contract is 1st September 2012, running to 1st September 2016.
It appears from the tender that the three boroughs are looking for “an innovative independent sector partner (ISP) to participate and invest in the creation of a Mutual Joint Venture Company.”
The tender says 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.”
The tender goes on: “The Contracting Authority is working closely with the Royal Borough of Kensington & Chelsea and Westminster City Council, and it is intended that staff from all three boroughs will be transferred into the Mutual Joint Venture company under the Acquired Rights Directive (the UK’s Transfer of Undertakings (Protection of Employment) Regulations 2006). The Contracting Authority is procuring on behalf of education bodies within the London Borough of Hammersmith & Fulham, Royal Borough of Kensington & Chelsea and Westminster City Council for an independent partner to set up the Mutual Joint Venture Company.”
Interestingly , the scale of services to be offered by the Mutual Joint Venture Company is extensive, everything from ICT services and ICT supplies to architectural, building and security services.
The closing date for expressions of interest in the tender is 31st January.
Hammersmith & Fulham mutual Pathfinder expected to launch in 2012
Posted in Campaign4Change, managing change, mutualisation, mutuals, procurement, public sector, public services
Tagged London Borough of Hammersmith & Fulham, London Borough of Kensington and Chelsea, Mutual Pathfinders, mutualisation, public service mutuals, Westminster City Council