Tag Archives: Big Society

Civil Service too risk averse at a micro level

 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

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

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.”

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

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

Mutuals: white paper offers public services choice as Cameron tells Civil Service to take more risks

It was unfortunate that yesterday’s press conference to launch the Open Public Services White Paper by David Cameron was hijacked by journalists quizzing him on the ongoing News International story.

The event, organised by Reform in Canary Wharf, also featured speakers from big business i.e. the CBI, the consumer organisation Which, and the voluntary sector – “a Coalition in support of the White Paper,” suggested Cameron.

Detailing the public services landscape, Cameron scarcely mentioned mutuals by name, though they do feature significantly in the White Paper itself.

Modernisation of public services, he said, will give people choice and control over the services they use, and end the ‘get what you’re given’ culture.

People will be given more choice to shape the public services they use, putting control in the hands of individuals and neighbourhoods so everyone can benefit from the best public services available.

“I know what our public services can do and how they are the backbone of this country. But I know too that the way they have been run for decades – old-fashioned, top-down, take-what-you’re-given – is just not working for a lot of people.“Ours is a vision of open public services – there will be more freedom, more choice and more local control. Wherever possible we are increasing choice by giving people direct control over the services they use,” said Cameron, who detailed five core principles for modernising public services: choice, decentralisation, diversity, fairness and accountability.

He also made some key points about change and also about risk-taking for those now in the public sector:

“This is the case for change. If we want to compete in the world; if we want to get value for money; and above all if we want the decent, reliable public services that make life better for people, there will be no progress if we stick with the status quo.  What does change look like? It’s about ending the top-down, big government way of running public services,  and bringing in a Big Society approach, releasing the grip of state control and putting power into people’s hands. The old dogma that says ‘Whitehall knows best’ – that is going.”

“We really need to ensure that civil servants and arms length bodies see that there is a clear set of principles to apply: about choice, about diversity, about payment by results, about the role of private and voluntary sectors.

“The biggest challenge for the Civil Service is to try and adapt to this new culture and also a very difficult thing to do, and an easy thing to say, is that actually civil servants will have to take some risks. We all know that in business it is very easy to award the contract to Price Waterhouse. They’ve done it before, they’re an enormous organisation, they won’t fail. I think there’s a similar tendency within the Civil Service. It’s safe to keep it in house and deal with one of the big providers.

“If we really want to see diversity, choice and competition, we have to take some risks and recognise that sometimes there will be a new dynamic social enterprise that has a great way of tackling poverty or drug abuse or helping prisoners go straight, and we do need to take some risks with those organisations and understand that rather like in business, when you have a failure, that that doesn’t mean that the Civil Service has done a disastrous job.

“In business, we try new things in order to do better, and when they don’t work, we sit back and think, ‘How do we do that better next time?’ We do need a sense of creativity and enterprise in our Civil Service which is clearly there….a change of culture, perhaps a different attitude towards innovation and risk and a sense that that will be a good way of driving performance.”


This what the White Paper says about public service mutuals:

6.14 We are doing much more than just sweeping away regulations. We are giving public sector staff new rights to form new mutuals and bid to take over the services they deliver, empowering millions of public sector staff to become their own bosses. This will free up the often untapped entrepreneurial and innovative drive of public sector professionals.

6.15 Ownership and control, through mutualisation, empower employees to innovate and redesign services around service users and communities, driving up quality. We will not dictate the precise form of these mutuals; rather, this should be driven by what is best for the users of services and by employees as co-owners of the business. Options include wholly employee-led, multi-stakeholder and mutual joint venture models.

6.16 The Government will take steps to identify and overcome the barriers placed in the way of public sector workers who want to exercise these rights.

6.17 Public sector employee ownership: the key policies we are already implementing include:

  • Right to Provide – we are giving public sector workers who want to form mutuals or co-operatives to deliver public services a Right to Provide. This will enable public sector workers to form independent, or joint venture based, mutual and co-operative social enterprises. Progress is already being made with a new Right to Provide for NHS staff and opportunities for local authorities to invoke the Right to Challenge;
  • mutual pathfinders – the first wave of employee-led mutual pathfinders was launched in August 2010 with a second wave announced in February 2011. These pathfinders are being mentored by expert organisations as well as leading figures in social enterprise and public service to support their growth and share best practice; the pathfinders will provide critical learning as more employees look to exercise these rights;
  • Mutuals Task Force – Professor Julian Le Grand, one of theUK’s leading thinkers on public service reform, has been appointed to lead a Task Force to push employee ownership across the public sector;
  • Mutuals Support Programme – we will invest at least £10 million in the Mutuals Support Programme, to support some of the most promising and innovative mutuals so that they reach the point of investment readiness. This support will be available from autumn 2011;
  • Enterprise Incubator Unit – this has been set up within the Cabinet Office to provide advice, challenge and resources for public service providers from central government departments and their agencies who want to move from the public sector to the independent sector. The unit will help management teams to restructure themselves and their teams into independent businesses, which may include partners providing finance or expertise, for example through a joint venture;
  • Post Office mutualisation – In May, Co-operativesUK published a report commissioned by the Government on options to transfer Post Office Ltd from government ownership to a mutual run for the public benefit. The Government will carefully consider this report before launching a public consultation later this year; and
  • My Civil Service Pension (MyCSP) – plans have been announced for MyCSP to become the first mutual enterprise to spin out of a central government service. MyCSP administers Civil Service pension schemes for 1.5 million public sector workers. MyCSP’s plans to mutualise, which have the full backing of the Government, will give employees a stake in the new business, alongside government and a private sector partner. The innovative ownership model will be matched by a participative management approach: there has already been a strong turnout in elections for the Employee Partnership Council, through which employees will have a meaningful say in the running of the business.
Enabling new provision

7.7  Creating open public services will require new types of investment in public services: investment of money, inspiration and entrepreneurial effort. The Government will promote the opportunities being created by open public services, tailored to individual sectors. This promotion will aim to support:

  • accessing new forms of external finance – there is an exciting set of opportunities to bring new forms of finance into public services. This includes social investment (e.g. social impact bonds); payment for results on capital improvements (e.g. energy efficiency) and the financing of modernisation programmes (e.g. joint ventures to introduce new technology). Work is under way to develop effective measures of the social impact of investment and to launch the Big Society Bank, which will catalyse the growth of a sustainable social investment market;
  • empowering public sector staff to take control of their own services in new enterprises like mutuals – the creation of mutuals is a critical step in achieving more diversity in public services. However, we recognise that this is a big step to take for both staff and the public body that employs them. We will set out a full range of support available to those who are considering setting up a mutual, in the same way that we seek to stimulate both voluntary and private sector development. This will include a £10 million Mutuals Support Programme to provide support to fledgling mutuals that are being set up to deliver public services by employees leaving the public sector; and
  • actively encouraging new providers, of all sizes and from all sectors, to deliver public services– when we say we want diversity in public services, that is exactly what we mean. We will take active steps to avoid simply switching from one type of monopoly to another. We will launch a positive action programme to improve the awareness of public service opportunities to new providers, especially small and medium-sized enterprises. Many of our policy changes have already opened up attractive new opportunities, for example in the Work Programme and through personal budgets in social care. In addition, we will take positive action on procurement and through regulators to ensure that other opportunities (e.g. in central government procurement) are opened up to new types of provider, be they from the public, private or voluntary sector.

If you want more details, you can access the White Paper here – and the Government has unveiled an Open Public Services website

Mutuals: After the Big Society, the Good Society…

By David Bicknell

I came across a piece from Public Finance written by Maurice Glasman discussing what Labour’s answer to the Big Society might mean in practice.

There are some interesting thoughts on mutuals here. Glasman writes:

“There is far more to meaningful work than money and self-interest; it is the way we serve and change the world. The workforce is at the heart of this. The Good Society stresses its importance in the private as well as the public sector. This is very different to the Big Society agenda, which does not recognise that capital seeks the highest rate of return and thus creates great pressure to turn both humans and nature into commodities.

“To understand what is at stake here, look at the idea of corporate governance. The Big Society offers two ideas of corporate governance for the public and private sectors. In terms of the state, it prefers a form of mutualisation, developed by Julian Le Grand, in which public services are provided by worker-owned enterprises. There is no balance of interest in the governance of the service provider, and users and funders are excluded. State-funded services have no representation on the board. This is in contrast to the Big Society view of private sector corporate governance, in which the worker has no status at all and managerial sovereignty prevails.

“Our ‘Blue Labour’ approach brings the two together. Reliance on managerial sovereignty is both wasteful and ineffective and does not engage fully the innovation, creativity and vocational energy of the workforce. It is a contractual and assessment-based model that focuses too much on procedure and not enough on developing relationships.

“Instead, a third of the mutual boards should be elected by the workforce. Another third should be represented by users (the involvement of users is an important part of community organising that needs to be undertaken to strengthen society and give voice to disorganised people). The final third of the board should be the local authority or the state, which has a legitimate interest in procedure, wider social goals and its integration into government policy.”

The Big Society and Mutualisation

By David Bicknell 

I was interested in David Cameron’s discussion yesterday about the Big Society and how the government plans to devolve power from Whitehall.

Cameron pointed to the imminent publication of an Open Public Service White Paper setting out the Coalition’s approach to public service reform, and that paper when it comes out will make interesting reading, and should point the way to how new approaches to public service delivery, for example through mutualisation, may develop.

There has been increasing comment over the last few weeks on the potential impact of mutualisation, and the Campaign4Change expects things to become clearer once the new Mutuals Taskforce led by Professor Julian Le Grand hits its straps in working with front line staff who can see how they can do things better but at the same time want to ensure  that their ‘rights to provide’ are upheld.                                                                  

Francis Maude, Minister for the Cabinet Office, has said, “When you take power away from bureaucrats and give it to people on the ground they often come up with better, more efficient ways of doing things, this is the essence of the Big Society agenda. Public sector professionals have been held back by the limitations of top-down control, and their commitment to serving people has been ignored in favour of targets and regimented structures.”

Maude has already announced the launch of the first wave of Pathfinder mutuals – public sector spin-offs – to be run by entrepreneurial public sector staff who want to take control of the services they run.

These pathfinders are designed to be trailblazers for the rest of the public sector, helping Government establish, by learning from the front line, what type of support and structures will best enable the development of employee-led mutuals on an ongoing basis.

The Campaign4Change has already been involved in discussions on mutualisation with Landseer Partners, the results of which will emerge in due course.