Tag Archives: CBI

Reaction to white paper publication concerns asset locks, finance, resourcing and support for mutuals

Much of the immediate reaction to the Government’s publication of its Open Public Services White Paper concerns issues surrounding assets, definitions of mutuals and most importantly, support for them, and financing.

Dom Potter from the Transition Institute says, “Noticeable by it’s absence is any provision in the paper to establish a mechanism for ensuring that publicly-owned assets such as council buildings or parks will remain in some form of public, common or shared ownership by communities.

“This will be taken by some as evidence of wholesale privatisation looming around the corner. But in my view the political discourse that will swirl around the issue of asset locks shouldn’t obscure the need to utilise these assets for the wider, long-term public good.

“There is also an issue that isn’t addressed in the paper around how public assets could potentially be used to leverage external investment into public services.

“As long as the assets are secured for public/shared ownership, I would be interested to see what mechanisms might emerge from the Big Society Bank and out of central and local government to enable assets to be sweated in order to raise the initial cash to get emerging mutuals up and running with a sustainable business model.

On mutuals definitions, he says:

“Thankfully for those of us who are keen that each individual spin-out is set up with the legal and governance structures appropriate to it’s unique local context, the one-member-one-vote implication of calling them mutuals is not quite as literal is it could have been.

“There is a clear indication that a variety of ownership models – ‘wholly employee-led, multi-stakeholder and mutual joint venture models’ – are mentioned, although further clarification is needed as to exactly what is meant by these terms.

On finance and support:

“There is mention of an ‘Enterprise Incubator Unit’ 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’. This sounds interesting, but I am wary of the idea of government advising itself on how to set up independently of itself. In my view, the Unit at least needs to be staffed by individuals who have experience of the transition to independent delivery or by individuals with experience of running independent organisations (or, ideally, both) in order to have the desired impact.”

“The Mutual Support Programme is due to come on stream in autumn 2011 according to the White Paper.  This means that there will be support available for entrepreneurial public sector staff more quickly than had been anticipated, given how quiet the Cabinet Office had become around getting the MSP up and running since it was first mentioned last year.”

“Recognised within the paper is the need to look for innovative ways of routing external finance into public services. The Big Society Bank will be a key part of this, and this may be a fruitful way of expanding, for example, the pool of social impact bonds beyond the one pilot in Peterborough prison.

CBI Director General John Cridland says:

“The Work Programme shows how companies of all sizes are successfully working in partnership with social enterprises, community groups and charities. While it is right to recognise the benefits mutuals and smaller providers can offer, the principle of any willing provider also means that larger firms should be able to bring their expertise to bear, and when they achieve better outcomes they should be able to make a reasonable profit. We think the Government could have made this much clearer in the White Paper.”

However, Peter Holbrook, Chief Executive of the Social Enterprise Coalition, takes a different view:

“We are concerned that the proposed reforms will create an unequal playing field in which social enterprises are unable to compete with large private sector providers for public sector contracts.  Social enterprises often do not have the capital or scale required to compete with big private businesses in open markets.

“These reforms must protect our public services, not put them at risk.  Without the necessary safeguards, the consequence of these proposals will be that private providers will dominate public sector markets.  Taxpayers’ money will flow into profit seeking organisations that exist only to satisfy the needs of their shareholders.  Public services must operate for the communities and people they serve, nobody else.

“The Government’s plans to extend Payment by results across a number of other public services will put private sector organisations at an automatic advantage.  The reality is that without decisive action to use public spending to improve social outcomes, the big organisations will simply use their stronger balance sheets and ability to attract private investment to win contracts.

“We only have to look to the Department for Work and Pensions Work Programme to see that when markets open up, large private sector providers move in and squeeze out smaller organisations.  A very small proportion of the contracts went to social enterprises, despite it being hailed by Government as a boost for the Big Society.”

Ed Mayo, Secretary General of Co-operatives UK, says:

“The government’s public services reform white paper presents an important opportunity for co-operatives and mutuals to bid for and deliver public services. As trusted organisations that are able to unleash the talents and energies of their employees and users, co-operatives can provide good quality public services.

“Longstanding examples of thriving and successful co-operatives running services like foster care, leisure centres and affordable housing and out of hours GP services show that the co-operative model works extraordinarily well.

“As the trade association for co-operatives we want to see co-operatives thrive in all areas of the economy, including delivering public services. Like many, however, we are wary of some elements of the government’s approach to opening up public services to outside providers.

“First, there are serious issues facing public sector employees and users looking into the co-operative option – from uncertainty about jobs and pensions to the challenge of public sector workers setting up new businesses – that need to be addressed if public sector mutuals are to succeed.

“Second, in the current context, it won’t help staff or users if all the government does is to open the door to privatisation with fake mutuals that fail basic quality tests of member ownership and democracy.

“Third, there is a gap between national policy and local practice, with a lack of understanding of the benefits of co-operatives delivering public services amongst local authority councillors and officers.

“Fourth, there is an urgent need for high quality advice and support with sufficient resource to make sure that this is in place for all who need it.”

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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.”

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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

Lord Digby Jones: telling some harsh truths on the challenges facing British business

It’s not often you can truly say you’ve heard a tour de force of a keynote speech at a conference. But  Lord Digby Jones certainly delivered one at the Trustmarque Solutions customer conference in London a couple of days ago.

Lord Jones, a former director-general of the CBI and more recently Minister of Trade and now a cross-bencher in the House of Lords, outlined the challenge facing British businesses – and indeed Europe as a whole – from the economic rise of Asia, painting a picture of the Chinese raising living standards for their 1.3bn strong population, with the subsequent impact on European and US business, with a cautionary tale about the fall of the Roman Empire along the way.

Lord Jones, whose energy and delivery fully engaged his audience of Trustmarque customers and partners and left them scarcely daring to sneak a look at their Blackberries and iPhones mid-speech, also told a moving tale of his Royal Navy career and the importance of teamwork.

Lord Jones currently has a book out: Fixing Britain: The Business of Reshaping Our Nation. If it’s half as good as his Trustmarque speech here, it will be quite a read. And from Trustmarque’s point of view, it was equally quite a coup to land a heavyweight keynote speaker with added clout and bite.