Tag Archives: Craig Dearden-Phillips

Why nations – and organisations – fail

By David Bicknell

I just came across an excellent piece by Craig Dearden-Phillips on why nations – and organisations – fail.

In it, he discusses a book,  ‘Why Nations Fail’, by Daron Acemoglu and James Robinson.

He writes: “The opener of the book contrasts two halves of a city, Noglales which straddles the Mexico-US border. One sits in the region on Sonala, Mexico, the other in Arizona, US. Here the people, culture, climate and operating conditions are the same. On one side of the border, incomes are many times higher, there are good public services and crime is uncommon. On the other, people are mostly poor, there are few public services and crime is rampant because the state isn’t in real control on the ground.

He continues: “Perhaps what has capitivated me most, though, is the read-across to why certain types of public services fail, despite wonderful resources and high levels of native talent. Analogous to the extractive and exclusive institutions described at state level in this book could be placed the large public sector monopolies which still dominate much of public service in Europe and certainly in the UK.

“Here, power is often monopolised and change, even ‘good change’ does run against the interests of many of those involved. Initiative is often powerfully suppressed. It is hard, frequently impossible, to set up in business against these monopolies and there are often few political processes which can be used to break these systems down.

“What am I thinking of here? Well, if you haven’t guessed, I am alluding to many of the organisations from which spin-outs do or don’t emerge.

“The truth of the matter, and I see this every day, is that setting up a new business to deliver public services feels like it probably does to set up any ordinary business in parts of the developing world. You need the buy-in of a variety of power-brokers, all of whom need to see their interests satisfied. You need to go through all sorts of bureaucratic processes to show you’re not a risk and are ‘worthy’ of delivering services.

“From there, you need to make all sorts of promises to the system that its interests will not be threatened and create opportunities for the system to have it’s say even when the business is up and running.

“All of this, of course, creates a massive disincentive for any sane person in public services who wants to change things. The risks are massive – to career, to sanity, to reputation – that most people, quite understandably either stay put or move out. Those that try to start a public service business have to run a gamut that looks far more like something you’d see in Mexico than in Midshire, UK.”

Dearden-Phillips makes some excellent points and the whole piece is worth reading.

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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

Understanding the politics of ‘stepping out’ to create a public sector mutual

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

Joint-venture mutuals again mooted as solution to local authority procurement hurdle

By David Bicknell

Stepping Out  managing director Craig Dearden-Philips has again  mooted the possibility of joint-venture mutuals i.e. new ventures which bring together public sector staff with an external partner to set up a new company on a 50/50 basis.

This, he suggests, can run a procurement – though not the contract to provide – as an external partner for the staff-led mutual, which will itself become the provider.

In an article for the Guardian Policy Hub, he suggests this gets round the procurement problem where in public services a tender process is run for virtually any service. For the nascent mutual, he argues, ‘this can feel like climbing Everest. With no trading history or commercial skills, being pitted against experienced competition is a deterrent. Why go to all the trouble of forming a mutual only to get knocked out in round one?’

Why those driving the creation of public sector mutuals are Investors, not Conservers

By David Bicknell

All those considering setting up public sector mutuals like Hammersmith & Fulham  – and those in the middle of running successful mutual pathfinders such as Central Surrey Health – know the importance of investing in their vision and backing it.

That’s why I liked this piece by Craig Dearden-Philips, who while discussing third sector organisations, makes a distinction between Investors and Conservers.

“My guess though is that the people who make the biggest difference in the world , certainly socially, are almost all on Investors. These people are not ‘born’. They make a choice about how to live. They know that the Investment Principle works – and they live by it.

“Of course, Investment isn’t just a one way street. Investments frequently don’t pay off. In people, in relationships, in business. You get burned as much as you get it right. And investments that are not made judiciously, in people or ventures that are wrong to begin with, are not defensible either. Being investment-minded isn’t about being a soft-heart. But it is about understanding the powerful link between investment and reward and making this, somehow, a feature in the way you operate.”

Wise words.

Are we sleep-walking towards a Big Six in public services?

By David Bicknell

David Cameron is due to meet the Big Six energy companies to persuade them to rein in their  price increases.

But are we in danger of sleep-walking towards a Big Six in public services too? This piece by the excellent Craig Dearden-Phillips makes some strong points about a ‘possible cartelisation of public services’.

He argues that the government needs to be ‘more categoric about mutuals and  social enterprises. This sector doesn’t really have much chance in a free-for-all. Government commitment to seeing a strong mutual sector, backed by the will to see it done, is what is needed now if the diversity spoken of in the public services white paper is to be more than just a wish-list. Diversity needs to be deliberately created as markets need to be ‘made’, he says.

Incidentally, an earlier piece by Dearden-Phillips refers to the situation in Stroud where a court order was successfully applied for to stop a social enterprise being formed to take forward former NHS services. You can read more about that case here

Much has been written about Central Surrey Health’s bid for a contract that has already prompted much jump-the-gun downbeat thinking about the prospects of mutuals. Baroness Jay was the latest to weigh in on the contract according to  a report last week.

I would suggest that perhaps it’s time for a bit of perspective here. It’s one contract; and it’s not the only contract that Central Surrey Health is bidding for, I’m sure. Business’s  fortunes  don’t depend on one contract; they bid for numbers of pieces of work. They win some; they lose some. Hopefully they win more than they lose.

I would expect that if Central Surrey Health has lost this opportunity – and I have yet to hear any public comment from it that it has – then it is already  looking ahead to the next one – or ones – after that. And then further opportunities too.

Surely the fortunes and prospects for the mutuals sector don’t just rest on the back of one NHS mutual, and one contract. A bit more positivity and perspective wouldn’t be a bad idea.

Making the right noises about the social economy

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.