Tag Archives: mutual

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

Hammersmith & Fulham provides strategic rationale and thinking behind the creation of a mutual

By David Bicknell

In yesterday’s article on the London Borough of Hammersmith & Fulham’s plans to create a mutual Pathfinder, I referred to the  recent report on the mutual plan published by the Council.

In that report are some useful thoughts on the rationale for developing a mutual as well as an insight to what needs to be discussed around procurement.

The strategic rationale for launching the mutual includes: 

• Confidence of the services that they could deliver more effectively as a private company

• Commitment at a political level to explore new ways of working

• As an alternative approach to deliver the challenging financial targets required and maintain/ further commercialise existing services

Hammersmith & Fulham insists that it “will not simply be outsourcing the services currently delivered, but will be piloting an innovative way of the future delivery of in scope services, at a costreduction (and possible profit making) to the Council in headcount and overheads. The delivery of these services via the pilot scheme will have no negative impacton the service as they  will continue to be undertaken by the existing staff who have extensive knowledge and expertise in these areas. All clients will benefit from a reduced cost of service, whilst maintaining continuity of staff and services.”

Benefits to the Council

• A significant reduction in costs through the development and extension of the business

• Reduction in headcount for the Council

• Piloting a new unique approach on the delivery of existing council services

• Front Line services to schools being developed

• Staff commitment to the venture and commercialisation seen as an opportunity

• Seen by the school community as an opportunity, not a threat (as identified in the informal consultation).

• Demonstrates LBHF commitment to the schools

• 50% of net profits shared by the local authorities to allow more freedom to the Councils to target new priorities

The Council admits there are many challenges to overcome for the final business case of the potential pilot scheme, including:

Finalisation of the scope

Capacity issues of staff members in the transition

TUPE issues

Pension issues

Independent Legal advice

Independent Financial advice


Legalities on novation of contracts and risk of OJEU

Venue for the additional staff from RBKC and Westminster

Corporate recharges

Support, marketing, sales and communications

On procurement, Hammerwmith & Fulham says it was initially envisaged that the Council would have the option of entering into a time limited relationship with the Mutual as part of the National Pathfinder. However, current Pilots have all been either NHS related(different legal framework) or where the services involved are classified under OJEU as “Part B” and as such the risks to the Council’s involved are minimal. It adds:

“The proposal in this report contains some “Part A” services and as such a full OJEU procurement exercise is likely to be required by law. In order to comply with the regulations and mitigate potential risks, it is proposed that the Council carries out an EU compliant procurement exercise to secure an external partnering organisation. Such an exercise should remove potential risks for future challenges based upon the relationship between the Council and the mutual.

“The first stage would be to place a compliant OJEU Contract Notice seeking expressions of interest from the market to assist in the establishment of a mutualised company. The controlling shares in the company would be on a ratio to be determined as part of the tendering process.

“Depending upon the nature of the mutualised company, the trading arrangement may not only be about service delivery, but consideration may e given to the supply of goods that would otherwise need to procured in accordance with the Public Contracts Regulations. In this case the mutualised company becomes both a supplier and service provider.”

Hammersmith & Fulham mutual Pathfinder expected to launch in January 2012

By David Bicknell

One of the Government’s flagship employee-led mutual Pathfinder pilots is now expected to be launched in January 2012 and be up and running by Spring next year.

The mutual, which is being led by the London Borough of Hammersmith & Fulham, but is part of a tri-borough business model with Kensington and Chelsea and Westminster, will have ‘social enterprise status’ and will deliver existing education support services to schools and some services back to the Local Authority.

A recent report on the mutual plan published by Hammersmith & Fulham proposes a pilot scheme to set up an employee-led mutual to deliver services to schools and the council (with the council commissioning some services from the mutual for a four year period). These services are currently delivered by schools resources division within the Children’s Services Department. The pilot proposal follows the council’s five stages of transition for staff wishing to develop so-called “New Ways of Working.”

The guiding principles of the proposed scheme are that:

• Staff and financial risk are transferred out of Hammersmith & Fulham

• The pilot will have the opportunity to develop its market share not only within the three boroughs, but much wider, such as with Independent Schools and Free Schools. The council says this will enable a more robust delivery model and further financial benefits through economies of scale

• A form of Mutual (John Lewis Partnership) model of staff ownership encourages business focus. It is intended that all staff will become shareholders, with shares allocated proportionally to responsibility/commercial value

• The mutual offers more than just delivery of the council’s medium term financial strategy plans, but presents opportunities for the Council to further benefit from the outset and again if the venture proves highly successful

• The mutual is part of the tri-borough merger and follows the principle of removing the direct delivery of discretionary services

One of the key drivers for the mutual is the council’s desire to drive a more “commercial” approach to service delivery whilst delivering efficiencies in line with its medium term financial strategy. It has  proposed that the Schools Resources Division which currently offers support to the Council as well as trading directly with Schools, offers a unique opportunity to pilot these ‘new ways of working’ whilst further driving efficiencies in Children’s Services.

To put the drivers into context, Hammersmith’s Schools Resources Division must deliver annual reductions totalling £475k of savings over the next three years; a 34% reduction in its baseline spending. It says, “Maintaining the confidence of schools through effective service delivery efficiencies requires creative solutions. This proposal provides an opportunity for piloting a ‘New way of Working,’ whilst exceeding the proposed medium term financial targets. It offers a broad package of services that by externally trading provide opportunities for expansion to deliver savings, whilst taking advantage of additional opportunities available through the tri-borough merger.”

It adds, “As part of the development of the business model, tri-borough partners in Westminster (WCC) and Kensington and Chelsea (RBKC) have identified opportunities to expand the scope of the mutual to provide IT services to schools in RBKC and WCC. Any tri-borough partnership will be subject to all the respective Cabinets’ approval, although the opportunity supports the joint strategy of progression for the three directly managed services.”

Although it is possible numbers might change, the report indicates that the proposed mutual “will be comprised of 21 Hammersmith & Fulham staff from the onset, with the additional inclusion of 12 ICT staff from Kensington and Chelsea (subject to RBKC Cabinet), and a further 7.8 ICT staff from Westminster (subject to Westminster Cabinet and further due diligence). Both Councils are expected to join the proposal between January 2012 and April 2012, depending upon the most appropriate timings for their respective Councils.”

The anticipated launch date of the proposed mutual is 9 January 2012. Hammersmith & Fulham says this date is a realistic one and is confident of an April 2012 start although further work is being undertaken to establish if the timescale can be accelerated. Hammersmith & Fulham says the inclusion of the other two boroughs will significantly develop the schools market and provide the business with a larger base to manage its operations from.

Some other points are covered in the report:

  • “The Council envisages that all staff will transfer from the Council(s) to the new company under TUPE (The Transfer of Undertakings (Protection of Employment)) Regulations with the possible indemnity for the first twelve months redundancy in line with other outsourced contracts”
  • “In addition, the mutual will reinvest a percentage of its net profit back to the local authorities(where the business is receiving income) for the enhancement of learning for young people, as identified by the Councils. This will be enshrined within the contractual relationship between Hammersmith & Fulham (and other Councils) and the mutual for the four years of the pilot phase where the Council(s) is also commissioning services.”
  • “For the first four years of the mutual the other 50% net profit will be retained by the business to provide a profit for any partners and develop a growth fund and develop the business on a secure footing. Given the national circumstances it is envisaged that there is unlikely to be any pay awards or dividends to the mutual staff in the first few years of the business, although this will be determined by the business and its partner in line with the business progress.”
  • “At the end of the four year period the Council will be tendering the strategic contract and the mutual would be able to compete with other providers and may or may not win the contract. By allowing the mutual four years it can effectively build its client base and develop its offer to schools, such that it should have sufficient capacity to re-direct resources should it be unsuccessful in the Hammersmith &Fulham contract.”

Andy Rennison, Hammersmith &Fulham’s assistant director for schools’ funding and the future director of the mutual, said: “What we do makes a big difference for schools and while we have solid systems, a solid approach and strong brands as boroughs, the status quo is no longer an option for us. We are working against a backdrop of massive financial pressures and that, along with changes in government policy around academies and free schools, means we must fundamentally change the way we deliver our business if we are to survive and grow. Becoming an employee-led mutual gives us a real opportunity to take control of the agenda and further develop a strong and sustainable service going forward.”

Questions and Answers

Q. Who is the lead council on this?

A. Hammersmith & Fulham Council

Q.Do staff from all councils get the opportunity to go into the mutual to work? 

A. Staff from the three boroughs who are engaged in this specific area of work will get the opportunity to go in to the mutual

Q. Are the timings in the report up to date – i.e. when it is planned to be set up (September 2011) and begin (April 2012)? 

Yes, we aim to have it running by April 2012.The mutual social enterprise is currently in the process of being set up and the council plans to go to market in September to procure a private sector partner to assist with its establishment. The tri-borough mutual social enterprise plans to go live from the start of April.

Q. Has this been approved by all three councils and what are the next steps?

A. The proposal to set up a mutual social enterprise was part of the tri-borough implementation plans in education services for all three boroughs. H&F council has approved the option appraisal and initial business plan, which includes authority to go to market to procure a private sector partner. Discussions are still taking place in the Kensington and Chelsea and Westminster boroughs about the final arrangements and staff affected. A tri-borough staff consultation is planned to take place in October.

Hammersmith & Fulham Mutual Proposal Report

Tri-borough Proposals Report

Could a new mutuals model work for trading standards?

By David Bicknell

A mutuals-like model for trading standards has been proposed by Consumer Focus, the statutory consumer champion, which in a paper, discusses the future of trading standards in light of spending cuts, the Government’s new empowerment strategy and changing consumer power.

The paper, ‘Hard times or our mutual friend’, by Paul Connolly,  is an excellent read and argues that the Trading Standards community should engage with another Government agenda:  mutualisation.

It says:

“Cabinet Office Minister Francis Maude wants to see mutuals widely adopted. He suggests within 10 years they will become ‘one of the major types of organisation providing excellent public services’ in a redistribution of power and ownership comparable with 1980s reforms.

“His reasoning is clear. First, he wants to continue the process of public service reform by ensuring direct ‘in-house’ delivery continues to be ‘contested’. In the past this primarily meant outsourcing. Plainly under this administration private providers will continue to feature in service delivery. However, the Government has indicated it wants a more diversified range of providers, including more small and medium enterprises (SMEs).

“Further, creating mutual structures can contest services, while empowering staff and short circuiting the public/private antagonism.

“Indeed, workforce empowerment is key. Mutualisation and outsourcing to SMEs, cooperatives and charities, are both connected with Big Society thinking. Government wishes to divest itself of direct responsibility for state delivery, but to do so in ways which spread associated commercial opportunities to those who have not benefited previously.

“This includes giving opportunities to existing public sector staff. Indeed, enthusiasts for mutuals believe workforce energies can be harnessed to support reform. Frontline staff understand their services, but are often inhibited from innovating by constraining bureaucracy.

“Decoupling mutuals from bureaucracies and giving staff stakes that link productivity to personal rewards encourage entrepreneurship and improve standards.

“Mutuals are not a ‘fluffy’ option. They are run as businesses. But the staff engagement model of mutuals, where rewards are linked to innovation, service improvement and productivity gains, means there is a real prospect of harmonising the interests of service producers and the individuals and communities they serve.

“There are many challenges associated with mutualisation. Is the largest public sector retrenchment in history the ideal moment to encourage people to risk a semi-commercialised model of delivery? Should staff downsizing precede or follow mutual incorporation? And how on current trends will the numbers mutualising substantiate Maude’s claims of an importance comparable with privatisation?

“The 12 pilots on the Cabinet Office website are pretty small, niche services, mostly in the health and social care arenas. Small and mutualisation might be perceived as a natural match, but there’s nothing to stop a whole agency, hospital, or local authority mutualising, John Lewis-style, or a series of small thematically-linked mutuals being incorporated under a franchising umbrella, like the Co-Op. Whatever, a substantial increase in adopters will be needed to match Maude’s ambitions. That will mean lots of services taking a risk. The danger for this intriguing agenda – which has attracted interest across the political spectrum – is that it doesn’t fly because volunteers are few.

“Nevertheless, Government continues to signal its intent in this area. Mutualisation is being strongly encouraged in areas of health, such as community care. The Public Services (Social Enterprise and Social Value) Bill is intended to put wind in the sails of mutualisation, while the Localism Bill calls for staff-managed approaches to be among the options considered in re engineering local services.

“The Trading Standards profession could do Francis Maude and themselves a favour by ‘going mutual’. Under the leadership of the Trading Standards Institute (TSI) – itself already in effect a social enterprise – and the Trading Standards Policy Forum, with possible input from Local Better Regulation Office (LBRO), one of two approaches could be adopted: a national super-mutual, covering England initially, but evolving to the devolved contexts following suitable negotiations, could be formed.

“It would be a single incorporated body. It would have a national head office. It would co-ordinate the use of any resources it received from central Government (the implied new BIS monies for instance) to address complex, nationwide and international threats. It would oversee and co-ordinate the delivery activities of suitably located regional, sub-regional and local offices.

“The mutual’s services would be purchased by local and central Government to meet statutory Trading Standards obligations.

“A second option, perhaps more realistic given that some Local Authority Trading Standards Services (LATSS) partnerships have already incorporated as businesses, would be for TSI and the other players to create a mutuals confederation. This would be a franchise support hub for a national network of local mutuals, each created as and when individual LATSS departments chose to incorporate. The hub would again attract funding for national projects and but would also co-ordinate the activities of the network, providing mechanisms for collaboration between local mutuals, and new sub-regional and regional structures, where appropriate.”

It is intriguing to see the mutual model being considered in this way. I hope for those considering creating mutuals, that the Consumer Focus trading standards paper might offer some useful ideas. It’s certainly worth a read – and we’d be interested in your comments.