Tag Archives: mutuals

Planning for and overcoming the challenges to mutuals in town halls’ mixed models

Posted on 26/09/2011 | 2 comments

By David Bicknell

Two pieces written around mutuals which might be worthy of a read this morning. The first is an examination of the ‘Oldham model’  in the Guardian’s Northerner Blog, which quotes an interview with Oldham Council leader Jim McMahon discussing the pros and cons of the outsourcing of services to co-operatives and mutuals.

The other is a discussion by PA Consulting’s Karen Cherrett for the Guardian’s Public Leaders Network which argues that without preparatory work, there is a risk that the ‘current enthusiastic but rather naïve rush to establishing mutuals to transform public service delivery will lead to wide-scale mutual failure.’

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services, reforms

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Civil Service too risk averse at a micro level

Posted on 23/09/2011 | 1 comment

 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

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Posted in Campaign4Change, change management, government, innovation, managing change, mutualisation, mutuals, public sector, public services, SME

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

Posted on 22/09/2011 | Leave a comment

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.”

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Posted in Campaign4Change, mutualisation, mutuals, procurement, public sector, public services

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

Posted on 20/09/2011 | Leave a comment

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

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Posted in Campaign4Change, mutualisation, mutuals, NHS, public sector, public services, social enterprise

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Could mutuals provide an innovative model for public sector IT delivery?

Posted on 19/09/2011 | 1 comment

By David Bicknell

What are the implications for IT delivery of creating public service mutuals and what part might they play in the public sector?

One public sector IT director I spoke with recently suggested that there are areas where mutuals will work exceptionally well. And some  are already beginning to do so. Some may get private sector sponsorship, while others will get charitable status.

These, however, are smaller scale mutuals or social enterprises, and a distinction must be made between those and large scale organisations where, for example, you could set up a mutual company for the whole of IT in a county or region.

There is a belief that the oft-quoted ‘John Lewis co-operative model’ could be an effective one.  One possibility is a shared services model along those lines  as an alternative to outsourcing or a private sector partnership.

That offers the prospect of developing a public service partnership of different organisations, effectively a sort of mutual or co-operative, where everyone who joins the co-operative has a slice of the cake irrespective of their size. The co-operative shares common infrastructure and services, but operates on a semi-commercial basis, possibly working with a private sector partner. Although the model doesn’t yet exist in IT, it is said to work well in agriculture.

Arguably the model overcomes a number of the issues raised by outsourcing and big public-private sector partnerships where there has been financial pain when things go wrong.  The mutual model offers the prospect of a better way, though there is a large difference between this scale of model and smaller mutuals in terms of risk outlook and management.

The IT director said he believe there is an opportunity for mutuals to insist, ‘We’re better than the private sector. We are very responsible about the risks, and we have a public service ethos.  For us ,  it’s not just about making money. We have the discipline of commercial business rigour and the safety net that protects vulnerable adults, for example, in the case of care homes.’

Some local authorities are already considering using mutuals to provide some ICT services. For example, the London Borough of Hammersmith & Fulham has become a Mutuals Pathfinder and proposed a pilot scheme with partners Kensington and Chelsea and Westminster to set up an employee-led mutual to deliver IT services to schools and the council, with the council planning to commission some services from the mutual for a four year period.  The scheme is due to get underway early next year.

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Posted in Campaign4Change, innovation, mutualisation, mutuals, public sector, public services

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Understanding the impact of the Teckal Test on procurement and competition for mutuals

Posted on 14/09/2011 | Leave a comment

By David Bicknell

I recently wrote about the impact on procurement for mutual and social enterprises of the Teckal Test, which tests whether contracts and the contractor are under the public authority’s direct control.

Broadly speaking, the Public Contract Regulations (2006) apply whenever a contracting authority seeks offers in relation to public contracts. The Regulations give effect in UK law to Council Directive (2004/18/EC) on the co-ordination of  procedures for the award of such public contracts.

This has implications for mutuals, because case law of the European Court of Justice has developed an exception from the normal application of the procurement rules, known as the Teckal exemption, where contracting authorities award contracts for providing services or works to an “in house” provider.

The exemption works on the basis that the contract being awarded is not a “public contract” for the purposes of the Directive and, as a result, the Regulations do not apply and EU law will not require the  contract to be put out to tender.

If you’re interested in Teckal, these links may be useful:

http://opinion.publicfinance.co.uk/2011/07/mixed-up-over-mutuals/

http://www.farrer.co.uk/Global/Briefings/16.%20Briefing/Public%20Procurement%20Update.pdf

http://publicsector.practicallaw.com/blog/publicsector/plc/?p=475　

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Posted in Campaign4Change, law, mutualisation, mutuals, procurement

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Economic boost of nurturing mutuals and social enterprises a key focus of party conference season

Posted on 09/09/2011 | Leave a comment

By David Bicknell

Mutuals and social enterprises are likely to be a strong area of interest in this year’s party conference season, which gets underway for the main parties with the Liberal Democrats in Birmingham on September 17th.

As the Guardian reports in this piece looking forward to the party conferences through a social enterprise lens, much of the focus will be on the role that social enterprise can play in transforming public services and stimulating economic recovery. 

It makes the point that “new research by Social Enterprise UK (formerly the Social Enterprise Coalition) has revealed a “start up explosion”, with 39% of social enterprises based and working in Britain’s most deprived areas. This compares to 13% of small- and medium-sized enterprises (SMEs).

“The research also found that the UK’s 62,000 social enterprises are outstripping business in terms of growth – 58% of social enterprises grew last year compared to 28% of SMEs.”

The optimism is to some extent offset by pessimism that  the current commissioning process will favour large-scale private sector providers over mutuals and social enterprises.

Here are links to the main parties conferences:

Lib Dems
Labour
Conservatives

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services, social enterprise

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Mutuals and SMEs under spotlight as government responds to EC procurement green paper

Posted on 07/09/2011 | Leave a comment

By David Bicknell

A post on Public Service Europe has argued that the govenment needs to explain its positioning on some key public procurement issues, notably in relation to mutuals and SMEs.

The post, written by a UK lawyer, argues that the government’s proposals sound ‘refreshingly promising’ but may reflect some  contradictions in wider policy.

It suggests that “the penny seems to have dropped in government that procurement policy is central to getting the economy moving again and not simply the esoteric occupation of a small number of professionals. The government has now published a Procurement Policy Note (05/11) setting out how it intends to engage with the commission on the reform of the rules. The note states that the rules as they currently stand are too complex, onerous and costly and encourage a risk-averse and over-bureaucratic approach to procurement within the EU.”

It adds that, “The note confirms that the government will be actively influencing the commission, other EU member states and the European Parliament in the run up to the publication of the commission’s proposals for revised and updated directives, and calls on those in the public procurement community who may have links to such bodies or other stakeholders to participate in that process and push the UK message. Whether the government will be successful; only time will tell. In the meantime it could let us know where it stands on the above issues.”

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Posted in Campaign4Change, mutualisation, mutuals, procurement, public sector, public services, SME

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Mutuals Taskforce urged to guarantee a level playing field exists for service providers

Posted on 26/08/2011 | 1 comment

By David Bicknell

An article has appeared on the Civil Society website which seems to muddy the waters over the creation and role of public services mutuals.

The article says that Acevo, the Association of Chief Executives of Voluntary Organisations, has warned that new public services mutuals which have spun-out from government, risk inhibiting other providers in the voluntary and private sector, as they are guaranteed business from the state to support their incubation.

The piece quotes Sir Stephen Bubb, chief executive of Acevo, warning that new spin-outs from government have guaranteed business from the state to support their incubation, so risk inhibiting competition.

“Care must be taken to ensure that mutualisation does not block or slow down potential service providers from other sectors,” he says. “And the Taskforce should seek evidence that this is not happening with any of the pathfinders or their predecessors in the NHS.”

Sir Stephen is  also quoted as saying that there is a danger that some public sector agencies may see mutual spin outs as a way to get wages and costs off their books.

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

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Could mutuals and co-operatives be the future of NHS care?

Posted on 25/08/2011 | Leave a comment

By David Bicknell 

A BBC website article has set a scenario where mutuals and co-operatives could be more widely used in the NHS.

The piece quotes the example of Sandwell Community Caring Trust, and contrasts the spread of social co-operatives in Italy, where  there are more than 7,000, covering  care for the elderly and disabled, to jobs for ex-offenders.

“Each co-operative is made up of paid staff, users and their families, volunteers and investors. Some or all of those put in their own capital to get it off the ground, but what’s absolutely crucial, is the big leg-up that Italian co-operatives get from the system,” the piece says.

“They pay reduced corporation taxes, have access to specialist banks and are linked together in consortia so they can wield more clout when tendering for public contracts.”

The article suggests that one of the biggest challenges faced by co-operatives is recruiting senior managers with good business acumen and a social conscience – not least because co-operatives are often seen as offering insufficient status and salaries.

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Posted in mutuals, NHS, public sector, Uncategorized

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