briefing public sector mutuals 10 2010

© Urban Forum 2010

  - January 2011

Introduction
On the 12th of August 2010 the Minister for the Cabinet Office, Francis Maude announced the first-wave of pathfinder mutuals. These will be run by public sector staff that want to take control of their service and explore the possibility of these pathfinders becoming mutuals.

Background
Mutuals is an umbrella term covering organisations in which members are the dominant shareholders. You can have employee-owned and consumer-owned mutuals, or a combination.

This idea of public sector mutuals has been on David Cameron‟s agenda since the launch of the Big Society, back in November 2009.

The Coalition Agreement went on to say, "We will give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver. This will empower millions of public sector workers to become their own boss and help them to deliver better services."

The Coalition Government has cited the fact that 66% of suggestions for cutting spending proposed as part of it‟s Spending Challenge came from public sector employees who wanted to have a greater say in how to improve their service delivery.

Examples of existing mutuals
There are already some innovative examples whereby public services have become social enterprises or cooperatives. Greenwich Leisure Centre is the first leisure operator in the UK to be awarded the prestigious Social Enterprise Mark. They manage 70 leisure centres within the M25 area in partnership with thirteen London Boroughs and its board of trustees has representation from a number of stakeholders including customers, council, and the workforce.

The John Lewis Partnership
The John Lewis Partnership is Britain's best-known mutual company, part owned by its staff.
Their Chairman, Charlie Mayfield, has stated that: "Being employee-owned is an approach that has served our business well for over 80 years.

'Whilst not a guaranteed solution to today's challenges, the strengths of an employee-led model - such as an empowered and informed work force and a close alignment of motivation between management and employees - has helped us create a strong culture of trust, innovation and customer service."

NHS Foundation Trusts
NHS Trusts are a combination of both a consumer-owned and employee-owned mutual.

The governance layer provided by the Board of Governors is the new and „mutual‟ part of the structure with the Board of Governors representative of their stakeholders (both employees and users) electing patients, public members and staff members and nominating staff, partners and partner organisations‟ users.

This Board of Governors has a number of defined duties with their main role being to act as the „accountable‟ body, to which the Trust is meant to refer to in delivering its strategic plan.

Francis Maude has also visited a groundbreaking social enterprise at Leatherhead Community Hospital in Surrey. The hospital, run by Central Surrey Health, is owned by the nurses and therapists who work within it since its formation in 2006. These employee-led reforms seem to have created significant efficiencies, and Central Surrey Health has now joined other experts in employee ownership to mentor the next generation of fledgling public sector spin-offs as part of the Government‟s Pathfinder mutuals initiative.

Pathfinder Mutuals
13 pathfinder mutuals have been selected as pilot models so the government can explore and establish what support and structures will be necessary for the mutuals system to work.
 

The 13 pathfinders are:

Support and Funding
Mentors already identified for these mutuals will include staff from the John Lewis Partnership, as well as staff from PWC, KPMG, Care and Share and The Office for Public Management amongst a list of others. All will provide support on business planning, financial modeling, workforce issues, tendering and procurement and how to unleash entrepreneurial talents across the service.

New support for public service „spin-outs‟ building on the Government‟s Pathfinder programme also include: 

• over £10million to help the best fledgling mutuals reach investment readiness
• a new information line and web service for interested staff provided by Local Partnerships, the Employee Ownership Association and Co-ops UK; and 
• a "challenge group‟ involving employee-ownership experts including, John Lewis Partnerships, to investigate ways to improve regulation.

Next Steps

The Government is to introduce new „Rights to Provide‟ across public services, where employers will be expected to accept suitable proposals from front-line staff who want to take over and run their services as mutual organisations. Prisons, Sure Start Children‟s Centres, hospitals and the Civil Service are just some of the services where professionals could have more freedom to run their services the way they want to.

Every Government Department will put in place a far reaching right for public sector workers to take over the running of their services. However, services in areas such as defence and security may be exempt. The new right will only apply if appropriate guarantees are met, mutual proposals will be expected to deliver savings to the taxpayer maintain or improve the quality of services. Where public procurement processes allow and savings are properly agreed, staff forming a mutual proposal will be awarded a contract to continue providing services rather than going through the full tender process.

More Information
http://www.mutuals.org.uk
A new web service for interested staff provided by Local Partnerships, the Employee Ownership Association and Co-ops UK, November 2010

http://www.uk.coop/sites/default/files/mutuals-manifesto-final-print.pdf
"The Mutuals Manifesto"
This manifesto is the first of its kind. It is a challenge to the UK‟s political parties to show how they plan to support and nurture the mutual sector. Published by Mutuo, March 2010

http://www.lambeth.gov.uk/Services/CouncilDemocracy/MakingADifference/TheCo-operativeCouncilWhitePaper.htm
"The Co-operative Council white paper"
This is a draft policy proposal for a fundamental change to the way public services are delivered in Lambeth with the aim being to make Lambeth the first co-operative council and ultimately the first co-operative borough. This was published by Lambeth Council, May 2010

http://www.opm.co.uk/resources
"New models of public service ownership: a guide to commissioning, policy and practice"
This is a practical guide to commissioning, policy and practice for public services considering moving services to employee ownership published by OPM (Office Public Management) Public Interest Research programme published in August 2010

Stacy Pritchard

October 2010 (updated January 2011)