Maude urges organisations to accept mutuals bids

By Vivienne Russell

17 November 2010

Public sector organisations will be expected to accept bids from employees who want to turn services they provide into mutuals, Cabinet Office minister Francis Maude announced today.

The government is to roll out a new ‘Right to Provide’ across the public sector.  This will put an onus on public bodies to accept suitable proposals from frontline staff who want to take over services.

A £10m fund has been set aside to help fledgling public service mutuals get off the ground. A ‘challenge group’ of employee-ownership experts, including representatives from the John Lewis Partnership, has also been established to investigate ways to improve regulation.

Speaking this morning, Maude said: ‘This is part of the Big Society approach to public service reform, devolving power to people on the front line who know how things can be done better. The Right to Provide will challenge traditional public service structures and unleash the pent-up ideas and innovation that has been stifled by bureaucracy. It will also put power at a local level so public services will be answerable to the people that use them.

‘When staff are given a stake in shaping services, productivity and efficiency has been shown to improve dramatically. We must not be afraid to take bold decisions that will help create better public services at a time when there is less money to go round.’

Today’s proposals were greeted with a muted reaction. Adrian Brown, a fellow at the Institute for Government, said: ‘While employee-owned organisations do tend to perform better – staff have higher morale, fewer sick days and diversity of supply in public services encourages competition and better services – it doesn’t necessarily follow that mutuals free the front line from bureaucracy.’

He added that creating mutuals was a complicated process, both legally and managerially. Frontline workers were looking to government to provide clear examples that relate to their work.

‘We shouldn’t let the warm, fuzzy feelings that mutuals tend to generate mask the tough choices and frankly hard work from all concerned, that the mutuals agenda demands,’ Brown said.

Peter Holbrook, chief executive of the Social Enterprise Coalition, said the news was welcome, but added a note of caution.

‘Without the necessary safeguards there is a danger that the mutuals could be demutualised and sold off to the private sector, reminiscent of what happened to British building societies in the 1980s,’ he said. 

‘It would be criminal to see that happen to our public services. To prevent this from occurring, all mutuals need to be asset locked to ensure that they operate for the benefit of the public, forever.’

Tony Woodley, joint general secretary of the Unite trade union, gave a hostile response.

‘It is insulting to think that these DIY co-operatives, set up on the cheap, can replace a well-established and joined-up public sector… You go to John Lewis to buy a sofa or a fridge, not to have chemotherapy.’

Health Secretary Andrew Lansley yesterday announced that 32 NHS projects would become social enterprises following successful bids from workers.