In these cash-strapped times, mutuals are an idea whose time has come. They bring benefits to public service employees and service users, as well as providing better value for money
Public services today face the twin challenges of declining resources and growing demand. A key way to meet these challenges is to unleash the power of employee ownership and control. There is strong evidence from both home and abroad that 'mutual' organisations, where employees have a significant stake in the business, are more productive and more innovative than conventionally run organisations. They provide better services to users and communities. And the employees in these mutuals have a greater sense of well-being, higher job satisfaction – and often superior working conditions as well.
On Monday, the Mutuals Taskforce, of which I am chair, produced its report. It is part of a wider movement towards the development of a wide variety of forms including social enterprises, joint ventures and other more independent forms such as Free Schools in public services. It is being led by entrepreneurial employees, leaders and communities, supported by civil society organisations and pressure groups, and endorsed by government.
To paraphrase Francis Maude, the minister with principal responsibilities in this area, this movement is going beyond the standard two options for public service delivery, state monopoly or privatisation, and developing new ways (for public services at least) of doing business.
This agenda, perhaps uniquely, has benefits for all interested parties. As the Taskforce report shows, new public service mutuals have already improved the standard of many of the services they deliver; for example, the City Health Care Partnership in Hull has already seen a 7% increase in customer satisfaction. Staff engagement and enthusiasm increases with mutuals showing much lower levels of absenteeism and turnover than other businesses. Commissioners have the potential for achieving higher quality services with fewer resources: better value-for-money.
All this is a by-product of staff taking charge of their own work and work-lives. Although subject to contract, they are not constrained by micro-management: they no longer have to take orders and directives from others more distant and less knowledgeable than themselves. They can take decisions – and take responsibility for those decisions. Finally, and importantly, the government and the tax payer benefit by seeing better, higher quality services delivered for less money, without as much regulation required from the centre.
However, as the Taskforce report points out, fledgling mutuals still require support from government if they are going to become a mainstream option. Many mutuals will not survive if they do not get any assistance when first starting out. They face daunting obstacles: unsympathetic commissioners, complicated procurement rules, hostile management, and limited access to finance. And, although keen to exploit the opportunities for mutualisation, public sector employees are often new to the business, legal and financial skills required to overcome those obstacles.
We also cannot expect that the established powers of the business world will allow newcomers much time to establish themselves. Our minnows need to be protected and nurtured, to ensure that they can deliver their potential to be big fishes, benefiting the whole of the public sector.
The Cabinet Office has already gone some way to providing the necessary support with a Mutuals Information Service and a Mutuals Support Programmes. And there is progress. In 2010, Cabinet Office knew of nine of these ‘John Lewis style’ businesses operating in four service areas. Today, there are nearly sixty in operation and about another forty in the pipeline across twelve service sectors.
But the government still has much work to do. All departments should develop a ‘Right to Provide’: a specified right for employees to take over and deliver the public services where they work, and a clear pathway for them to follow to exercise that right. We need to work with Europe so that rules and regulations preventing the success of mutuals are amended; our European partners have much to gain from this, as mutuals are already widespread across the continent. And we need to ensure there is a level playing field in mutuals' access to finance, in their bidding for contracts and in their tax treatment.
But most importantly we have to change the culture of those managing the public services we rely on. Not those in the front line who want more autonomy to be able to deliver more, nor those at the top of the chain who understand the advantages in the business models. It is middle management where we need to influence. Too often, employees enthusiastic to mutualise are held back by risk- adverse managers, worried about resources, procedures, and job security. An important role for government is to get these people on-side, as, without their assistance this agenda cannot flourish.
The report is not just a to-do list. It contains a review of the evidence, where we have got to so far and of the many successes we have already seen. Those working in both the new and the forming mutuals are already working hard to get their rewards. However, it is now time for a step-change. This government needs to prove that it is committed to this agenda and to get moving on the recommendations so we can see more mutuals being formed, delivering better public services – and happier and more fulfilled employees.
Professor Julian le Grand is chair of the Cabinet Office Mutuals Taskforce. Its report is available at htttp://mutuals.cabinetoffice.gov.uk
