Mass mutualisation has few friends in the public sector

23 Feb 11
Major doubts have been cast on the government's plans for a mass mutualisation of public services, with scepticism over both staff appetite for and the viability of the model

By Lucy Phiilips

25 February 2011

Major doubts have been cast on the government’s plans for a mass mutualisation of public services, with scepticism over both staff appetite for and the viability of the model.

Anna Turley, deputy director of the New Local Government Network, told Public Finance that while some councils were ‘looking quite hard at employee spin-offs and co-operatives’, there was ‘not huge enthusiasm from staff’, who were understandably nervous about the relatively untested structure.  

She said moves towards mutualisation were being driven by senior management. ‘It’s come from leadership who want imaginative ways to ensure they don’t lose the capacity of their workforce but enable them to cope with the financial situation.’

Turley added that ministers had not put forward clear evidence to prove that mutualisation would save money and improve outcomes.  

Stephen Overell, associate director of the Work Foundation,  said the benefits of employee-owned mutuals were derived only when staff felt they had a genuine say in the day-to-day running of the business and not just ‘an abstract financial partnership’. There were not many examples of successful

co-operatives in the wider world, raising questions about how viable they were. ‘The form has been tried but not actually taken off,’ he said.

Unions are equally unconvinced by the agenda, which is being driven by Cabinet Office minister Francis Maude.

The Trades Union Congress claimed a recent ballot at South East Sussex PCT showed 90% of staff were opposed to being ‘spun out’ as a mutual. TUC policy officer Matt Dykes told PF: ‘The moves towards mutuals are being driven by management rather than bottom-up. That makes a nonsense of the model because it relies on a buy-in from staff. You can’t force mutuals.’

Dykes said new mutuals were unlikely to survive in an open market, resulting in large firms coming in. Mutuals ‘will not be spun out under privileged terms’ he said. ‘They will be competing with private firms with greater economies of scale and powers.’

Rachael Maskell, national officer for Unite, added: ‘Public servants want to remain in the public sector. They’re looking at what’s happening in the not-for-profit organisations and saying, “no way”. They think it is a dismantling of public services... there is a fear about what will happen to the end user.’

Sue Slipman, director of the Foundation Trust Network, told PF that the foundation trust model, where local people, patients and staff can become members and governors, could be extended. But, she said, employee-owned mutuals could only be replicated by organisations that were ‘asset light’ – unlike foundation trusts, which have £24bn of

publicly owned assets.

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