Minister calls for one million public sector co-owners

23 Feb 11
Cabinet Office minister Francis Maude would like as many as one in six public servants to take co-ownership of the body they work for by 2015, he told Public Finance in an exclusive interview
By David Williams

24 February 2011

Cabinet Office minister Francis Maude would like as many as one in six public servants to take co-ownership of the body they work for by 2015, he told Public Finance in an exclusive interview.

Speaking about the public service reform white paper, expected in March, Maude said ministers wanted to increase mutualisation in the public sector, and open up the work of government to a mixed market of mutuals, private companies and charities.

Increasing the involvement of the not-for-profit sector in public services is crucial to the coalition’s Big Society agenda, which has come under sustained fire in recent weeks as budget cuts to public bodies begin to affect partner organisations.

However, Maude argued that there was still a ‘huge amount of interest’ among public sector workers about setting up their own co-operative organisations to run services independently. He told PF: ‘There are 6 million people who work in the public sector at the moment. It would be very ambitious, but is not inconceivable, that at the end of the Parliament, 2015, you might have as many as 1 million workers who would be co-owners in some form of the public service entity that they’re part of. That would be very exciting.’

Apart from the armed forces and police, he said there were ‘very few’ areas where the mutual structure would be unsuitable. It could ‘absolutely’ be applied to council finance functions, he said. But he suggested that the incentives for employees to enter into a mutual were likely to be professional, rather than financial. ‘There will be people in the public sector who are entrepreneurial, who will see this as an opportunity to build something,’ he said.

Maude claimed mutuals already spun out of public services were creating a new dynamism and that ‘even without any financial incentivisation at all, they will be looking at how they can grow, or become a provider beyond what they’re immediately doing’.

The minister added that various models could be adopted, including joint ventures with private or third sector partners. In some cases, the government might retain a financial stake in staff-run mutuals.

The government has previously indicated that it would introduce targets for the proportion of services to be run by outside providers. But Maude revealed: ‘We’re unlikely to have rigid quotas. We want public services to be opened up and to have a multiplicity of providers – but it’s going to be hard to define what proportions there should be. What you want is to have openness and encouragement for diversity without trying to enforce a particular template.’

Maude also said commissioners should take into account the social impact of an organisation as they consider bids, looking more favourably, for instance, at those that employ people with severe disabilities.

Ian Mulheirn, director of the Social Market Foundation, agreed with Maude that the mutual model could be applied across almost all of the public sector. But, he said, either the model was simply a ‘cover for outsourcing’, or the new bodies would not be exposed to full competition on the open market. This would lead to an ‘accountability deficit’, with staff having more freedom and the taxpayer less say over how money was spent.

‘The use of the idea of mutuals tends to be used to obscure the kind of delivery model you’re trying to achieve. It’s never been clarified because it’s a useful ambiguity,’ he said.

John Tizard, director of the Centre for Public Service Partnerships, said Maude’s rejection of firm quotas was ‘admirably sensible’.  He added: ‘Such targets become artificial and distort good practice. The key must be to adopt a strategic commissioning approach.’

Tizard warned that there was a danger that the most successful mutuals could be bought out by the private sector, leaving a less diverse supply market. ‘If a service is funded by a local authority, staff becoming a mutual will only thrive if the authority still has the funding to provide the service,’ he said. ‘There’s some naivety that mutuals and co-operatives will easily be able to find alternative sources of revenue. It’s yet to be proven.’

Did you enjoy this article?