Public Service Mutuals: A Work In Progress

Kristian Scholfield, Geldards, Derby

The Cabinet Office’s Mutuals Support Programme (“the MSP”) has been an ambitious programme to support disruptive innovators in public services.

Launched not long after the formation of the Coalition Government, the MSP helps front-line service providers to spin-out of public sector control to form new employee-driven businesses.

In 2011 Francis Maude MP spoke of an aspiration to have 1 million public servants working in this type of organisation by 2015. With only 6 months until the General Election, now is perhaps a good time to consider how much progress has been made.

The number of mutuals has risen considerably since 2010.  According to Cabinet Office figures, released in July this year, there are now 100 mutuals across England, compared with only 9 in 2010, and this number is set to rise further due to a healthy pipeline of forthcoming projects.  However, those same figures reveal that only 35,000 people are actually employed by mutuals; far short of Maude’s million.  How can this be explained?

The path to mutualisation has not been easy.  Technical and cultural barriers began to emerge early on and were holding back the pace of change. Issues around commissioning inequalities, parent body opposition, negative attitudes to change, risk and failure, and access to funding and finance had to be explored and addressed.  The idea of mutualisation as a genuine option for redesigning public services took some time to bed-in.

However, it is to the credit of the public sector, Government and the Mutuals Taskforce that much work has been done to address real and perceived barriers to change.  It was not long before acceptance of the benefits of mutualisation became more wide-spread, and spin-outs started to emerge in diverse service areas such as housing, children and youth services, health and social care, education and culture.

These fledgling businesses are now delivering around £1.5bn worth of public services.  Faced with game-changing budget reductions, entrepreneurial public servants are increasingly attracted by greater freedoms to innovate and to design user-focused services which are less reliant on central block-grants.

While some of the numbers might disappoint, it seems apparent that the ‘idea’ of mutualising services as a way of delivering differently has become part of mainstream thinking.

In addition, commitment to the agenda has been reinvigorated recently with separate but complementary programme announcements and initiatives such Delivering Differently and others aimed specifically at youth and neighbourhood-based services, as well as the recently launched NHS mutuals pathfinder programme for Foundation Trusts.

It is now feasible that we will not see any major diversion in policy after the 2015 General Election.  The mutuals movement is starting to take hold and is agnostic to political allegiance.

There might be a re-packaging exercise if there is a change of Government, but mutuals clearly represent a powerful third way in the public service landscape: between services delivered on a grand ‘one size fits all’ model by the public sector and those delivered by large increasingly distrusted private sector profiteers.

Mutuals are now firmly established as part of the landscape for public service delivery, but they have some way to go before they can secure larger contracts and tackle some of the major service challenges which require large investments of working capital and large scale resources.  We may yet see fledgling mutuals go the way of early housing providers which sought to combine their operations in group structures to secure economies of scale and larger balance sheets.  These are exciting times for mutualisation.

This article previously appeared in Municipal Journal.