Not everyone likes the term spin-out, but as a way of describing groups that leave the bosom of the public sector to set up as independent service providers, it is pretty accurate. Sporadic bursts of political enthusiasm for this emerging sector mean that some spin-out organisations, such as Greenwich Leisure, are already well known within policy circles.
The coalition government has been keen. After all, spin-outs are by definition not the public sector, which seems to be the main underlying thrust behind the open public services agenda. Similarly, the opposition supports them – in the face of an austerity alternative Ed Miliband described as the "Serco and G4S state", these organisations that combine entrepreneurial spirit with social ethos appeal to progressive public service reformers.
But what does the spin-out sector feel like from the inside? Why are public sector employees interested in spinning out of the relative safety of direct employment to join the increasingly commercial public sector market? And most importantly, what has been the social and economic impact of the sector so far?
Research carried out by Richard Hazenberg for the Transition Institute, Northampton University and Collaborate CIC answers some of these questions. In a report published today, interview data with 66 spin-outs (about a third of the sector) gives us a picture of their needs, wants, obstacles and aspirations.
What respondents tell us is that, for the most part, spin-outs are surviving, creating value and, in some cases, thriving. Andrew Burnell, chief executive of City Healthcare Partnership in Hull tells a tale of progression since leaving the NHS. He says the partnership "is nothing like the organisation that we spun out from, never mind the organisation that we were in those heady early days".
In four years it has experienced growth of around 10% per year and delivered 4% year-on-year efficiencies. Burnell reports that 65% of profits have been reinvested in frontline service delivery.
This story is not atypical. Survey data suggests that while the majority of spin-outs sought independence as a response to public sector cuts, respondents reported an average increase in their full time staffing levels of 44%, and an average increase in turnover of £5.8m since becoming independent an average of five years previously.
Not everything in the garden is rosy, as one might expect in a period of flux in public services. Three quarters of respondents felt that commissioning frameworks do not value the opportunities spin-outs offered. Many lamented poor access to finance, and felt that weak (or inconsistent) political support inhibited growth. Others outside the sector have rightly pointed out a need to articulate social impact and community footprint more strongly.
As Turning Point chief executive Lord Victor Adebowale argued, this is a critical time for services to the public during which short-term decisions could seriously undermine the potential of a different social economy. If we indeed want to see service provision that is responsive to citizens and able to contribute to the future sustainability of the public sector, then we need to understand and support spin-outs in a difficult and competitive context.
As politicians must surely know, the alternative is a market that doesn't currently work for citizens, and a state that is lamentably being stripped of its capacity to deliver.
Allison Ogden-Newton is chair of the Transition Institute and Henry Kippin is director of Collaborate CIC
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