The government has recognised the transformative power of public service mutuals in changing the way public services are delivered. However, the Mutuals Taskforce, in its recent progress report on public service mutuals, has highlighted that much more needs to be done to turn an ambitious target for one million public servants to be working in mutuals by 2015, into a reality.
The rationale behind the public service mutuals agenda is that such organisations have the power to unleash entrepreneurial spirit leading to innovation and reductions in the cost of services to the public purse. This is supported by a growing body of evidence which suggests redesigning services in this way offers greater job satisfaction, more motivated staff, more efficiency, higher levels of productivity and, perhaps above all else, better outcomes re-designed around the needs of service users and communities.
The taskforce comprises mutuals experts and was set up as an independent body "to engage with, challenge and promote the work of the government to support the creation and development of public service mutuals". Their next steps report points to a six-fold increase in the number of mutuals since the advent of the Mutuals Information Service. It also highlights the real and perceived barriers to mutualisation including several technical and cultural challenges.
The taskforce's proposals will go some way to overcoming such barriers and meeting such challenges. However, if opportunities for mutuals to flourish are to be maximised, a number of key issues need continued attention. These can be summarised under four headings: attitudes, communication, funding and procurement. How can these be addressed to enable mutuals to deliver a sea change in delivery of public services?
Attitudes: Mutuals will only take off properly when attitudes to change, risk and failure among public servants are addressed. Establishing a mutual is a truly collective effort requiring buy-in from the top, middle and bottom. Organisations need to commit to the possibility of change so that, for example, middle manager resistance to frontline staff looking at a "spin-out" becomes unacceptable. "Disruptive" innovators need to be nurtured not neutered. We must accept that some projects will fail but that failure can provide invaluable lessons. The failure of a few ventures must not become a political football which damns a public services revolution. Politicians take note. However, care must be taken to safeguard public service delivery in vulnerable areas should a venture fail. This can (and should) be addressed during the mutual formation process via operating contracts and agreements. A sustained programme of education and training is required together with the formation and implementation of effective failure regimes.
Communication: In spite of government action to date there is still a low level of awareness of mutuals among civil servants and local government officers. A relentless campaign is needed throughout government and local authority departments to dispel myths, deal with issues and frequently asked questions and meet head on the need for support. This has to reach everyone and should make use of all channels – traditional and social media enabling individuals employed in public service and elected officials to engage fully. The more robust government's action the more likely all will see this is not just a fad or an unacceptable risk. Shining examples should be better publicised showing how others have successfully achieved transition. The language of mutuals needs to become sharper; more succinct.
Funding: We need an even greater push by Government backed by priority policy announcements, with bigger pots of money and more resources, especially early-stage seed capital and grants. There is some funding and support for fledgling and established mutuals, for example, the Mutuals Support Programme (MSP). However since its launch in December 2011 only 12 projects have been approved for assistance. This is aimed at "promising" mutual proposals but where do those adjudged otherwise go to further develop their plans? The MSP has a £10m start-up fund, and the Community Right to Challenge, which went live last month, is supported by a similar £11.5m fund. Other possible sources of financial assistance may be found through SEIF or Big Society Capital.
But this doesn't begin to scratch the surface. It has been suggested that the pre spin-out business planning/initial contract stage alone can cost up to £120,000 for a single mutual. Only when access to funding for this elementary stage can be obtained more easily will Government have a hope of meeting its ambitious targets. New businesses are a risk.
Government must risk a little more money upfront to reap the reward it craves. Sustained programmes of education sponsored by a business school will be required. Better prepared mutuals will be less risky for potential investors.
Procurement: there is an ever-present procurement problem; obvious to all who are serious about mutuals. Rules on market competition often mean a fledgling mutual dies in its nest. The Cabinet Office is said to back solutions such as a temporary exclusion from EU procurement regulations. But backing is not the same as providing a solution. It had previously sought concessions in the negotiations surrounding a recent EU directive on public procurement. None were forthcoming. Government needs to state its case with more conviction and win the concessions needed.
Freeing up drive and innovation to unleash the transformative power of public service mutuals is happening. If the government accepts the taskforce's recommendations (and it has not confirmed one way or the other) good progress will have been made. We now need more leadership from government. There is little time to spare.
Kristian Scholfield is a senior solicitor in the social enterprise team at specialist public services law firm TPP Law. He can be contacted at kris@tpplaw.co.uk
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