On new mutualism

A recent funding annoucement by the Cabinet Office Minister, Francis Maude, has reinforced the Coalition Government’s commitment to give public sector workers they right to take over the services they deliver, by forming employee owned co-operatives and mutuals.


Mark Bramah, Deputy Chief Executive of the Association for Public Service Excellence (APSE) reflects on whether new mutualism is the way forward for local government

The Coalition Programme for Government in May 2010 made a commitment to give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver. This was followed In August by an announcement by the Cabinet Office Minister Francis Maude of first wave of Pathfinder mutuals, to be run by entrepreneurial public sector staff, who want to take control of their services.

There are a lot of organisations and individuals jumping on the bandwagon of new mutualism at the present time, not least the big consultancy houses who have obviously spotted that there is an opportunity to make more money on the back of an already hard pressed public sector. The push for co-ops  and mutuals does create some very strange bedfellows indeed, but there are echoes of an earlier movement in the late 1980’s and early 1990’s to encourage public sector managers to set up Management Buy Outs (MBOs) very few of which survived the cold blast of competition and the passing trends in public policy.

What is new however is the notion of mutuality being a vehicle for meeting the Government’s deficit reduction strategy. That somehow in an era of draconian cuts in public spending, you can sustain and even improve the performance of public services by empowering the staff to take control of their own services through co-ops and social enterprises. It remains to be seen how many angels can dance on a pinhead, but there is certainly no compelling evidence that co-ops and mutuals are inherently any more efficient or accountable than directly managed services, or that they can save money for the public purse. Indeed there is evidence that banks are reluctant to lend to the co-operative and mutual sector raising doubts about their ability to raise funds for investment.

The devil here is of course in the detail. No amount of evangelising on behalf of social entrepreneurs can avoid the painful reality.  Funding is going to be severely rationed over the coming years and a right to bid for public sector contracts is not a right to avoid competition or the rigour of the EU procurement directives. Cutting each others’ throats to win contracts may prove to be a poisoned chalice for the advocates of new mutualism.

I recall vividly what happened to the co-operatives which were formed in the wake of bus deregulation in the mid 1980’s. They were soon swallowed up by the big private sector bus companies. There are often salutary lessons to be learned from recent history.

This entry was posted in Co-ops and mutuals and tagged , . Bookmark the permalink.