Mutual assistance

“You can’t just talk, like people have in the past, about wanting more mutuals and co-ops and hope somebody, somewhere gradually gropes towards making it happen. You really need to push it.”

That was the message from Cabinet Office minister, Francis Maude, last August as he launched the government’s Pathfinder scheme of (12) public sector mutuals. As Social Enterprise Coalition (SEC) chief executive, Peter Holbrook, hinted on this blog last week, there’s no area of activity where the social enterprise movement is more likely to find itself hoist by its own innovative petard than this.

While sceptics may have other suggestions about their motivations, taken at face value the current government’s enthusiasm for mutuals is based on an eminently sensible desire to enable the provision of more flexible, more responsive public services in a situation where there’s not much money to pay for them. So, while Jesse Norman MP, author of The Big Society, is an honourable exception, the current support for mutuals should not be regarded as a sign that most Conservative politicians have specifically decided that co-operative structures are a good thing in themselves.

That makes it interesting to read the views of those who do support mutual approaches as a matter of principle. One leading voice is Jonathan Bland, Holbrook’s predecessor as SEC Chief Executive and now an independent consultant. Last week, Co-Operatives UK published Time to get serious, a paper in which Bland considers existing examples of co-operative public service delivery from around Europe: schools in Spain, social care in Italy and nurseries in Sweden.

Bland explains that Italian social co-operatives, which employ 244,223 people primarily in delivering local social care, benefit from a clearly defined legal structure (established in law in 1991), tax breaks and the active support of local authorities – both as purchasers of their services and investors: “The social co-operatives have strong and positive partnership relations with local authorities. They are often involved in joint planning of services with local authorities. When the law (establishing the social co-operative legal structure) was passed, it gave the co-operatives a status as preferred providers in the procurement of local authority contracts.”

In Spain, teachers themselves often provide the start-up finance for the 550 (mostly government funded) co-operative schools. Bland notes that: “The teachers that now own and run most of the co-operative schools are well educated and are in salaried positions that allow them to borrow against their future salaries to pay their co-operative membership fees. These membership fees then provide a capital base for the enterprise to develop and grow. This is important in relation to other sectors where pay levels are much lower.”

In Sweden, the government has put significant funding into support for specialist co-operative development agencies: “The Coompanion network of support agencies is funded centrally by the Swedish Government Agency for Economic and Regional Growth, with an annual budget of just under £4m, which is distributed to the regions on a per capita basis, and is then matched with regional funding and with other sources of finance. The specialist advisers have played an important role in the development of new co-operatives and the continuing success of existing ones.” 

Bland’s paper is engaging and well argued but the key underlying points are very much in the ‘not rocket science’ category. The main factors that existing successful examples of co-operative public service delivery have in common is:
  • political support
  • the ability to raise cash
  • and specialist business advice
While it may be seen by some as a diminution of our social entrepreneurial bravado to admit it, the second two factors are primarily by-products of the first. Francis Maude is absolutely right that someone in government (possibly him) really needs to push the public service mutual model if it’s going to take off. It’s currently unclear whether he and his colleagues believe the positive (but very smallscale) Pathfinder programme, the Big Society Bank and the ongoing blizzard of positive rhetoric are that push.

The stark reality is that the UK equivalent of the specialist regional business support that has been so successful in supporting co-operative development in Sweden has in fact been drastically reduced – from a much lower base – since the current government came to power.  That, the absence of the (practical) political support shown in Italy, and little or no suggestion about where the money will come from if spin-outs are going to have the muscle to compete effectively with outsourcing conglomerates, suggests that Bland’s conclusion: “The UK policy context does not emerge particularly well from the comparison with these pioneer countries and this must form something of a reality check” may be something of an understatement.

The additional challenge that  Bland can’t provide any answers for through comparison is on the specific question of organisations ‘spinning out’ of the public sector. All the examples cited by Bland are primarily based on groups of people, whether workers, parents or wider groupings within communities, getting together and deciding to form a co-operative to answer a need not (adequately) catered for by existing public services.

The situation in the UK is different. In his interview with me, Peter Holbrook rightly described the government’s mutualism agenda as ‘a brave experiment’. While levels of staff involvement in the decision in the decision to ‘spin-out’ will vary, all mutuals spinning out in the current climate are doing so as much as response to a funding crisis as out of a positive desire to create a new kind of organisation. Public service mutualism hasn’t been pushed for this reason on a significant scale anywhere else in the world before. In answer to the question of whether spin-outs would be able to compete with outsourcing conglomerates, Holbrook added: “I think we should be able to compete, it’s just a case of whether – particularly in terms of the public sector spin outs –  they will be able to transform their culture within the time period they’re given.”

Part of the response to this challenge may come from The Transition Institute, an organisation set up by Social Enterprise London and NESTA ‘to inspire and facilitate new model of public service delivery’ but ultimately its ministers have to take the big decisions. Do they really want to create an environment where mutual models of public service delivery have a serious chance of success, or do they not?

1 Comment

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One response to “Mutual assistance

  1. “in a situation where there’s not much money to pay for them.”

    And this is the key thing: noney is a social relationship – the ultimate strength of our currency is that the state accepts only pounds sterling when taxing individuals and organisations. The government is implementing economic policies – such as growth-depressing austerity and cuts to corporation tax and tax enforcement – which will make this situation will continue to get worse, rather than better.

    But the opening up of public services to private capital will provide a pretty good investment opportunity given that the customer is the state. Arguably, government borrowing provides this opportunity to private capital – but democratic governments will find it harder to sustain a squeeze on wages and living standards as an overt economic policy. And so we have it through privatisation instead…

    I mean, where’s the Big Society Bank? Will it be any better than the Green Investment Bank – which is unable to operate properly for another five years?


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