As the Government and wider public sector continues to encourage staff and others to create mutualised businesses to deliver public services, it is time to make the case for long-term mutualism.
Understandably, concerns are being expressed by public sector employees and their trade unions that the creation of a ‘spin out’ mutual is just the first step to the enterprise being sold on to the private sector. In other words, the fear is that the ‘spun out’ mutual, social enterprise and/or co-operative programme is merely a front or ’Trojan horse’ for naked privatisation. It need not be.
There are many social enterprises and co-operatives that have been operating for decades without any hint that they are about to be bought out, taken over or devoured by the private sector. Rather, they are successful social businesses delivering products and services, providing good rewards for their members and employees as well as a wider community or social benefit. Some of these enterprises started their lives as part of the public sector while others were created by social entrepreneurs and community groups. Many of these organisations display social values that should be viewed positively by trade unions – rather than attracting their suspicion. This requires major commitment from public sector organisations.
There are social enterprises and co-operatives that partner with the private sector (no bad thing in itself) but which have retained their social purpose values. And yes, there are some which have ‘elected’ to be acquired by private sector companies. The issue is why this happened and whether the social purpose has been retained.
In the sphere of public services, I envisage that over the next few years we shall see the growth of many new forms of collaboration between the private and social sectors. These hybrid models can – with the right conditions and ethos – add social value, enable the social sector to secure essential capital to offset and better manage some risks and provide access to specialist professional expertise enabling the delivery of effective outcomes.
When the public sector or public employees are considering the creation of a mutualised delivery vehicle, it is essential that they decide if they wish it always to remain true to the principles and practices of social enterprise and co-operativism. If so, this can be achieved through a legally binding ‘lock-in’ clause in the new body’s memorandum and articles – something that is quite normal for most such enterprises. Legal conditions can also be set to determine who can be company members and/ or shared owners; what will happen to any assets should the enterprise cease to exist; what activities it can – and indeed what activities it cannot – undertake; and arrangements for governance, accountability and transparency that reinforce the principles and values of mutualism.
Of course, on their own, legal constraints are insufficient to guarantee the future of a new spin-out enterprise. Any business must have access to affordable capital, commercial expertise and the opportunity to win business. I believe that, when considering the creation of spin-out enterprises, public bodies have a moral duty to ensure that the new enterprise will have all of these. This means that there has to be a comprehensive and holistic approach across the public organisation so that its policy, leadership, commissioning and procurement teams and its practices are all geared to the delivery of sustainable social enterprises. Such new entities, like newly born infants, need to be nurtured and given long-term opportunity.
These new enterprises also need to be owned and driven by employees, and quite possibly by their managers, their trade unions and – potentially – even their users. Indeed, we should not always assume that the model is simply about employee ownership or management. This means that staff need to be given time to develop their ideas and to be provided with access to specialist advice and support. They must not be bullied or cajoled into adopting this model, nor should they be confronted with the ‘Hobson’s choice’ of ‘try this or get your P45’. Very sadly, too many public bodies have deployed this unacceptable and frankly counter-productive approach – often while hypocritically claiming the moral high ground.
TUPE will apply when these enterprises are created, and there should be no automatic assumption that the new model’s business case requires a move – voluntary or involuntary – to inferior terms and conditions for employees. If an enterprise will only be viable with such changes, then those involved really ought to be questioning whether it should be pursued. The business plan needs to be sound and the promise of some long-term deferred employee gain has to be carefully tempered, and always agreed with by the staff.
One of the advantages and benefits of these new models is the power, control and ownership that they can offer to staff – so imposition of employment terms and conditions by the public sector ‘parent’ is mistaken and inappropriate. The benefits for staff should be about more than terms and conditions or pay. Achieving this can lead to consensual flexibility and change in a way that is not so easy in employer-led bodies – and it can be more rewarding too.
In other words, a local authority or other public body that wishes to support the creation of viable new spin-outs to deliver its services and functions should only do so if this is core to the public body’s strategic mission. In turn, its systems and processes must be redesigned to enable the achievement and delivery of the strategic objective.
Inevitably, social enterprise and co-operative models will not be appropriate for all organisations and/or for all services in the same organisation. This is why ideology should play no role in this agenda.
The risk that new social enterprises and co-operatives spun out of the public sector will end up being swallowed up by the private sector lies more in the potential failure of the public sector parent to take its responsibilities seriously and to take the necessary steps to ensure sustainable success. This is a further reason why staff, unions, service users and other key stakeholders need to be involved at all stages of the development of policy and practice in this area.
Finally, the public sector needs to be wary of any major private sector corporate that claims that it is really a social enterprise or that it has established a social enterprise subsidiary. Such claims must be weighed against a public interest test.
Over the next few years, there will be a paradigm shift in the nature of public services and the bodies that deliver them. There will inevitably be a greater plurality of delivery models and a great deal more cross-sector collaboration. This has to be based on trust and respect – not on acquisition and avarice. Private sector providers may be required by the public sector and service users to open ownership up to employees, service users and communities too; and to demonstrate a real commitment to supporting social enterprises and co-operatives.
Exciting prospects and some major risks lie ahead. Ultimately the guiding principle has to be what offers public value for the community, service users, taxpayers and staff. Mutualism could be one answer, but one that should only be adopted if it is for life rather than the life of one short-term contract.