The 2010 Open Public Services white paper set out a bold ambition to transfer one in six public service employees into employee-owned organisations (mutuals).

Minister Francis Maude said: ‘We must not be afraid to do things differently if we are to provide better services for less money.’ Enacted through the Localism Act 2011 and Social Value Act 2012, the Cabinet Office was tasked to deliver this ambition by 2015.

The number of public service mutuals remains stubbornly off target. Success stories exist: NAViGo provides health and social care in North East Lincolnshire, while People2People provides social work and occupational therapy services across Shropshire.

High profile failures draw more coverage, for example MyCSP was continually dogged by performance failures and most recently criticised by the National Audit Office and then there was the bankruptcy of Secure Healthcare that provided NHS care for prisoners.

In delivering the Cabinet Office Mutual Success Programme we learned problems start at the beginning of the process.

Fewer than one in four initial enquiries resulted in an application for support and when a formal application was made, a quarter failed to meet the entry criteria. Where projects received targeted support, only 12% succeeded in becoming live mutuals.

The main problems are lack of buy-in from the parent organisation remaining risk-averse to vesting control in employee-led bodies.

Rigid adherence to public procurement practices exacerbate the issue. For example, commissioners stubbornly demand operating and financial data that is not available to a new mutual despite ministers securing changes in EU rules offering contracting flexibility in early years of spin-out.

Then there is market readiness. The ambitions of 12 government-supported probation trusts seeking to become mutuals were thwarted by being comparatively ill-prepared for the competitive tender processes, predictably resulting in existing commercial providers securing the contracts.

Mutuals did not get enough practical help: individuals leading the process had to take on high levels of personal risk and extra work, all while managing their day jobs.

Accessing working capital and proper financing remains problematic with few public bodies willing to gift assets or under-write pension fund liabilities to establish a new mutual.

The mutual initiative ran out of steam as the 2015 elections approached. The Cabinet Office focus shifted towards sponsoring local authorities’ discretionary services (those facing funding challenges) assuming employee ownership could immediately protect them from closure.

This flew in the face of the evidence – many applications and successful new mutuals came from care services, environmental services or schools support.

The new approach sought applications led by service need to avoid service cutbacks rather than employee aspiration for ownership.

The result was higher failure rates: only one of 11 youth service projects progressed to further support stage, confirming that an intrinsic ingredient of employee ownership is an employee-led solution.

Is there any way to reignite the passion for employee-led public services and deliver on the initial ministerial ambition?

There are actions that could make the difference. First, inform and incentivise public sector bodies to work with and encourage potential mutuals. This can be done by raising awareness of the changes to EU procurement rules and improving understanding of how to manage the risks involved in new delivery approaches.

Second, provide consistent, official guidance on mutual models and a simplified investment fund.

Third, facilitate best practice sharing underpinned by evidence-based research into what is working and the reasons for the success and failure of mutuals.

The potential is still there to truly transform the delivery of many public services through employee-ownership.

We owe it to the memory of the Rochdale Pioneers who developed the first mutuals in 1844 to take the action which will achieve the ambition for new models of delivery for public services.

Karen Cherrett is a local government expert at PA Consulting Group