The politics of mutuals

By Craig Dearden-Phillips and Cllr Colin Noble | 24 June 2015

We are writing this together because we share an enthusiasm for the potential of Public Service Mutuals (PSMs) in local government.   Suffolk County Council has been one of the strongest pioneers of PSMs with its libraries, adult social care and supported employment services all among the first to spin out.   

Now, Suffolk is looking at where its next wave of new PSMs is likely to come from.   Stepping Out has overseen the development and growth of about 30 of the 100 PSMs in England which now employ 35,000 people and account for a £1bn in public service delivery.
An observation we both share is the importance of politics, both small and large ‘P’ when it comes to mutualisation in public services.  We think the reason there are not more PSMs than there could be is that, despite the quality of the solution, the local political hurdles are still too high.   
For many left-leaning councils, mutualisation is still viewed as a ‘right wing’ idea, pushed as part of austerity and, possibly, part of a deeper long-term plan to push public services into the private sector.  
Equally, many on the political right cannot quite get their heads around the idea that new companies, owned and controlled by staff can actually make for really strong, growing businesses.  For these councillors, mutualisation is a touch too fluffy.   
In the middle are a lot of quite cautious councils, of all colours, who are viewing commercialism simply as the council itself setting up shop in as many sectors as possible, turning its own departments in to local-authority owned ventures.    To these councils, the case for PSMs has remained marginal.
Is this all about to change?  The July Budget will set an even steeper gradient for council finances than were allowing a year ago.   This will, we believe, widen the search for solutions beyond the standard scripts of efficiencies, LATCOs and traditional outsourcing.   We both believe that mutuals will get a better hearing this time round for three reasons.
Firstly, while before there was a hope, in many councils, for some reprieve under a new Government, clarity is soon to emerge about the further savings still required.  No-one expects this to be an easy settlement for local government.   
The next turn of the dial will, we believe, encourage authorities who have held back on PSMs to take a fresh look, particularly now there is some track-record on efficiency and improvement at which to point. 
Secondly, the search is increasingly now on for ways of delivering services which marshal the energy of the people and communities using them and, of course, their workforce.   Take Suffolk Libraries as an example.   
The council took £2m out of its £10m budget and not a single library has closed.  Suffolk Libraries now uses far more local citizens in its running than it ever did as part of the council.   Free to run its affairs as it wishes, the managing director of Suffolk Libraries has broadened its offering,  transformed the way its space is used and created a ‘can do’ culture in the staff.    
When it comes to doing ‘more with less’, one need look no further.   
Thirdly, the Government’s  approach to developing new PSMs is likely to change.   There is probably going to be more direct help to councils seeking to develop mutuals in a strategic way.   
There is also a growing market of larger PSMs with strong balance sheets who can present themselves as ‘Social Serco’s’ to stand behind larger new PSMs emerging from councils.   This kind of approach is being pioneered by Albion Provider Partnerships (APPS), an innovative collaboration of three large PSMs and their backers.  
So, for many of the same reasons, we are both of the view that PSMs will, during the next five years, become more mainstream.  
The experience of Suffolk has been of success.   Tied to a strong local agenda of devolution to communities, local enterprise and pride-in-place, Suffolk’s PSMs have enabled the council to tell a good story about its own response of public spending pressures while also coming up with the required savings at minimum damage to people.    
This is a powerful narrative for any council, left or right, as successful new mutuals in Labour-run Warrington, Salford, Rochdale and Leeds all testify.    
That there will be barriers is no doubt still true.   And there will always be councillors who see PSMs with distrust.   But the evidence so far and the fact that, increasingly ‘what matters is what works’ is always going to be in favour of ever-more PSMs.    
Craig Dearden-Phillips is managing director of Stepping Out and Cllr Colin Noble is leader of Suffolk CC
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