An Encouraging Start: What’s the Future for Public Service Mutuals in the Theresa May Premiership?

by Craig Dearden-Phillips 13/07/2016

On Monday, in a widely covered speech in Birmingham, our new Prime Minister, Theresa May, made a well-covered stump-speech in which she discussed a range of reforms to the economy and the public sector.

Most reported was her idea for workers on company board. Not reported at all, but immediately following that, was her support for the formation of public service mutuals.   

Where this arose from and how much to read into this, we don’t, at this stage, know. Much will depend on her Ministerial appointments and the post-Brexit reckoning in public finance. But the fact that mutualisation, a fairly off-beat policy, came up in Mrs May’s campaign suggests its there in the thinking. We ought to be encouraged.

All this came on the back of a well-attended event in central London last week, where we saw the re-launching of the Public Service Mutuals agenda following a period of hiatus after last General Election.

The signs were positive: a brainnstorming Ministerial speech from Matthew Hancock, a senior civil servant presented to lead the charge and £4m to catalyse the next stage.    

This is all positive, not least the political message that this Government, and Mrs May, is interested in the Public Service Mutual as an alternative delivery mechanism. Without this interest and endorsement, the whole project stays on the fringes while the real reforming energy goes elsewhere.

But the formal re-ignition of Government interest is not a signal for the sector itself to sit back and let the state push this on from here. 

This is because the resources required to make the mutuals agenda really move on a level, are not sat in the Whitehall machine but, largely, within this new sector – the 115 new businesses, 35,000 staff and £1.5 billion in public services delivered through this new kind of organisation. Plus, of course, a supportive advisory community!

Set against a handful of talented people operating from Whitehall and a Minister with a groaning post-Brexit in-tray, this is a formidable resource.  

The ‘exam question’ therefore, is how we marshal the forces of Whitehall, the new money on the table and the resources of the sector to best effect?

So where do we start?  Two obvious things are being made clear by Government. 

One is that  there will be no re-building of the formidable Cabinet Office machinery that ran the 2010-2015 programme. This served a useful catalytic purpose but, rightly, has not been deemed necessary now that we have a bigger sector.   

The other is that there is unlikely to be a traditional out-sourcing of the mutuals programme to third parties with no current connection to the agenda.     

Which leaves the door ajar to some kind of sector-led solution. What this could look like is an open question at the current time, but it is important that those with a long-term commitment to the PSM sector’s development use the summer to think carefully about what this could look like. £4m sounds a lot but isn’t set against the scale of the task in hand. 

What is the task? In my own view, the real challenge we would all tell Mrs May about, if we had 5 minutes of her time, is that the PSM sector is still a fringe movement conducing guerrilla warfare in the foothills of the public sector.  

We have made gains, for sure, but unlike our reforming equivalents in the education sector, for example, we have not made the sweeping difference in the way sectors operate. Free schools and academies, whatever you think of them (and I myself have criticisms), are a fantastic example of how to put together a fantastic alliance of politicians and public leaders into a powerful force for change.   

While the Free Schools and Academies’ job has been made easier by a focus on one sector (education) and Government Department, the success of the core idea of handing power to heads, to teachers and parents has been manifest. You have to pass power down.    

But  without the champions outside Whitehall this agenda, even with a  missionary politician like Michael Gove at its head might have failed.  Wider support was needed from beyond Government.  

And there is much we can learn from this broad-based approach when we look at the next stage of PSMs.

The next stage of mutualisation, I believe, is to look at some much bigger wins. My own list would be ambitious. Children's Trusts. Whole parts of the local health economies. Every library in the country.  

For this to happen, we need to widen our tent to include the enablers to make this happen. Social finance has a massive potential role. So too does the progressive end of the private sector – thinking of how well Maximus has partnered with Remploy.    

We also have to bring public bodies themselves into the mix. Mutualisation has been viewed, regrettably, as anti-public sector. Or as something that cannot be mixed with formal public accountability mechanisms. 

The truth is that if we want to get whole devolved city-regions like Greater Manchester (or even Norfolk-and-Suffolk) to invest in the idea of large new public service mutuals, we may have to accept that the public bodies sponsoring them will want to be involved and share in its ownership and control.    

Otherwise, new Public Service Mutuals won’t cut through the local ice and local authorities and CCGs will default to the status quo. So we need to reach out far more powerfully to senior leaders in Councils and the NHS if this is to fly.

So how do we use the £4m to best effect? Again, this is a personal view – it would be very easy to salt public money away on low-impact activity. There is an argument to say we have enough ‘How To’ guides to sink a small warship (including a very good one written by me!).   

And we need to be careful not to create rescue funds for public service mutuals which are facing financial difficulties. There is already a range of funds available for mutuals to go to.     

Nor, in my view, do we need a big open grants programme to fund the whole process of mutualisation from end to end. 

Instead we need to use any new money to invest in the early stages of new ventures that are at too early a stage of development for other investors to get involved in. The time when exploration is happening but needs some money to test the case.   

Government money should be the enabler, the confidence giver to get others to explore big new alternatives.  

How we administer this money is something to which more thought needs to be given. A sector led approach has real appeal but its important that this is done in a way that wins support across the board.    

I would personally like to see the £4m of Government money used in a very strategic way so that others beyond Government (social financiers, existing mutuals, corporate partners) were encouraged to pick up the baton from Government to provide on-going finance to mutuals once signed off by local politicians. Quite how this could all look remains to be seen.

Finally I come back to where I started. Whatever Mrs May’s intentions around PSMs, this next stage isn’t only about Government, it’s about how, with Government endorsement and some enabling funding, this new sector mobilises to take Public Service Mutuals from the guerrilla-foothills to the mainstream of public life in this country.  

The questions to us therefore are these: What is to be our equivalent of the New Schools Network? How are we going to punch beyond our weight? What does a ‘sector led response’ actually look like? And how are we going to make it happen?

I am hoping this blog throws up some good questions and interesting responses.

Back to stepping out now