Do we really want a ‘Right to Mutualise’?

by Craig Dearden-Phillips 01/07/2015

What is to be the story of Public Service Mutuals going forward, particularly with our champion Francis Maude now gone?

His legacy was the ‘Right to Mutualise’ for public sector workers, as set out in the Conservative manifesto. It is likely that his replacement, the Rt Hon Matthew Hancock MP, will be thinking carefully right now about how to craft this into a policy that fits the overall intention of public service reform for the new Government.

Before looking forward, let’s wind back a little. ‘Right to Mutualise’ was inspired, in part, by the 100 or so new mutuals which have stepped out of the public sector since 2010, many from local government. Francis Maude visited a fair number of these. On these trips, he heard, time and again, about difficulties in obtaining parent-body consent, even when the business-case was strong.   Beyond this, he probably heard about countless more worthwhile PSMs that never got out of the starting blocks often due to political factors, small and capital ‘P’.   

It was, maybe, on the long ride back to London that the ‘Right to Mutualise’ idea was conceived. And now, against all electoral expectation, it has to be enacted, without any Coalition push-back.  So what now needs to be considered? The good news is that this question is likely still an open one in Government. 

So here’s the view from me. The first factor to be thought about is that a ‘Right to Mutualise’ may not be the answer to all of our prayers. As anyone advising in this sector knows, it isn’t always helpful to set up a situation where anybody anywhere in the public sector feels it their right to set up a new venture regardless of whether the business itself stacks up or meets a genuine need.   It’s actually better to keep the ‘Right To’ language out of the way until there is a clear case for this kind of action. Perhaps the more useful right to focus on in this context is the right for staff to ask for mutualisation to be compared, on a level field, with all other options when the future of public services are being considered?

The second factor in the ‘right to mutualise’ discussion is one of scale. Today we have just over 100 mutuals but many that are extremely small and whose origination costs are probably, in truth, more than could be afforded in the future. Therefore, again, the right to mutualise may need to be qualified to services operating at a scale that justifies the start-up costs involved. The logic of future government investment in mutuals is probably not in ‘letting a thousand flowers bloom’ but in putting money into very large scale mutualisations that probably already have the backing of their parent public sector body. 

Which leads me to the third relevant factor in this discussion – and this is more delicate – and it is about who is the real target of future policy around mutualisation? To date this policy has been aimed straight at the public entrepreneur, often seemingly over the heads of slow-footed public bodies. This has been very empowering for staff but, unsurprisingly, it hasn’t been a massive hit with the top-end of the public sector. Few have shown enough confidence in the mutuals agenda to choose this as a major strategy for their services.  Instead, rather distressingly, we have seen, since 2010 far more private outsourcing or publicly-owned trading companies than at-scale mutualisation.  

This suggests to me we need to be quite mindful of how any future ‘Right to Mutualise’ message is communicated. If, like before, this is call-to-arms for front and middle line staff, there is every chance it will, like the predecessor policy, not be seen as a very strategic approach to public sector reform. It would be far better, to my mind, to craft a message to the senior tier of public organisations about the benefits of mutualisation and its place in the development sustainable, modern  21st century public services. A shift in emphasis, in other words, from a new form of ownership and control, to a set of benefits that all public bodies are scratching their heads to achieve.

All of this needs an approach to the ‘Right to Mutualise’ which is a bit more nuanced than the headline first appears. It is not an unconditional right and it is, at best, a right for due consideration, not automatic determination. The next phase of policy also has to accommodate what we now know about the need to invest scarce resources in bigger projects and the need to appeal more clearly to the top tier of public sector bodies, not merely those employed to deliver services within them. 

Back to stepping out now