A mutual future?

by Craig Dearden-Phillips 04/09/2014

Taking the one million target at face value, the mutuals agenda has yet to achieve critical mass.  Today there are about a hundred new public service mutuals which together employ 35,000 people and account for £1.5bn in total public spending.   About half of the mutuals come from the NHS and central government but the largest number now come from local government.  

Many of the new and emerging mutuals, such as in Leeds, Rochdale and Warrington, are to be found in adult social care but other sectors also figure prominently, notably culture, libraries, leisure, school support, youth and community sectors.


While a hundred new mutuals is, without doubt, a formidable achievement why has the mutuals agenda yet to take Town Halls by storm?   Three reasons stand out.  The first is that mutualisation is still viewed as ‘too difficult’ by many in local government.   

Complexities around procurement, pensions and contracts are still viewed as barriers – and indeed do require simplification.  

Secondly, it also the case that many local authorities struggle culturally with the very idea of staff or intermediate-management-led ventures not driven from the senior, strategic cadre within the council. 

This means that emergent mutuals, starting ‘bottom-up’ can find themselves swimming against the tide of a local authority’s decision-making processes.   

Thirdly, the idea for a staff-led mutual normally has to compete in an options-appraisal ‘high-jump’ with better-understood alternatives such as the local authority trading company or some kind of re-booted in-house offering.     Next to a string of ‘safer’ options, the mutual can look high-risk.

So what of the future?   If the first five years of the mutuals agenda has seen steady but gradual progress,  what of the period after 2015?   Obviously, much depends on the outcome of the General Election. 

But whoever comes out on top, there are reasons to believe that the mutuals agenda could become more important during the next five years than it has been during the last five.    

One big reason for this is money.  As Simon Parker of New Local Government Network noted on these pages recently, most councils will be looking to divest many of their leisure, culture and community services in the next five years.   

It won’t be fiscally possible for many councils to be direct providers of certain services. This could, in turn, trigger a far larger stream of divestments to mutuals, as well as other forms of venture, than we have seen to date.

Another reason to expect an uplift is that a wider commercialization agenda has clearly been taking off in councils this last three years.   We are seeing councils all over England creating standalone businesses and joint ventures from their services.   

In some cases, this will result in more LATCs, such as Optalis in Wokingham (social care) or EFMS in Suffolk (facilities management).  But it will, inevitably, also lead to more councils, like Norfolk County Council, which has worked with its staff to set up a mutual, Independence Matters, under joint council and staff ownership, to run its adult care services.

A final reason to expect more mutuals is that the ‘early adapter’ phase is now drawing to close.    Five years ago, there were few mutuals to which to point.    There was no ‘playbook’ to guide their formation.   Any council setting up a mutuals was experimenting, taking a risk.  Today, there are many more examples in every region and sector. 

Despite well-documented problems, it is now much easier than it was to set a mutual up, there is funding to do so and there is a network of organizations that can help.  

No longer is it quite the ‘minority sport’ it was.  There is undoubtedly a mainstreaming of this idea taking place.  We saw this in the 148 bids into the Department for Communities and Local Government and Cabinet Office’s ‘Delivering Differently’ programme in May 2014 in which many of the submissions were to proposing some kind of mutualisation of services. 

In conclusion, after an early period ‘under the radar’ for mutuals, there is now an increasing buzz which could clearly be seen in the publicity around the ‘100 Mutuals’ in July 2014.     

The clinching arguments in almost all cases with mutuals are that they are capable of saving money, improving commercial performance and getting better outcomes for citizens than services left inside the public sector.   

This argument appears now to be getting through.    Whether 2020 will, finally, see one million public sector workers operating in mutuals remains to be seen.  But it would be unwise to bet against a big growth the number of public sector mutuals in local government over the coming years.   Everything points to more.

As published in TheMJ:

Back to stepping out now