A Cabinet Office taskforce has released a glowing report on mutuals, describing the business model as “high quality” and recommending that the process of forming them be made easier.

In its report launched today at the London School of Economics in London, The Mutuals Taskforce recommends that establishing a mutual be made a mainstream option for public service delivery, and it advocates that certain barriers  be removed in order to make this happen.

Specifically, the taskforce wishes new mutuals to be exempt from EU procurement regulations; for them to have full implementing rights, with clear pathways and appeals processes; training and guidance to be provided for public service commissioners; and calls for an analysis of investment opportunities in mutuals to be made by Big Society Capital.

The Mutuals Taskforce was established in February 2011 by minister for the Cabinet Office Francis Maude (pictured). It is chaired by Professor Julian Le Grand and made up of figures from public policy, employee ownership and business.

The report shows that since 2010 the number of public service mutuals has increased from nine to at least 58 with, some 40 projects in the pipeline. In addition, the number of services provided by mutuals has increased, from an initial four – health, social work, education and leisure – to twelve, including fire services, housing and libraries.

The report also finds improvements to the conditions and well-being of staff, as well as improvements to service quality, efficiency and effectiveness.

In December 2011 the Cabinet Office began a £10m support programme for staff-led mutuals emerging from the public sector.

Mutuals not a fantasy

“This is no utopian fantasy,” insisted Le Grand. “Mutuals deliver higher quality services at lower cost to tax-payers. So it’s with some jubilation that I can report a movement, led by truly entrepreneurial public servants, has taken root and is growing.

“But we simply cannot rely on there being enough exceptional leaders to make this a mainstream delivery option. The path to mutualisation must be made easier.”

Le Grand explained how public service mutuals develop differently to other SMEs, often becoming businesses overnight. He emphasised how this must be reflected in new regulation, new investment and greater support.

“But, most importantly, we are calling for change inside the public sector,” Le Grand continued. “The will to develop mutuals and improve public services is there at the very top of government and on the frontline. But too often there is a gulf in the middle where risk-averse managers, ignorant of the benefits, impede progress.”  

Francis Maude thanked the taskforce for its recommendations, and added his own comments. “Frontline staff are the real experts: they know what’s important to the people they help every day,” the minister said. “Forming a mutual lets them focus on local needs with less bureaucratic interference. It’s no surprise that as more services mutualise we are seeing real benefits.”

Maude said that the government will now consider how to take the taskforce’s recommendations forward, and added that he was particularly aware of the problems with EU procurement regulations and would be pushing for reform.

Employee association praises report

Meanwhile, the Employee Ownership Association (EOA), whose chief executive was a member of the Mutuals Taskforce welcomed today’s report. EOA chief executive Iain Hasdell said:  “This is not only a rigorously well researched report but also a very timely one and I am pleased to have been a member of the taskforce.
 
“Mutuals are a fantastic vehicle to unleash the power of employee ownership. Whilst diversity of models is to be celebrated, we welcome the report’s conclusion that there is ‘incontestable evidence’ that employee ownership improves services as well as the well-being and fulfilment of employees.

“We also welcome the clarity the valuable definition included in the report of a mutual as being a spin out with significant employee ownership/control.”
 
Hasdell added that the challenge lying ahead is in the implementation of the recommendations contained within the report, and he expressed his hope that ministers would recognise this and dedicate sufficient resource to the mutual programme "to allow it to be both visionary and ambitious, but also realistic”.
 
The EOA speaks for co-owned business in the UK, and is a network of over a hundred companies – including John Lewis, Waitrose and Unipart – with significant employee ownership. The sector is worth a reported £30bn annually.