The mixed fortunes of the first spin-outs

Twenty-one organisations are in the government's pathfinder programme for mutuals. David Ainsworth looks at their progress and interviews the chair of the Mutuals Taskforce

Our mutual friends
Our mutual friends

Mutualisation is a key plank of the government's big society policy: Francis Maude, the Minister for the Cabinet Office, has said he hopes that by 2015 there will be a million public sector workers in independent, mutually owned social enterprises spun out from the state.

To help the process, Maude last year launched a pathfinder programme to help 21 organisations leave the control of central and local government and the NHS, and appointed the Mutuals Taskforce under the chairmanship of Julian Le Grand, professor of social policy at the London School of Economics (see our Interview with Julia Le Grand). There is also a £10m Cabinet Office fund for training and business support.

So far, the pathfinders have met with mixed fortunes. Plans for lecturers to take over Newton Rigg College, Cumbria, fell by the wayside when the college was taken over by another institution. A project to spin out youth services in Westminster, Hammersmith & Fulham and Kensington & Chelsea is on hold because the three councils are negotiating to merge many of their services.

Many mutuals, however, are making good progress, and some have already been launched successfully. Examples include the community interest company Inclusion Healthcare, which, as Leicester Homeless Healthcare, was part of the NHS. Salvere was intended to be a spin-out of Blackburn with Darwen Borough Council's social care department but became an independent enterprise (see Case Studies, below).

Right to provide

In the longer term, the government intends to offer almost all public sector workers the 'right to provide', allowing them to become independent organisations delivering public services. The pathfinder programme is building on the experience of the previous government's 'right to request', which applied only to primary healthcare organisations. Most of those that took advantage of this say they have benefited enormously.

"We're extremely happy we did it," says Lynne Woodcock, managing director of Anglian Community Enterprise, formerly the provider arm of NHS North East Essex, which became a community interest company last June. "It's been a lot of work, but it's improved our service and given us more freedom to solve problems as we see fit."

But few argue that the process is easy. A recent report by Co-operatives UK highlighted a lack of effective start-up funding, business support and appropriate procurement regimes.

"Building an environment in which mutuals can grow is much easier in other countries," says Ed Mayo, chief executive of Co-operatives UK and an adviser to the government on the mutuals programme. "Here, it will need a lot of political will and technical ingenuity."

Mayo believes that, given sufficient resources and dedication, solutions will be found to the problems. Dan Gregory, an independent adviser on social enterprise who has worked with public sector staff in the spin-out process, says those solutions need to be found quickly.

Support mechanisms

"The government has created a lot of buzz around mutuals," he says. "But they are still trying to figure out how it will work. The frameworks and support mechanisms aren't in place. There's a danger that momentum will be lost."

One stalling point is the absence of a framework for council workers to take over services. This will be partly solved when the 'right to challenge' is introduced in the Localism Bill towards the end of this year. However, many observers feel the right as it currently stands is not strong enough. Other elements of a framework will also be needed.

Craig Dearden-Phillips, chief executive of the consultancy Stepping Out and part of a Cabinet Office mentoring scheme for the pathfinders, says: "A few have hit trouble, but most are doing fine. It's an early group and it's early in the agenda.

"I think the Cabinet Office initially spread itself too thinly and didn't have the resources to support all of the elements of the mutuals agenda. But it is now handling the situation much better."

Dearden-Phillips believes the mutual agenda has benefits for the wider sector. "If I was a charity like Turning Point or Scope, I would be thinking about which councils I could go into partnership with," he says. "But many charities will be risk-averse and will not want to get involved early on."

Ceri Jones, policy manager at the Social Enterprise Coalition, agrees there are positives for the sector. "These new organisations have a real appetite for having charities and social enterprises in their supply chain," she says. "They are also a different and complementary voice that will raise the profile of the sector."

What about Maude's ambition for a million public sector workers to be employed in mutuals? "I'm not sure there's the appetite," Jones says. "Many haven't even heard of this agenda. I think there would have to be a radically different approach to support than there is now."

Dearden-Phillips is equally cautious. "I would be happy with a third of a million," he says.

See Editorial

Read Interview with Julian Le Grand

Find out how other mutuals work

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