Francis Maude offers public sector workers £10m fund to create mutuals

The Cabinet Office minister says productivity will improve under the public sector's new 'right to provide' initiative

Cabinet Office minister Francis Maude
Cabinet Office minister Francis Maude

The government has announced a new £10m fund aimed at enabling public sector workers to create mutuals that will take over the running of services they provide.

The new 'right to provide' was announced by Francis Maude, the Cabinet Office minister, in a speech in  London this morning.

He said prisons, Sure Start children's centres and hospitals were examples of services that could be spun out as mutuals under the scheme.

Maude said the government would set up a new helpline and web service for staff interested in pursuing such an arrangement. It would also establish a 'challenge group', involving employee-ownership experts, that would examine how regulation of mutuals could be improved.

Absence rates fall and productivity rises when employees have a stake in the organisation they work for, Maude claimed.

"The 'right to provide' will challenge traditional public service structures and unleash the pent-up ideas and innovation that have been stifled by bureaucracy," he said. "It will also put power at a local level so public services will be answerable to the people that use them."

He said he expected that staff taking part in the scheme would continue to be paid by the state and would not be able to receive a financial return on shares owned in the mutual.

He also hoped that private investors would put money into mutuals and said they might be able to receive financial benefit from doing so.

In order to be approved to run a mutual, workers would have to submit a bid in which they demonstrated they could operate the service significantly more cheaply.

In some cases, mutual proposals could be accepted without the need for a full tender process. But services in some areas, such as defence and security, would be exempt from the new plans.

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