Lack of government support is stopping public sector setting up mutuals, say MPs

Clive Betts, chair of the Communities and Local Government Committee, says its report shows a surprising lack of progress on mutualisation

Clive Betts
Clive Betts

Public sector professionals are being held back from setting up mutuals and cooperatives by a lack of funding and practical support from the government, according to a committee of MPs.

A report by the Communities and Local Government Committee, published yesterday, criticises the Cabinet Office and the Department for Communities and Local Government for failing to work together on the issue.

After a nine-month inquiry into the role of mutuals and cooperatives in running local services, the committee has reported that:

  • Funding for setting up employee-owned models is in "short supply"
  • Only a small number of local authorities are using mutuals or cooperatives to deliver local services
  • There is confusion among councils and other sectors over the definition of cooperatives and mutuals
  • Bureaucracy is deterring workers from setting up their own organisations.

Among the biggest barriers to greater take-up are the lack of skills and understanding among staff of how to navigate their way through the complexities of legal, taxation and regulatory systems, the committee says.

And despite the Cabinet Office role in coordinating activities across government departments, the report says: "We are not convinced that the Cabinet Office and the Department for Communities and Local Government have been operating in step. The links between the Cabinet Office and the department need to be strengthened so that the Cabinet Office takes full account of the potential for mutuals and cooperatives to deliver services in local government and to ensure that guidance and support is made available to all those interested in taking on local services."

The committee recommends better coordination between the government’s Mutuals Support Programme, the Department for Communities and Local Government and the Local Government Association, which would lead to more sharing of good practice.

Clive Betts, Labour MP for Sheffield South East and chair of the committee, said the lack of progress on mutuals was surprising. "The Cabinet Office programme to promote the use of employee-owned mutuals across the public sector remains isolated from work by the Department for Communities and Local Government, through its localism reforms, to stimulate opportunities for cooperatives and mutuals to take over local services.

"Failure to connect these two strands of policy activity betrays an absence of rigour, enthusiasm and understanding that is essential if the mutual model for local service delivery is ever to take off."

Responding to the report, a spokeswoman for the Cabinet Office said it would look closely at the committee’s recommendations but that the number of mutuals had increased six-fold since 2010.

"A great deal is being done to support mutuals," she said. "Anyone can get advice from the Mutuals Information Service and we have a £10m fund to support fledgling mutuals with professional services."

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