From the TUC

A mutual loathing?

14 Apr 2011, by in Public services

“I want to talk today about our plans to set public sector workers free, to let them take control of their organisations, turn them into mutuals and have more control and autonomy over how things are run”.

So said Francis Maude in November last year as he launched the Government’s drive to enable more public sector workers to create mutuals that will take over the running of services they provide.

But are public sector workers embracing the brave new world of the mutual?  Events at MyCSP this week would suggest not.

Along with extending the ‘right to provide’ to nearly all public sector workers, the Government has set up a £10m enabling fund and brought together a Mutuals Taskforce, Chaired by Julian Le Grand of the LSE, to drive through reform in Whitehall and beyond.

Of course, as has been pointed out by the Office for Public Management and others, the benefits of employee ownership such as innovation, efficiency and creativity are only derived when there is genuine employee ownership and buy-in.

This process cannot be driven from the top.

The Minister himself acknowledged as much, reassuring us that “the Government will not seek to dictate what is best for employees”.

It is interesting then, that the Government and public service managers continue to drive mutuals forward in the face of the overwhelming opposition of the workforce.

This week it was announced that the administration of the pensions of over 1.5 million civil servants will be handed over to a joint venture between MyCSP, a new ‘employee-owned’ mutual and an as yet unnamed private sector partner.

The press release was surprisingly low on detail.  Why was the private sector partner not named?  What was the structure of the new mutual?  Given the ground breaking nature of the announcement, weren’t the public going to be interested in the model of ownership that the employees had signed up to?

The Government are unable to provide this detail as it has yet to be decided.  The employees have had nothing to sign up to because they have been presented with no options.  The announcement was made to the staff, currently within the DWP, earlier this year following no consultation.

PCS have sought more details from the leadership of the new enterprise, the Cabinet Office and those in charge of the mutuals ‘incubator fund’ but few, if any, have been forthcoming.  What’s more, PCS have held meetings packed with concerned MyCSP staff hostile to the move that is being imposed on them.

Were this an isolated example of a mutualisation going badly wrong, we might not have much to worry about.  But this is part of a pattern that has emerged very strongly in other parts of the public sector, particularly health.

Evidence from UNISON and CSP suggests that in the vast majority of cases where staff have been balloted, a clear majority have chosen to remain within the NHS.  In many cases the results have been emphatic, as the following table indicates:

Primary Care Trust % of staff voting against the transfer
Cornwall 81
Plymouth 74
Shropshire 85
Greenwich 86
Mid Essex 97
Sandwell 67
Cornwall & Isles of Scilly 80

In some cases, such as Greenwich, Sandwell and Shropshire, these overwhelming votes against transfer have led to a change of course and the retention of services within the NHS.  However, in other cases, such as Mid Essex and Cornwall, the views of the staff have been ignored and the move to social enterprise status has been driven ahead regardless.

In many cases, staff engagement has been peripheral or skewed in favour of an outsourcing option, with ballots or staff surveys precluding in-house or NHS options.

Why then is the Government so keen to force ‘employee-ownership’ on a reluctant workforce, despite this being exactly the wrong way to develop the mutuals model?

Mutuals are clearly seen as a cheaper option for service delivery.  Francis Maude made clear his expectation that mutuals would “deliver cost savings to the taxpayer” back at his launch in November.

But, perhaps more importantly the use of joint venture mutuals, as in the case of MyCSP, is creating new opportunities for private sector ‘engagement’ in public service delivery.  Phil Bartlett, until recently a senior civil servant, now CEO of MyCSP thinks that “this new and innovative structure will give us the agility to exploit opportunities in the changing pension landscape and grow our business”.  I’m sure his private sector partners will enjoy the proceeds.  And no doubt Mr Bartlett too.

This approach may raise a few eyebrows in the world of genuine co-operatives where certain principles are fundamental.  But the Governement takes a more relaxed view.

They have showered praise on Circle Healthcare, expounding its virtues as a model of employee ownership and awarding it a 10 year contract to run Hinchingbroke Hospital in Cambridgeshire.

But Circle Healthcare Ltd is registered at Companies House as a private limited company.  Staff own just over half of the shares, the rest are owned by external investors including companies such as BlackRock, the asset management firm with the highest paid CEO on Wall Street.   There’s few outside the Government that regard Circle as either employee-owned or a social enterprise.

The Government tends to get quite touchy when the ‘cynics’ talk of “privatisation by the back door” but it is becoming increasingly hard to find a more suitable term.

2 Responses to A mutual loathing?

  1. Colin Rolfe
    Apr 15th 2011, 3:41 pm

    This is just a start in the tories plans to an eventual sell off of the NHS. Yes, the NHS is far from perfect but those who work the front line are never asked for input. It is always Doctors Managers and and MP’s.I am afraid that our Mp’s no nothing of the real life and has been shown so far to have little knowledge of how this country should be run. Something else we must remember is that the government do not have a mandate on their current policies they were elected against their manifesto which was completely different. Let us hope that at the local elections in May the voters will show a vote of no confidence in this government (or should that be .Dictatorship)

  2. What can we learn from European public service mutuals? | ToUChstone blog: A public policy blog from the TUC
    Jun 13th 2011, 4:27 pm

    […] The likes of MyCSP and Circle Healthcare Ltd would suggest that this certainly is the experience in the UK. Related posts (automatically generated):All aboard for public service co-ops? […]