The next steps for public sector mutuals...

Was it going to be an apologist for lack of progress or an equally oversized creamy (or even perhaps more river-churn foam) air-filled container that left one sucking at the nooks and crannies for sustenance and some form of satisfaction?

Taskforces are all very well but once they have been around for a few years life can get very frustrating and anxious for everyone if they are left whistling in the wind for double shots when all they are getting back are single shot - or decaffeinated returns from the Government.

On a review of their Paper I think the Taskforce has quickened the blood and stiffened the sinews for the fight ahead and I think anybody in the thick of public sector mutuals at the moment would say the Taskforce has pin-pointed - with some GPS-level accuracy - the exact location of where PSMs are right now and further, with the bedside manner of a good GP (or Barista for that matter), is dispensing some good advice about the gap-analysis and how to achieve desired outcomes.

The Mutuals Taskforce Report

We would expect some advice from the Taskforce - after all its job as an independent body is to identify the barriers that prospective and current public service mutuals face and to advise on ways of overcoming them. The Report acknowledges that a wide variety of obstacles are out there, some technical but others cultural in nature, such as inexperienced commissioners and a lack of understanding or sympathy among senior commissioning managers.

At this stage of reading I started gulping my coffee, flash-backs to some recent experiences in the office where exactly that sort of cultural behaviour was on display were returning; where, arguably, very poor commissioning standards and a lack of a bed-side manner from management was not only stopping a social enterprise from emerging from the public body on the point of hive-off - after substantial amounts of money had been spent on getting it to that stage to begin with - but was also in danger of leaving a very sour taste in the mouth across the whole area. Here, despite a couple of years of development, the commissioner’s reasons for worrying about the release of the social enterprise were because of finances; it had already agreed block arrangements with others which could not be changed and therefore all the cuts needed to come from the developing social enterprise.

This kind of behaviour - similar to historical cutting of internal provider budgets on a moment’s notice - was one of the important original reasons for social enterprises trying to get out from under the wing of the public bodies in the first place. Some poor decision-making on finances is causing problems for developing mutuals and when this difficult message is passed on in a poor manner, we really begin to taste the bitterness of the coffee at the bottom of the cup.

The Challenge for Commissioners

On the commissioning side, there are some very enlightened and interesting people who have strived to procure from those organisations who are in touch with the users of the service; however, we also know that too many commissioners find it easy to pass the work to the same old monoliths because it is easy to do so.

Social care and integrated care must benefit from an injection of new providers in the field such as employee-led businesses that are floated off from Councils and Health, but the challenge for Councils is whether they can fit some time into their desperately busy schedule to work out how to do this - assuming they think this is a good way to go forward, mind.

If Councils bought or provided coffee for people in their area and all they provided was black coffee or white coffee in mugs, then increasing levels of frustration at a lack of a range of products or services and ultimately, an unwillingness to spend personal budgets on that service will, in today’s world, be inevitable. They want someone who can provide a crème on top, who will do it ‘wet’, with extra shots, without caffeine, mixed with syrups or made extra hot and in a take-away-cup - precisely how they like it. The in-house coffee people are desperate to do all this but they are not getting the chance because of some supposedly ‘safe’, slow-moving, job-protecting attitudes which do not seem in keeping with the Coalition’s agenda.

Jobs

Good on the Taskforce for raising problems and barriers that are very real, stopping better services, innovation and reducing the chance of new SMEs and private sector jobs that could compensate for the reduction in public sector jobs.

According to the Office for National Statistics, employment in the private sector grew by 205,000 in the quarter to April, while public sector employment fell 39,000 to 5.9m, the lowest level since 2003. If jobs are going to continue go in the public sector at least developing employee-led hived-off mutuals can help the other side of the equation. As Francis Maude highlighted in the Taskforce’s Report, there is now an increasing number of mutuals being set up across the Country from health and social care to youth and children’s’ services including real interest from Fire and Rescue Authority Services and these all need further encouragement.

Key Reasons for Success to Date

‘Rights’ for employees: to help see where we should be going with mutuals in the future the Taskforce has identified the key reasons for success to date for public sector mutuals and, quite rightly, top of this list are the ‘Rights’ given in Guidance to employees to enable them to hive-off a business which they can provide in a much better way from outside of the public body.

‘The Right to Request’ for providers of community health services within PCTs and the ‘Right to Provide for Trusts and employees of Councils providing adult social care through to the Community “Right to Challenge”’ contained in the Localism Act are examples of these ‘Rights’. It is incredible what impact some Guidance can have. Departmental Guidance is often at its most effective when it has some timelines so that inertia does not settle back on the sofa with its preferred beverage. If we want to nurture or encourage leadership skills within public sector organisations then top-level management need to be receptive to the message about developing social enterprises and have incentives to achieve results by particular dates. All of the most difficult mutual births often have to dip back into these Rights set out in Guidance to help get the project back on track, dealing with questions from different parties and calming down frazzled people who in doing something innovative will often get cold-feet and need sustaining.

Financial and other Support: as always, finance is important. Without support from sources such as the Social Enterprise Investment Fund (and the brilliantly helpful and energetic Julie McEver) then many of the success stories would simply not have happened. SEIF grants and loans have been so crucial and without these one would have feared for the quality or potential risks and liabilities present as a result of not having professional support to help ensure the business being created was a good one. Additionally, The Mutuals Support Programme has now really kicked in, with a comprehensive package of advice and support available including managing the process for mutuals to obtain legal and financial support.

Recommendations

The Taskforce’s recommendations come thick and fast and my recommendation is to take a double shot of espresso and hang on for the ride:

#Government Departments need to have a mutilisation plan - a clear pathway for employees so that they can take this agenda forward; Cabinet Office mutual ambassadors and good communication could play vital roles.

#Cabinet Office funding issues need to be reviewed, as do appropriate skill-sets for people involved and there should be cross-departmental support for these issues.

#The Cabinet Office should help sort the procurement complexities that apply to mutual hive-offs and give better guidance; I would say this theme is now really developing with the new Guidance for the Community Right to Challenge being released. Part of these complexities include not only core procurement law in itself - and how allotting contracts without fully comprehensive procurement processes is possible - but also related financial ‘evaluation’ issues, the strength of social enterprises, experience that can be taken into account and how the Government should continue to negotiate a better position for newly formed public service mutuals within the EU rules.

#Mutuals should be factored into the workings of the new Commissioning Academy and links made with the Cabinet Office.

#Big Society Capital could review the mutual sector with a view to assessing the potential opportunities and barriers to investing in mutuals; HM Treasury could look at reliefs for employee led businesses and financial barriers. On the funding side, in practice, it seems to me that the key issue still is early support. Grants and loans are vital and perhaps in the future social investment bond type support where money is paid on achieving certain goals. It is hard for the private sector just to set up SIBs like this where circumstances mean their return is uncertain but we have to keep looking. Equity investment and normal bonds issues are much more difficult in the mutual context.

Conclusions

The Taskforce Report is very welcome; its energy, analysis and release at this time is incredibly important across the public sector because on the ground there has been some recent lethargy as people concentrate on other things under cover of the austerity defence. I think there is a kind of road-plan developing within the report which should lead to a better place for mutuals, one which builds on the good work done thus far and this vision is far from a utopian one. Developing the mutual market up to this point has been based on hard graft, knocking down of barriers, absorbing every challenge possible from commissioners, ambition, innovation and leadership in spades - and I cannot see that changing.

Chris Brophy is a partner with Capsticks, specialising in commercial and contractual work for healthcare bodies,social enterprises, mutuals and charities.