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The case for mutuals is made to Government in new paper

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Plans for staff mutuals in local government are being hampered by procurement obstacles, low awareness of Ministers’ aims and uncertainty over the cost impact according to ‘Knowingly Undersold - how Government can spread the John Lewis effect’, a new paper by Prospects, a leading public sector provider that is itself an employee owned former public sector spin-out.

Written by the former chief executive of the Employee Ownership Association and member of the Government’s Mutuals Taskforce, the paper calls on Ministers to issue tough new guidance to councils on supporting staff mutuals within EU rules - describing current procurement uncertainty as a “blight” on Government plans for a million public sector staff to be in employee mutuals by 2015.

Praising the Coalition’s courageous support for employee ownership, the paper advises the Cabinet Office to include council chiefs in a new advisory body needed to ensure officials are “properly plugged in to realities on the ground and give a critical mass of public sector leaders a stake in making more mutuals happen.”

The paper also calls on Ministers to support awareness-raising national awards for public service mutuals, issue evidence on how staff mutuals are reducing costs to councils while preserving service standards and consider tax incentives that will make forming staff mutuals more attractive to councils.

The paper’s author, Patrick Burns, said; “The evidence shows that staff mutuals can be a highly effective solution to councils’ need to cut costs and protect service quality - but Government can accelerate take-up dramatically with much clearer guidance on how and why to make this happen, and by involving local authorities more directly in the policy process.”

As well as recommendations for staff mutuals in the public sector, the paper also backs employee ownership as an option for family business owners looking to sell their company. Prospects is submitting the paper to Cabinet Office Minister Francis Maude MP and the independent review of employee ownership being conducted for BIS Minister Norman Lamb MP.

  • See full paper - ‘Knowingly Undersold - how Government can spread the John Lewis effect’ - in the ‘Files’ section of this article.

Patrick Burns is Director of Mutuals Development for Prospects and until December 2011 was Chief Executive of the Employee Ownership Association, the representative body for the £30 billion sector of co-owned companies which includes firms such as the John Lewis Partnership.

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