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Mutuals - questions and answers...

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LGC considers the main issues for this type of alternative service delivery

What is a mutual?

Mutuals are businesses that are owned by thier members. From that base they can choose to operate as social enterprises should they wish and they can take part in a range of commercial arrangements - including joint ventures with central government, local government, or the private sector.

Are they the same as social enterprises?

Not necessarily. Central to the notion of a social enterprise is the reinvestmernt of profit to fund particular goals, such as homelessness or addiction. A mutual does not need to make such a commitment.

Why would staff want to give up secure council jobs to form mutuals?

They may feel that their current remit is stifling and that breaking away from the council will allow them to provide their current service more flexibly, as well as potentially widening their offer to include more commercial work.

Any other reaons?

They may also have been told they face redundancy if they don’t explore alternative ways of working.

What are the risks?

How long have you got? According to the Confederation of British Industry, finance and scalability are the main ones, coupled with a perceived lack of business experience among many front-line staff. Not insurmountable obstacles, it argues. Risks for staff would include the future of their pensions and the ability of their mutual to fend off competition from established private operators.

How many mutuals could there be?

Potentially quite a lot. Cabinet Office minister Francis Maude has said he wants to see one million public sector staff working in mutuals by 2015 – potentially representing a transfer of one-sixth of the workforce. However not all of them would be from local government.

Is local government leading the way on this?

Not exactly. The NHS’ “Right to Request” programme goes back a bit further and the Audit Commission is exploring the creation of a mutual. Last week, plans to spin out the administration of Civil Service pension schemes into a joint-venture mutual were announced.

Having said that, there is lots of mutuals activity in schools and youth services.

What is a council’s role in helping staff to break away?

Recent advice from Local Government Employers argues that councils should take care to make sure that staff consider the whole range of options in discussions about the creation of mutuals and satisfy themselves that sufficient motivation and impetus exists to see through the complexities of setting up a venture.

What is the government doing to help?

It has created 12 pathfinder projects, each supported by a consultancy, such as KPMG, or leading mutual, like the John Lewis Partnership, to explore the issues faced by public sector bodies looking to mutualise services. It has also created the Mutuals Taskforce headed by Prof Julian Le Grand (see left).

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