Bridging the trust gap: the past, present and future of mutuals and public service commissioning

Here in the UK, we are of course immensely proud of our welfare state. We fight for it fiercely at national, regional and local levels and the concept of “outsourcing” is dismissed by many as a dirty word. High-profile failures like the collapse of Carillion have tarnished the reputation of outsourcers and legitimate public scepticism about the value of outsourcing has as a result increased significantly. Alarm at the extent to which public services are dependent on the financial status of private companies has also heightened in recent months.

But it’s easy to pinpoint the current problems. What about solutions?

Where are we now?

18 months on from Carillion’s demise, this summer the government is focussing attention and resources on public service mutuals. DCMS has opened up a new round of funding for new mutuals and produced template legal documents for spin-outs under its Mutuals Support Programme (available here), and launched a public consultation on mutuals. At Bates Wells, our involvement with this work has led us to reflect with colleagues across the sector on the value of mutuals, and now certainly feels like the time for a proper debate about the future of public service spin-outs and the role that mutuals can play in the future of our society. This consultation is a great opportunity for mutuals to make their voices heard, and I urge you to participate if you haven’t already.

Setting aside the ideological objections to public sector outsourcing, the fact is that the Bevan-era ideal of a wholly publicly-run and state-funded welfare state has come to an end. Many studies support this fact. To cite just one, in the early 1990s just 5% of home care was provided by private companies. Today it is more than 80%[1]. The annual value of outsourcing work now offered under tender from the NHS is £5.9bn[2].

This evidence hammers home again the need to restore public trust in public service commissioning. The key players in this sector need to work to resolve this issue rapidly, and may need to consider some radical options to achieve this.

Next steps

So where do we go from here? Profit should not be the goal in public service provision, and of course the notion of ‘too big to fail’ is no less applicable to PFI contractors than it was to banks.

But there is an alternative to private sector outsourcing. The government’s move to prioritise social value in public service commissioning should, if implemented effectively, open the door to greater engagement of mutuals, who place social value front and centre, foregoing the distribution of private profit altogether in favour of a focus on positive impact.  Mutuals should seize this opportunity to drive improvement of procurement at a legislative level by urging the government to ensure that social value is recognised as genuinely integral to strategic commissioning, and to build on the changes at local level already happening across the country.

Mutuals combine their social purpose with localism, which is increasing in popularity as a growing movement of co-operative councils look to commission from within the community and campaigns such as ‘Keeping it Local urge commissioners to draw on local expertise and re-invest in local economies.  

These community based strategies encourage ownership of services by communities, users and staff, and one core message we at Bates Wells have heard from our consultations with mutuals is that ‘ownership’ is a crucial factor behind their success.  Communities, users and staff are actively engaged in the direction and delivery of services, whether at a governance level or via inclusive methods of management which move away from the hierarchical structures traditionally found in the public sector. In this way, mutuals can play a pivotal role in closing the ‘trust gap’ which has emerged between the public and local government in public service provision.  

But this is also a moment for reflection amongst mutuals. Is employee ownership integral to the identity of mutuals? Are they charities, social enterprises, co-operatives or none of the above? Do all mutuals arise as a result of a spin-out from the public sector? Are all mutuals funded by councils or the NHS, or can they become self-sustaining?

The answers to these questions may lead to important conclusions about a new ‘sector’ of public service provision and help mutuals to join forces for positive change in our society. Perhaps now we have an opportunity for those inspired and dedicated service providers among councils and communities to move beyond the chaotic politics of our time and re-construct our welfare state from the ground up, according to the key values embodied by mutuals; community, creativity and sustainability.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of September 20, 2019.