The new mutuals delivering public services - really?


Both the continuing austerity measures and the drive for improvements in public services are fuelling interest in alternative delivery models in the UK. The previous Labour and Coalition governments both promoted experimentation in mutual and social enterprise run services, and the current Conservative government has continued this trend. 

One resulting development is the arrival of the ‘public service mutual’ - the new kid on the block. These are independent organisations that have developed out of and left the public sector, but which continue to deliver public services. They are described as ‘mutual’ because employee engagement and participation in the governance and running of the organisation and its activities plays a significant part. Examples of public service mutuals can now be found in health, education, cultural, leisure, social care, children and young people’s services. 

The UK Cabinet Office’s definition of public service mutuals allows for considerable flexibility in legal form and ownership structure. It emphasises the independence of the mutual, the need to provide public benefit and the importance of some form of employee engagement. This is not the same as a more traditional description of mutuals as organisations owned by, and run primarily for the benefit of, their current and future members, who may or may not be the employees.

Mutual benefits

An Office for Public Management (OPM) 2010 report looked at mutuals in public service delivery. Drawing on research, they came to the conclusion that alternative ownership models offer three potential benefits for public services:

  • improved organisational performance and efficiency
  • employee and user engagement, with its resulting influence on service improvement
  • wider benefits to society resulting from a greater sense of citizen empowerment and responsibility.

The report also highlights a number of benefits associated with employee-owned enterprises including: higher productivity, lower rates of turnover and absenteeism and concern for service quality.

The Mutuals Taskforce briefing paper Our Mutual Friends: Making the Case for Public Service takes a similar view. However, the paper also recognises that while mutuals can provide real benefits, it does not make them the preferred option in all cases. In some cases employee control or ownership may not be appropriate. In other cases, where a service is effectively a failing enterprise, then a mutual model may not necessarily be the best approach for quickly turning around the financial viability of an organisation.

The additional benefits provided by mutuals are often to do with the opportunities available to build social capital both within the organisation and with those who interact with it. Stronger engagement with and by employees, for example, can support increased sharing of knowledge and experience, which can result in long-term improvements in service delivery.

But positive member participation is not a given just because an organisation adopts a mutual legal form. Management has to recognise what mutualism offers and proactively encourage employee and other stakeholder involvement to develop and contribute to improving performance.

Furthermore, transitioning to a mutual model and developing an engaged membership takes time. This perhaps suggests that it is most appropriate where there is the potential for a long-term stable membership. It is probably less appropriate where annual member turnover is likely to be high.

Watch this space: emerging models

The new mutuals have adopted a variety of legal forms, and approaches to organisational purpose, governance, ownership rights and profit distribution. One interesting feature of the mutuals established under the ‘right to provide’, available to NHS and social care staff, is the extent to which they can be described as ‘bottom up’ rather than ‘top down’ organisations. With ‘right to provide’, staff can produce an expression of interest, setting out their proposal. This staff led approach is very different to some of the earlier public service mutuals. 

Initial studies indicate that there is no one model, but rather a variety of multi-stakeholder organisations, which identify as ‘mutual’ but which are working beyond traditional definitions and sector boundaries. Some will view this as diluting mutual or public service ideals, while others welcome the application of mutual and public service values and principles to new ways of providing services. In both instances, like them or not, public service mutuals offer a very different take on the idea of ‘public’ ownership, and one that potentially opens up new ways of thinking about and delivering public services.

CIPFA resources:

Alternative delivery models (due to be published September 2016)  
Social enterprise and public service delivery (2014)