Beyond the spin: Public service mutuals and social productivity

The RSA 2020 Public Services has a vision for public services that we call ‘social productivity’. Boiled down, it rests on three key propositions:

The RSA 2020 Public Services has a vision for public services that we call ‘social productivity’. Boiled down, it rests on three key propositions:

• That value in public services is created through relationships: between citizen and service, formal and informal resources, private business and public institutions;

• That public services should support individual capabilities and social resilience over the long term, not patch-and-mend failures in the short term; and

• That locally crafted and democratically owned public service strategies should be part and parcel of building economically productive as well as socially productive places.

It’s a vision we first shared back in 2010, when it was developed as the central insight of the Commission on 2020 Public Services. Change was in the air, and a fresh-faced Coalition was drawing up plans for Open Public Services that would see numerous services ‘spinning out’ of public control and ownership and into the control and ownership of their staff.

The new public service mutuals would unlock ‘untapped entrepreneurial drive’, bringing much needed efficiency and diversity to the supply side. While some questioned why the Coalition’s appetite for mutuals did not appear to extend to business more broadly, and unions expressed anxiety about terms and conditions, change had, in fact, begun under the previous administration, so stepping up the pace of mutualisation was generally welcomed as a promising development. Certainly, the 2020 Commission report which introduced social productivity was upbeat about spinning out: ‘If taken forward on a large scale, these changes could constitute a radical, positive move towards citizen and professional ownership in the services they deliver and consume.’

So how has public service mutualisation progressed? And is it still in step with our vision of socially productive public services? Through our partnership with the Transition Institute, we’ve had an inside seat on change in four London Councils. Our Enterprise Solutions programme supported by London Council's Capital Ambition has gathered learning from library, youth, communications and social care services. We launched its final reports this week, along with an animation that directly answers one of the research findings – namely a low level of awareness among frontline public servants of social enterprise options and understandable staff bewilderment when the process gets underway and the jargon begins to fly. The animation is an accessible way of kick-starting plain-speaking conversations.

But from a social productivity perspective, are these conversations worth having? From what we now know, is the march of the mutuals a good thing or a bad thing? The most obvious thing to note is that the march has been a good deal slower than the Coalition had envisaged. As the chair of the Mutuals Taskforce recently conceded, ‘a complete mutuals revolution is not yet upon us’.

This matters because part of the promise of mutualisation was that it could unsettle the private and public incumbents that dominate public service provision, generating value by blending skills, cultures and resources from a variety of sectors. Yet while mutuals are expanding slowly, outsourcing of public services to established private sector companies is surging forward at an unprecedented rate. The value of government contracts to the private sector has doubled in four years to £20bn. What’s been termed a ‘Shadow State’ of private providers has grown in size and strength.

For new mutuals, this has practical implications for entering the market for public services. Our Enterprise Solutions research suggests that in some circumstances, a joint venture with a well-established private – or indeed voluntary – organisation  can be a smart move for fledgling mutuals in order to enter the market and access capital and specialist expertise. But there is clearly a risk that the new organisations lose distinctiveness, and that mutuals become a politically helpful veneer to crudely marketised public service provision.

This is a significant risk. Some may think that it’s a risk not worth running for the sake of a process which is – at best – resource intensive and challenging for the spin-out service and its parent authority. But as Tim Cooper of Accenture pointed out in last week’s guest blog for 2020, social enterprise solutions – partial spin-outs, partnerships, in-house trading companies – are gathering pace, and are not simply a veneer to cover incumbent interests. There are many creative solutions that go with the grain of local expertise and culture.

As we heard at the launch event for Enterprise Solutions, mutualism -and the wider hybrid family now growing around it - can give local authorities and other public bodies confidence that change and improvement are possible. They are helping local authorities and other public bodies to think much more creatively about their economic roles - not only in terms of providing employment, but also in supporting skills, opportunity and entrepreneurialism. We know that in local authorities like Sunderland, staff are actively supported to consider setting up in business, potentially through spinning-out, but equally through setting up new enterprises beyond the public sector.

Mutuals, in other words, could be one of the ways in which public services play a smarter and stronger role in supporting sustainable local economic growth. Local authorities in particular will need to find ways to link their labour market and skills policies with encouraging business creation from within their own staff.

Against two of the three social productivity criteria, then, public service mutuals today still seem to be positive – though vulnerable – players in public service reform. They could help bring sustainable economic and social development together; and they could accelerate the growth of hybrid organisational forms, drawing from a variety of sectors, institutions and networks. But how do mutuals measure up against the remaining social productivity criteria, that is, the need to shift our public service interventions away from failure response and towards long term resilience and capabilities?

The signs are mixed. Working closely with communities and service users, some mutuals have developed packages of support that respond to the strengths and needs of the whole person and their wider community. But more often mutualised services have not had the ability, nor perhaps the inclination, to radically redefine their offer.

Ultimately, as players in a market, mutuals can only create interventions that commissioners are willing to buy. Under the last government, the voluntary sector won a greatly expanded role in the provision of public services. But the sector was not encouraged or allowed to renew the type of services that were delivered. Public services changed hands, but barely changed in nature. If we want mutuals and other social businesses to develop their full social productivity potential, political leaders and public service commissioners will have to involve them in creating a radically different model of public services.

Paul Buddery is Partner at RSA 2020 Public Services. He tweets at @buddypb