Employee-led mutuals ‘must not be cost-cutting front’, say MPs

Employee-led mutuals could positively transform public services as long as they are not driven by economic motives, according to a group of MPs.

A report by the all-party parliamentary group on employee ownership, published today, found the coalition government had made “significant process” with its commitment to mutualise public services, including social work.

But the group warned that, although many employee-led mutuals had reported efficiencies, cost-cutting alone “should not be the prime motivator for seeking out mutual ownership models”.

Mutuals are currently being piloted in social work in the form of independent, GP-style practices, led by frontline staff. The government claims giving social workers more control of services could lead to higher morale and status in the community, and more commitment to, and personal involvement in, their work.

The idea was first mooted in children’s services by Julian Le Grand, professor of social policy at the London School of Economics in 2006 and, in February, the Cabinet Office appointed Le Grand as chair of its Mutuals Taskforce.

His role is to find ways to expand employee-owned mutuals across public services as part of the government’s Big Society agenda.

However, the APPG, chaired by Conservative MP Jesse Norman, identified a number of concerns about the timing of the mutuals intitiative. Trade unions in particular have suggested it is being driven by financial considerations rather than the desire to give frontline workers more freedom and control.

“Several witnesses told us that the timing of the public service mutuals initiative, during a time of deep budget cuts at central and local government level, was inflicting severe damage on how the initiative was perceived and how it was being implemented,” the report said.

“The group is concerned to hear that some spin-outs appear solely driven from very senior level, typically under the pressure of the need for immediate short term cuts, with the wider base of employees engaged only after the process had started.

“We believe the background of expenditure cuts do present a danger that organisations may set unrealistic timescales in making the transition to new models, and could make bad decisions about selecting appropriate models and business plans for the future.”

The APPG, which was set up in 2007 to raise awareness of the benefits of employee ownership, also noted that the “plethora” of employee ownership models available had caused confusion among frontline workers.

Norman said policy makers should do more to connect would-be mutuals with experts and ensure that advice is accessible.

He added: “Employee ownership in the public sector is to be encouraged, and in the coming months the APPG will pursue our recommendations with government and other influential bodies to ensure employee ownership continues to become a reality.”

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