The New Directions: Mutuals And Co-operative Spin-Outs

[Tim Lund]

Any one else spot this in the South London Press this Tuesday?

A council event for staff on June 16 called The New Directions: Mutuals And Co-operative Spin-Outs saw experts speak to 45 employees about the opportunities. The six-month review into which services could be given up was agreed at Lewisham’s mayor and cabinet meeting on Wednesday.

The Mayor's response to the report from the Public Accounts Select Committee’s Short Review into Mutualism is here, and the report itself - at least in draft - is here.

In the SLP article, Alex Feakes says saving cash was a factor in the proposals, but not the main aim. Maybe not for him, but it feels to me to be mainly about getting down the Council's wages bill and 'TUPE' obligations by encouraging staff into new, non-Council organisations. I can't find it now, but in looking through these reports, I think I saw something about there being no evidence that such spun-out services did provide better services to the public - but I may be wrong.

Rather than go this way, Lewisham should just be trying to deliver better value for money as it is - which given that it has to save money, means itself facing up to the need to make poorly performing staff redundant - and not letting it happen via some spun-out entity going belly up, having absorbed a lot of time, energy and possibly personal savings. That way the reputation of social enterprise, mutuals, co-operatives, call them what you will, will be further damaged.

(And anyway, I suspect groups of staff who do take the plunge of setting up a mutual organisation, will tend to be among the better performing.)

It is easy to understand why Lewisham will want to evade grasping these nettles itself - and the Localism Bill, also referred to in the SLP article, with all its central government inspired romancing of 'the community' gives them the perfect excuse.

[Alex Feakes]

Thanks for highlighting this report Tim. It was an interesting piece of work to be involved with and we (the Public Accounts Committee) received some useful evidence from a range of sources including LB Lewisham's Chief Exec and a representative of the Co-operative movement.

You've raised some important points with your piece and you're right that the such research that has been done in this area has suggested that the small scale spin-outs typical of council's efforts up to now haven't been as successful as their instigators have hoped (or promised). The same research - and other evidence we received - also suggests that this has been because the enterprises created have not been particularly good 'businesses' in the sense of having sufficient revenues, assets, breadth of customer base etc to survive.

There is, however, some evidence supporting the idea that mutual organisations generally have a better motivated and happier workforce, and in turn, more satisfied customers - this is one of the gains which PAC saw as coming out of the proposals.

Combining these two issues, we recommended that any such 'spin outs' using a mutual social enterprise model would need to have sufficient scale to be a viable business in its own right - small bits and pieces of service provision here and there aren't really going to cut it and your comment about wasting time with poorly conceived spin outs is well made.

The general feeling was that the Mayor & Cabinet's initial response shows that officers haven't quite fully grasped the implications of this point, but at our most recent Public Accounts Committee meeting, we pressed this point further and hope to get a more satisfactory response after the summer. We were also pleased that the council have been holding the seminars you mentioned and getting a lot of interest from staff.

One interesting observation that came out of our evidence is that in principle, nearly any service could be delivered through a mutual social enterprise - one former Lewisham children's service director has said that he thought that the quality of social care could well benefit from being delivered through a mutual social enterprise involving care givers and receivers. That is possibly too radical for where we are at the moment, but it's interesting that professionals who work in the field are thinking in such terms.