Making sense of mutuals on eve of all-out election warfare

The NHS is getting in on it, the probation service is on board and the current government has shown its commitment – but what exactly is a mutual and why is the mutual model relevant to all of us during party conference season? 

Ellie Ward goes back to basics and makes sense of the jargon-filled maze that makes up the mutuals discourse.

Mutuals made their debut in the political sphere a number of years ago and as we edge closer to full-scale election campaigning the model is to become increasingly important. 

In his first public speech at the Cabinet Office and Nesta's Social Action conference the UK's new Minister for Civil Society said: “For years, traditional private sector organisations had dominated the outsourcing of our services market but now we are changing this by supporting staff to take control of their own services through public service mutuals. 

“There are now 100 public service mutuals – up from nine in 2010 – with many more in the pipeline.”

Earlier this year the Cabinet Office celebrated the Mutuals Support Programme’s two-year anniversary. The Programme was originally launched in February 2012 with a £10m government investment. 

But how does the mutual model work in practise and what evidence are the political brains basing their grand plans on?

Definition wars

Dan Gregory is an independent policy and practise adviser on mutuals, cooperatives and social enterprises. He says: “Conventionally, mutuals are businesses owned by their members. 

“But [Cabinet Office Minister] Francis Maude takes a rather more disruptively innovative definition, which is more free and easy. He talks about businesses with a significant degree of employee ownership or engagement.” 

It is possible to be a mutual, a social enterprise, a spin-out, employee owned and a cooperative.

Director at Mutual Ventures Andrew Laird vents his frustration at the lack of clarity around the mutual definition. When asked what he thinks the general public should know about public sector mutuals – so that they are empowered with a greater understanding of the way some public services are run – he replies,  “I’d like there to be a much better understanding of what a public service mutual is and what it’s not.”

Laird describes the mutual model as the “perfect middle ground between public sector delivery and straight outsourcing”, because “it preserves the public service ethos through empowering staff and reinvesting profit but it also introduces commercial behaviours to help services become more sustainable”. 

When discussing mutuals, it is inevitable that other terms are thrown into the mix – from social enterprises to cooperatives. Dan Gregory clarifies: “It is possible to be a mutual, a social enterprise, a spin-out, employee owned and a cooperative.

“In fact, many of the 100 mutuals which the Cabinet Office has recently celebrated identify themselves firstly as social enterprises as their journey began under the previous government’s Right to Request policy led by the Department of Health.”

What you need to know 

There are certain myths surrounding mutuals such as that they rely on one single contract to survive, which evidence shows is not correct. Dan Gregory explains what he believes are the key things to be aware of when it comes to mutuals.

Those who think this is a Trojan horse or backdoor for privatisation are wrong.

“It is important to understand that many mutuals are not run for private profit (and are social enterprises), while some could be. It is also worth remembering that marketisation (or privatisation) in healthcare and other public services has been progressing for decades under governments of various colours. 

“So those who think this is a Trojan horse or back door for privatisation are wrong. Allegations that this is a smokescreen might be closer to the mark but a real shame if true, as it would be great to think that politicians of all parties were genuinely interested in empowering public servants and public service users as a genuine alternative model to either bureaucratic top-down public sector models or faceless private profiteers,” he explains. 

What do they know?

The key arguments in favour of mutuals focus on the principle that because they are employee-led or owned, people with genuine passion and more commitment run them. 

Karen Shannon, director of the first arts and media mutual in the UK, Lets Go Global, says: “We’re all really proud of Lets Go Global – we feel a real sense of ownership having helped grow the organisation from a start-up to a successful business and are all tremendously committed to its success. 

“One of the biggest benefits of being a mutual is the freedom to be truly innovative and creative. We’re exploring our values and culture at the moment, and it's great to be able to really invest our beliefs into the organisation.”

Campbell McDonald, director at Baxendale – an employee owned social enterprise and expert in employee owned businesses – says: “If you can crack it – if you can get the right mix of enthusiasm, mechanisms and motives – employee ownership can be a truly dynamic driver of outcomes and happiness. In my experience ownership done right brings out the very best in people – their drive, their ideas, their sense of pride, plain and simple. 

“Ownership gives you rights – to share in information, influence and reward – but it comes with the expectation that you’ll take care of the business like it’s your own – because it is your own.”  

While this anecdotal evidence is important, how much do supporters of mutuals really know about the benefits of them?

Political support for this agenda is really based on ideology rather than evidence.

Dan Gregory says: “While there is plenty of evidence that employee ownership can bring benefits compared to conventional private ownership, there isn't much research which looks at how public sector spin-outs change when they mutualise or become social enterprises.” 

There is one study led by Prof Fergus Lyon, which Dan Gregory was involved in. Good news for mutual advocates – it found that innovation can be faster and easier in social enterprises compared to the public sector.

“Really though, while there are some good reasons to suggest that spin-outs can be more responsive and less wasteful, political support for this agenda is really based on ideology rather than evidence. Of course, that's what politics is often about,” concludes Dan Gregory. 


Key Term Definition

Ex-public sector organisations that are now independent, socially orientated business

Cooperative Organisation that is owned and run jointly by its members, who share the profits and benefits
Spin-out When one organisation leaves another to become an independent, stand-alone business


The mutuals future

From the Mutuals Support Programme to Brooks Newmark’s recent comments about changing the way public services are delivered in the UK, it seems predictable that a commitment to the mutual model will be a feature of both the Conservative and Liberal Democrat manifestos for the 2015 election.

Benedict McAleenan is a former Conservative Party Agent who currently works in Public Affairs at Edelman. In an article for the Conservative Home website, McAleenan suggests that planning departments would make good mutuals and would allow David Cameron to fulfill his Big Society mission.

“The Big Society was mis-sold as some sort of huge volunteering project. In fact, it was meant to be a revolution in the way public services are provided. It was supposed to give more freedom to innovate, more varied ownership structures and new ways to save money. With mutuals, it can do all of those things for the planning system. For the sake of anyone who dreams of buying a home, we should let it,” writes McAleenan.

For Labour, railway franchises are likely to be given the mutual go ahead in their upcoming election manifesto. At the beginning of the summer the shadow transport team confirmed that Labour will offer cooperatives and mutually-owned companies the chance to run Britain’s rail services.

The Labour Party kicked off party conference season for the three main political parties in the UK, followed by the Conservative Party. The Liberal Democrat Party conference is underway in Glasgow until October 8th


The need for change to improve public service delievery is increasingly urgent – Playtime's over. And that's this year's theme for the UK's annual social investment conference, Good Deals. It's time to get serious about social change. 

Photo credit: Darren Harmon