Friday, 24 September 2010

Mutually ours: a solution for public sector reform?

Public services are at a crossroads – the Lib Dem conferences fringe events were dominated about the future. Today I am attending a “meet the primes” event for the voluntary sector in the North East . This a curious name for a event organised for the voluntary sector to engage with private and third sector bidders for the larger contracts likely to be put to tender in the North East. This reveals the classic problem that public services are cheaper when put out on a big scale but that innovative local solutions to local need are often best provided by locally rooted organisations.

Many local publically owned and run public services provide excellent services to residents. I would argue that this is despite being part of a government bureaucracy than due to it.

For 3 years I was a trustee of Leisure Tynedale, now the much larger North Country Leisure, which was a voluntary group set up to run the Tynedale districts leisure facilities. It is run by the former director of leisure and I remember him talking of the liberation he felt from being able to run his service like a business when it separated from the council. The charity has repeatedly cut its costs, whilst increasing participation. It has become recognised as a leader in the provision of leisure in the North and has now taken over the running of leisure services in North Northumberland and Copeland in West Cumbria.

The still large degree of subsidy from the local authority has meant they have still had a big say in strategic development but the independence of the charity has meant they have been able to lobby for the council to fund new leisure facilities, such as the extension to Prudhoe Waterworld and the new Wentworth leisure centre swimming pool in Hexham.

Successes such as this across the country has encouraged Tory run Suffolk County Council to go the whole hog and announce that it is going to disinvest and that the council will not directly run anything in four years.

So there are definitely benefits from “outsourcing” but I am worried about the ability of local and national commissioners to effectively tie national and multinational contractors into terms that allow the public body to hold service providers to account and not to overpay for services in the long run. The last governments PFI contracts are a classic example, I worked at a council department where we just couldn't afford to bring in a PFI contract manager with the requisite knowledge to compete with the private sectors team.

I want to see a really vibrant market of public sector provision emerge that has lots of local providers providing innovative solutions with local community ownership.

There is definitely a role for the voluntary sector to take over some services but in other areas there is a real role for the existing staff to tun things. Under Labour, the term “social enterprise” became very fashionable but many of these social enterprises have very loose legal structures and feel very much like pure private businesses. They often are controlled by a few individuals with little democracy. Their not for profit nature is corrupted by being run by and for the high wages of senior managers.

The answer, in part, surely is to embrace mutualism and co-operatives. This feels out of fashion at the moment and bizarrely wasn't heavily promoted by the many ministers of the previous government who were the joint MPs of both the Labour and Co-operative party.

Mutually owned organisations, whether by the public, customers or workers would add the local responsibility we need whilst still allowing public services to be run at an operational level free of the “dead hand” of council bureaucracy. But fostering this new environment will not save as much money as the quick fix of tendering services out to large national charities and companies who can provide immediate lower costs but at a cost to local accountability and ownership.

I still think a lot of public services could follow in the footsteps of former local authority stock transferred out of the state and of Welsh Water which was mutualised after being privatised and is now owned by its customers. The public sector could sell the assets to a new not for profit structure. This would realise capital receipts, free them up from state control and put in a more philanthropic ownership. I still think this could be a very attractive thing to do with Northern Rock.

Anyway here are a few suggestions for the new government and for local commissioners:

  • Let public sector contracts in sections small enough to allow local contractors to tender and place value in the tender spec for local community involvement
  • Make the Financial Services Authority (FSA) more amenable to approving new co-operative organisations
  • Promote potential spin offs of workers into mutual enterprises but accept that it will take a few years for efficiencies to bed in – this is the price you pay for more community ownership
  • Accept that if you fund charities they must be allowed to campaign and potentially criticise the people funding them
  • Don't think that because it is run by the voluntary or co-operative sector it will be cheaper than the private sector, focus on the social capital you are developing

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