Government plans for mutuals should not be ‘forced through' against employees' will

date: 16 August 2013

embargo: 00.01hrs Wednesday 21 August 2013

Government plans to outsource public service provision to independent employee-led mutuals should be subject to a ballot of employees and not be 'forced through' against their will, Co-operatives UK and the TUC warned today (Wednesday).

The two umbrella groups - representing co-operatives and unions - say that ministers should not ignore the views of workers in their drive to mutualise services.

To date, around 70 public service mutuals have been formed, controlling public expenditure of over £1 billion. Whilst there have been some examples of good staff engagement, the TUC and Co-operatives UK are concerned that not enough public sector mutuals offer employees a genuine voice in the formation or the running of the new business.

The civil service pension scheme manager MyCSP, for example, was formed as a private business without a ballot for staff on the transfer and operates without the genuine accountability that would make it a true mutual. Employees hold just 25 per cent of shares in a trust, with 35 per cent being held by the government and 40 per cent owned by private investor Equiniti, led by former employees of outsourcing firms Serco and Capita.

Several spin-outs of mutuals across the NHS have proceeded without full support from staff.

The TUC and Co-operatives UK have signed up to a historic joint set of best practiceguidelines setting out the conditions that should be in place to ensure that public service mutuals are based on employee support and offer genuine employee ownership and representation.

The guidance calls for the government to establish quality standards in its programme of public service mutualisation and outlines a set of principles agreed between trade unions and representatives of the co-operative and mutual sector.

The guidance addresses concerns in five key areas where the two organisations have identified best practice for successful mutualisation:

• workforce engagement and consultation in the process
• governance and democracy in the mutual
• commissioning of services
• safeguarding of public assets
• employment standards

TUC General Secretary Frances O'Grady said: 'Increasing numbers of employees are leaving the public sector through the government's mutualisation programme, often against their will.

'The mutuals that are being formed often don't meet the democratic and open criteria of genuine co-operatives. In fact, many are simply privatised services under the cover of mutuals.

'These new entities will give controlling stakes to investors rather than workers and allow important public institutions to be taken over by large for-profit providers.

'We hope that this guidance ensures that where public service mutuals are created, they are done so with explicit employee support and genuine ownership and representation in any new organisation.'

Secretary General of Co-operatives UK Ed Mayo said: 'I am a strong supporter of the mutual option for public services as a way to empower staff and engage service users. But it needs to be done well. You can't be genuinely employee owned if, in terms of culture and governance, there is no sense of employee ownership.

'There are international principles which safeguard the co-operative model, as a form of mutual. This guidance draws on these principles , and pioneering work with co-operative schools, to set out how to protect and promote the interests of employees and others who have a direct stake in the quality of our public services.'

NOTES TO EDITORS:

- A copy of Public services, co-operatives and mutuals: Best Practice Guidance, can be found at www.uk.coop/publicservicemutuals

- The TUC and Co-operatives UK aim to work with the Cabinet Office, which is responsible for the mutualisation programme in government, on the implementation of these principles.

- Ed Mayo is co-author of The Mutual State, published in 2001 by the New Economics Foundation which kick-started work on mutual models in public services. Mayo is speaking here independently in his capacity as Secretary General of Co-operatives UK and not in any way as an adviser, past or present, to Governments on mutual enterprise.

- Co-operatives UK works to promote, develop and unite co-operative enterprises. It has a unique role as a trade association for co-operatives and its campaigns for co-operation, such as Co-operatives Fortnight, bring together all those with a passion and interest in co-operative action. www.uk.coop

Contacts:

Media enquiries:

Co-operatives UK

Nick Molyneux T: 0161 214 1762 M: 07802 556 575 E: nick.molyneux@uk.coop

TUC

Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk