Nudged out: this is mutualisation, but not as we know it
The Guardian, by Ed Mayo
It makes for a lovely headline. The much-trumpeted "nudge unit" in government is being nudged out and will be run as a private, mutual business. As one academic, Will Davies, jokes: "Turning the nudge unit into a mutual suggests coalition policy has now entered an infinite feedback loop." But it is worth taking note of, because it could soon be coming to a school, health centre or local authority near you.
The unit is a small offshoot of the Cabinet Office. Led by David Halpern, an outstanding policy academic, it was formed after the 2010 general election, with a mandate to find smarter ways for government to get the public on side.
And it is now to be an experimental model for how public services more widely could be run. The staff agree to form a business and look for a private sector partner to co-invest, with a stake for the employees and for government. As long as the staff have more than 25% of the shares, it is, in the language of government, a public service mutual. If this can then go on to win business, inside and outside government then, on the face of it, the Cabinet Office has an exemplar of lower costs and new entrepreneurialism.
But there are concerns. There is no vote for staff in this version of mutualisation, so they can perhaps be pressed into something they don’t buy into. It is not really a new model but rather good old privatisation – although with the potential for the taxpayer to benefit if the business does well.
Above all, it is not, or at least not yet, a genuine mutual business. Nor is it a co-operative. And don’t even mention the wonderful John Lewis, which is tediously and often inappropriately trotted out as an ideal for all services.
The co-operative and mutual sector is more in the limelight than ever, but that doesn’t mean that we want privatisation carried out in our name. Co-operative businesses in Britain together turn over more than £35bn a year. The sector has grown by 19.5% since the start of the credit crunch in 2008, while the economy as a whole has shrunk by 1.7%.
It is hard to be a saint in any business, but we have a strong reputation for fairness, because the people who own co-operatives and mutuals are the workforce, the customers, the suppliers or the local community. Seventy-five percent of people say they trust co-operatives to act fairly, while just 18% say the same about business generally.
The term mutual traditionally applied to financial services co-ops, serving members with insurance, savings or loans. In an effective model still widely used around the world, they recycle money within a closed system that doesn’t include – or need – outside investors. It is true, though, that the term "mutual" has been watered down in some countries. In the US, mutual savings banks see their customers as "members" but they don’t allow them a say in what goes on.
In public services there are some good examples of genuine mutuals. The Cabinet Office is tracking 65 fledgling mutuals delivering about £1bn worth of public services. These range from youth services and social work practices to fire and rescue, with some for profit, some non-profit.
More impressive still, and led from the grassroots by teachers and parents, is the rise of co-operative schools, now numbering more than 500 in England alone. It gives a democratic form to the governance of a school and entrenches a commitment to ethical values.
But the government’s entry definition of mutual ownership, with a paltry 25% for staff and no rights for service users, gives no guarantees of member control and leaves investors in charge. It is a start, but when public services have been sold in this way before, such as the bus firms in the 1980s, the assets moved as night follows day from being employee-owned into private hands.
We respect the right of government to try different models for public services. But with respect, we don’t want to be sheep’s clothing for someone else’s animal, whether predator or prey.