Co-operatives UK and TUC team up to protect public service mutuals

Employees must be at the heart of the decision to outsource public services to a mutual, rather than being ‘forced through’ against their will, warn Co-operatives UK and...

Employees must be at the heart of the decision to outsource public services to a mutual, rather than being ‘forced through’ against their will, warn Co-operatives UK and the TUC.

The two umbrella groups representing co-operatives and unions have highlighted a lack of accountability and stakeholder engagement in some of the 70 public service mutuals that have been created.

Government plans to decentralise services have so far put more than £1 billion of public expenditure in the hands of former employees.

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 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 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.

Co-operatives UK and the TUC have signed up to a historic joint set of best-practice guidelines setting out the conditions that should be in place to ensure 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.

It addresses concerns in five key areas:

• Workforce engagement and consultation in the mutualisation process
• Governance and democracy in the mutual
• Commissioning of services
• Safeguarding of public assets
• Employment standards.

In the document, Co-operatives UK said mutuals should be accountable to all stakeholders, including users, the community and employees. It also calls for public service mutuals and co-operatives to adhere to the International Co-operative Alliance’s seven principles of co-operation.

Ed Mayo, Secretary General of Co-operatives UK, 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.”

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.”

Both organisations aim to work with the Cabinet Office, which is responsible for the mutualisation programme in government, for the implementation of these recommendations.

• To read the full guidelines, visit:

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