Does the word mutual lose its meaning if it is imposed?

Today there are more 100 public sector mutuals across the UK, which can be found on this interactive map – and, as far as public service union Unison is concerned, these represent “a fundamental dismantling of the public sector”.

The union’s national officer Paul Bell warned the conference that these spin-outs won’t work because they “are imposed” and are really about “austerity” and “privatisation”.

But, in a session looking at the relationship between co-ops and trade unions, and now to protect jobs, services and co-op values, he said: “The two movements have a shared history and a common goal.”

Mr Bell was joined by Cilla Ross, vice-principal of the Co-operative College, who said the two movements both emerged in the context of industrialisation. “There has been a parting of ways,” she added, “but values are really shared – the idea of association: through joint action one can achieve more, whether as a co-op or trade union.”

Now, she argued, the movements face the challenges of economic crisis and austerity. The public sector should come first in providing public services, she believes, but where an alternative is needed due to the undergoing crisis, the co-op option should be the  way forward.

“My main concern is that if there are co-operative models, they are proper co-operatives,” she said. “We’ve gone from common ownership to public ownership and now back to common again.”

Co-ops are already making an important contribution to the public sector, she said. In Argentina, worker co-ops have been set up by workers to save bankrupt enterprises; in Italy social co-ops provide a range of public services; and in Canada they contribute to community development.

But the scenario is different when it comes to public sector mutuals in the UK, said Mr Bell. At Unison his responsibility is to try to stop these organisations from spinning out of the public sector.

“They are imposed, and therefore not going to work,” he said. “They are a result of austerity and cuts. Mutuals are being used as a way to privatise – it’s an ideologically driven move.”

He said the government was using trusted brands – co-operatives, mutuals and social enterprises – to privatise using the austerity narrative of budget cuts.

Public sector spin-outs under the Localism Act can be co-ops, mutuals or social enterprises. Unison would prefer the co-operative model but, said Mr Bell, “they are mostly social enterprises and mutuals”.

The union also wants a large-scale programme to mutualise the private sector contractors now providing public services.

In a 2013 report on public sector mutuals Unison warned that just giving some employees a proportion of the shares and labelling it  a mutual erodes the distinctiveness
of the sector.

“The problem is not with the co-operative movement,” he added. “Branches tell us there is no engagement in public sector mutuals.”

The National Trade Union Centre and Co-operatives UK have published a guidance on public sector mutuals, which warns that employee-led mutuals should be subject to a ballot of employees and not be ‘forced through’ against their will.

True mutuals would require genuine accountability but some public sector mutuals are formed without being subject to a staff ballot, the document adds.

The Cabinet Office defines public sector mutuals as an organisation that has left the public sector but continues to deliver public services and has staff control embedded. But often employees do not hold the majority of shares. This is the case of the civil service pension scheme manager MyCSP, where employees hold only 25% of shares in a trust, with 24% being held by the government and 51% owned by private investor Equiniti.

The guidance from Co-operatives UK and the TUC highlights the importance of engaging the workforce in the process and governing the mutual in a democratic way while safeguarding public assets and meeting employment standards.

Another concern for Unison is that public sector mutuals can lead to a two-tier workforce – the transferred workforce and the new starters. The two groups are on different contracts, with similar pension schemes but different salaries and holiday entitlement.

EU Procurement regulation is also posing a challenge to public sector mutuals, warned Mr Bell. Organisations spinning out of the public sector can operate for three years as a public sector mutual, but after three years they have to compete with other providers. “Staff have no long-term security of their jobs as contracts cannot be longer than three years,” he said.

“These organisations should be voted for by employees, governance should have 100% employee ownership, procurement should be ethical, they should protect against private sector takeover, and they should operate as exemplary employees,” he added.

Dr Peter Davis of Leicester University told the conference a genuine co-operative movement could never support the destruction of labour standards.

He added: “The public sector is not there to provide employment, but to provide services. We need to defend investment in public services. Too much time is spent on structures and not enough on behaviours. We need to look at the cultural aspect of education; we need to look at solidarity. Trade unions are not just about defending rights, this is not true about the
co-op movement either.”

Mr Bell responded: “We believe that you are part of the organisation if it is publicly owned. We don’t oppose co-ops”.

Cheryl Barrott, from Change Agents, a charitable community benefit society that works to promote the employment, engagement and participation of older people, said: “Co-operation is about common ownership and public ownership is about that too. We should work with trade unions, we need a way of coming together.”