Tuesday, October 18, 2011

My piece for Guardian Public Leaders Network 17.10.11

Many noble words have been spoken in the last couple of years about the future role of public sector mutuals and social enterprises as alternative delivery vehicles for public services. So far we've seen some interesting pathfinders and the rather anodyne open public services white paper which, on its own, will probably not be sufficient to turn a trickle of new ventures into a torrent.

We have also seen consistent references by Francis Maude to the idea of partnerships between emerging spin-outs and the private or third sectors. This is an interesting concept but what might it mean in practice?

Most spin-outs have been standalone entities, often set up using government grants and loans to get them going. Now that state funding is no longer there to the same extent, it will become increasingly necessary to look elsewhere for cash and expertise.

This is where partnerships could come in. One possible vision of the future in healthcare is represented by Circle Health, a social enterprise which is part-owned by its staff and part by its managers and financial backers. Each new NHS spin-out becomes part of Circle with the employee share of the company kept at the same level – around 50%.

Two of the councils which we at Stepping Out are working with are seriously considering seeking partners for the spin-out of part of their in-house services – a joint venture as opposed to creating one that's standalone. The idea will be to ask charities and private sector organisations to compete – with investment and skills – to be the joint-venture partner for the new companies in exchange for a long-term contract and a stake in the company.

Speaking to people on the frontline about this, there are many attractions in the partnership model. If a well-known name is seen to be willing to risk its reputation on a spin-out, it encourages others to get involved. Likewise, staff and managers know that there will be support to fall back on. It is somehow easier to imagine this kind of scenario than hundreds of standalone mutuals and social enterprises spontaneously emerging from a cash-strapped public sector.

Of course, there could be problems, including a potential clash as the public service ethos vies to find a common agenda with the commercial side. This is difficult stuff and nobody should pretend there aren't some dangers but that shouldn't close minds to possibilities.

Given public discomfort about private profit in health and care services, this could become a big opportunity for the third sector, particularly with the so-called Big Society Bank on the horizon. After all, the public service ethos is, in many respects, very similar to that found in not-for-profits. If the better players in the third sector rival private companies in attracting investment for new spin-out ventures, it is very easy to see charities being selected as preferred partners over social enterprises and mutual ventures.

One logical question, of course, is why go to all this trouble? Why not just give charities and companies contracts to run the services themselves? Supporters of spin-outs would argue, correctly, that new spin-out ventures which are employee-owned, locally focused and not just a branch or a project of a national organisation would be a better partner to a local authority. They are more invested in the local area and better at involving communities and individuals in the co-creation of services.

Where this agenda is going remains to be seen. The jury appears to be out on spin-outs. While Cameron and his team remain enthusiastic, there is huge pressure, from the Treasury in particular, to create more efficient versions of what we've got, preferably delivered by the private sector.

For the spin-out agenda to get more traction, it seems necessary that existing players from charities and private companies get involved – and quickly – because the biggest danger for those already out there is that this movement remains small and peripheral. The next year or two is crucial. Partnerships appear to be a sensible way to press on beyond the first wave of early adapters.

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