True Enemies - or Necessary Allies? Unions and Social Enterprise

This week 'Union News' published a story about a flagship social enterprise spin-out called Care Plus which operates health and social care services in NE Lincs.

The story highlighted the possibility that staff recently transferred out the NHS and Council might be made redundant and re-hired by Care Plus on new contracts.

It also spoke of the 'financial chaos' engulfing Care Plus (the organisation has to find big savings) and compared the situation in NE Lincs unfavourably to that in neighbouring North Lincolnshire where services have remained in the NHS.

The article wrapped up with a demand that all of these services be put back under NHS and local authority control.

At the moment, I don't know enough about the particulars of the situation in Care Plus but my understanding is they have tried to change terms and conditions for staff and, in doing so, have sought to deal directly with their own workforce (who are also owners of the company) - rather than deal mainly with the unions.

There is a some logic to the Care Plus position.  The members of the company are also the staff.   It therefore makes sense for the conversation to be one that takes place between owners rather than between 'bosses and workers'.

However, the situation is complicated by the fact that many staff are members of trade unions too.  Furthemore, there are also long-established practices in these services, which have seen unions being involved early, routinely and directly in talks around changes to terms and conditions.

Indeed, the prospect of being defined-out of the equation is, probably, one of trade unions' biggest fears about staff-owned spin outs.

There is a risk, in a world where everyone is an 'owner', of a trade union appearing superfluous.

And, on top of this, if a newly-minted, social enterprise is, in its first two years, changing terms and conditions, the story, from union eyes, looks every bit as bad as any other piece of privatisation.

As someone working in this mix, trying to support new social enterprises come out of the public sector, I feel pretty frustrated by the polarised situation between those seeking to set up co-ops and social businesses and the trade unions.

Particularly when the overall story of what is being achieved by organisations like Care Plus is so good.

The debate, it looks to me, has become like two sets of supporters on the terraces.  One side cries out out how much what they are doing is just the kind of thing trade-unions should be supporting - employee ownership, socially motivated enterprises, co-operative ventures.

The other replies by shouting back - 'Privatisation - you're just as a bad as all the rest'.

Obviously, I come to the debate not as a neutral.  I happen to believe that the public realm in this country can only be protected if we embrace new forms of public service delivery that go beyond traditional public services.

I also admire the leadership and staff at Care Plus for all they have achieved for the people of NE Lincs. They are an imaginative, well-motivated and inspiring set of people.

Care Plus, and those like them show us that the only way to address the national-emergency in social care (for that is what it is becoming)is to deliver benefits in far closer partnership with communities and their own staff.

My fear is that if Councils and the NHS don't do this now, we will lose services and that very large, powerful private sector companies will take an ever-increasing role in public service delivery.

Meanwhile, the position of trade unions, I think, is to see social enterprise as a kind of soft-focus ploy to undermine public services and the security of the people they represent.

It is easy to see where the unions are coming from.  The public sector is, in many ways, the only place left in the UK where terms and conditions of staff are relatively good.

History has taught the unions that once things are moved out of the public sector, things get worst a lot more quickly for the staff.

Can these two tribes be brought together?

In truth, I don't know.  At the moment, there doesn't appear to be much going on in terms of conversation between the social enterprise movement and our biggest unions.

We seem to be avoiding each other (again this may be just a perception) and shouting from the terraces.

My own view is that there is potential to find a shared-cause between emergent social enterprises and the trade unions.  

This is because there is much common ground:

1.  A shared concern for staff empowerment and the well-being of workers

2.  A philosophical agreement about the idea of staff owning and controlling their companies

3.  A genuine social concern as a main motivating force.

4. A belief in the public service ethos.

5. A belief that public services should not be run for corporate profit.

But, there are also big disagreements.

1.  The State. Social enterprises tend to believe that the postwar public services settlement in the UK is now history and new types of organisations, with new offerings, are needed while unions still believe in public sector delivery.

2.  Ts&Cs.   Social enterprises do sometimes need, over time, to realign terms and conditions to reflect performance of the organisation in its market while trade unions, naturally, wish to protect terms and conditions as they are now.

3.  Outsourcing. Social enterprises insist that employee-run is not the same a privately-run while trade unions tend to see anything that is operating outside the public sector as 'outsourced' and 'privatised'.

So what could any agreement between the Two Tribes look like?

In my view, there needs to be 'give' on both sides.

On on hand social enterprises need to guarantee the role of trade unions as a legitimate part of life in the new world.

Although a co-op or social enterprise may be owned by its staff,  it doesn't necessarily follow that conversations need only take place between 'owners' and  the need for union representation of  staff  by unions is no longer really required.

Even in a well-run mutual, the interests of managers and front-line staff may diverge - and we shouldn't deny that.

Furthermore, there need to be assurances to trade unions that all will be done to ensure that they are included fully in the operation of these businesses.  It happens on the continent and there is no reason it should not happen here.

Finally, the social enterprise sector needs to recognise that the unions have a job to do and have taken lesson from experience that should not be lightly set aside.

On the other, trade unions, I believe, need to re-evaluate the social enterprise route in terms of its alternatives as the UK enters its next round of public austerity.

We have to get prepared, together, for the possibility that i very few services will be delivered directly by the state within a decade, particularly if growth does not materialise.

If this happens, the terms of the debate will shift onto what is the best alternative to direct public sector deliver.

Compared to the prospect of mass-privatisation to firms with dubious motives and a bad track-record, social enterprise may well look more attractive, particularly if this can also maintain a wider range of services.

Under such a scenario, one could easily see the unions and social enterprise working together, as sometimes happens now at a very local level, where there is trust and mutual understanding.

But t the moment, it feels like we are a million miles away from an agreement.  I think the Two Tribes need to start talking, at the very top level and see if we can find any common ground before, for both sides, it is too late.

Is local government ever going to embrace social enterprise?

Will there be some kind of tipping point for social enterprise in UK local government?  So far we are in the Innovator / Early Adapter stage with many watching to see what happens in the first wave. 

But my view, which is of course not a disinterested one, is that we will get there.

Why?  Because of three related crisis': financial, services and political.

1. THE FINANCIAL CRISIS

The knock-on of austerity for the public realm in the UK is not yet apparent, except for a very small minority of people at the wrong end of welfare or social care cuts.

For the rest of us it is still an abstraction.

But this will change as local authorities face up to an existential challenge from 2014-18.  The hard facts are that English local councils will have lost up to 40% of their income between 2010 and 2015.     

Many Councils, among them Newcastle upon Tyne, will, by 2020, only have enough in the kitty to fund statutory social care costs, leaving nothing for other things.  A taste of things-to-come in Newcastle is the abolition of all Council funding for arts and culture in the city from this April.  It is also closing a number of libraries and, probably, the City Pool, the main swimming baths. 

Faced with this scale of challenge, Councils are really having to think hard about how to respond beyond finding efficiencies, selective closures and privatisation of remaining 'in-house' services.

Councils now realise that public money isn't the only ingredient in a successful public realm.   Combined with community endevour, it can be a potent factor in keeping public services in business.   

Let's look at Newcastle again.  Twenty years ago, Jesmond Pool in Newcastle became a social enterprise, after a lot of argy-bargy about privatisation.   It is run by local people, for local people. Today, it is in a far better position to survive than other neighbourhood pools, thanks to the low level of dependency it has on local authority funding. 

  This might be harder to do, say, in Elswick, at the opposite end of the social scale to Jesmond, but surely it is right to look at this possibility carefully before ever closing facilities.

While a surprising number of Councils still seem to be asleep at the wheel, there is a dawning realisation that if local councils let the car drive off the cliff then voters faced with closed parks, dirty streets and pot-holed streets will punish them at the ballot box.  

This isn't to mention the negative effects on an area's image that a negative spiral will create.  Nightmare scenarios in places like Detroit in the US privately haunt Leaders in parts of the North, especially, where there is a real risk of a point-of-no-return being reached if decline is not arrested.  

In this environment, again, it is occurring to many in Councils that the role of the Council as core provider is probably over and that new, more dynamic, more community-engaged vehicles are set up to support people and places to operate as they should.   

Devolution of budgets to community level (now happening in many places) is on important aspect of this.  So too is social enterprise, be this a community or charity takeover of a public service, or a spin-out from public services. 

2.     THE POLITICAL CRISIS

If Councils need to start closing the services that the majority see and use they know they will be in trouble at the polls, sooner or later. 

While the parcel can be passed to central government for a while, as has happened in Newcastle, this won't last forever.  People get angry when the streets are dirty and their local library isn't there any more. 

The most enterprising councils understand that a new settlement around Discretionary services ups essential if local services are to be maintained.  So in Wycombe, their woodlands services were moved into a mutual this year (with our help) because the alternative was probably a load of grief about the demise of the local environment. 

In this context, social enterprise looks sensible politically.

THE SERVICES CRISIS

The 1945 settlement basically gave a state-backed guarantee to all citizens around social protection.  Nearly 70 years on, the 'Beveridge Settlement' is no longer properly deliverable by appointed local state bodies like Councils and the various branches of the NHS.   

This isn't just because it is unaffordable now, but also because the society it serves has become too complex to be serviced effectively by public sector bodies.  This is well documented in other places (see the 2020 Commission on Public Services led by the RSA) but the reason to mention it here is that Councils now have to face this full-on because they have no money.  

This is an opportunity, disguised as a problem, in my view.  Social enterprise is part of a new settlement which says that we need to help people to look after themselves and each other with the state in a partner rather than a parent role.  Large, single providers who are seen by citizens as 'responsible' do not fit into this world.  As Councils try to forge a new kind of relationship with citizens, social enterprise comes more clearly into view as a means of delivering public services.

What, if anything, does this add to up?  Taken together, the financial crisis, the service crisis and the political crisis facing local government appears to be opening minds.  

Councils' first instinct is to set up their own ventures - which is very easy and quick to do - but the challenge, from my own very first hand experience, is that such ventures tend to a bit like teenagers who never leave home.  They look and occasionally act like grown-ups, but the relationship remains one of dependency. 

The good thing about social enterprise is that the child does leave home and forge a healthier relationship with its parent based on respect and appropriate distance.  There is still a bond, but a very different one to when everyone was under one roof.

This more closely mirrors the grown up relationships with their citizens to which Councils now aspire.  Which is why, although it's still early in the day, social enterprise, I think, has a big future in local government services.