Much of the talk about public service mutuals tends to imply it is all about happy groups of professionals unhooking themselves from the chains of NHS or council bureaucracy and running happily into the cornfields.
Of course, it's not like that. Stepping out of the public sector is political with a capital P. So far, I have never seen a spinout that hasn't required heavyweight backing either from the top pinnacle of the local bureaucracy or senior elected members.
Put simply, if you, as a public manager, want to "step out", you've not only got to do the numbers, you've also got to do the politics.
So where do you start? In short, politicians, or very senior executives, need three things. Firstly, they need to know if this fits in with the general tenor of where they see things going more widely in the organisation. "Does this fit with our larger strategy?" will be question number one. Politically, it may, in which case, you could be fast-tracked. Or, it may not – and you'll be received more coolly.
Councils, whether Tory, Labour or Lib Dem, are increasingly viewing social enterprise as a positive alternative to out and out privatisation, particularly in services where profit-maximising operators might not go down well with voters. This works particularly well where a social enterprise will clearly reduce the need for immediate cuts in front-line services or an increase in rates. This is where politicians' antennae are most clearly tuned. Give them a way out of either and you're half way there.
Secondly, they want to know if the numbers add up. Every politician's nightmare is something blowing up on their watch – or going bust. They want to be sure that if a spin-out goes ahead, it will be successful. In addition, politicians want to be sure that in letting your ship go free, they are not left with a gaping hole in their own. You therefore need to think about how what you're doing might affect the council's wider position.
No area is more important here than the back-office functions – HR, IT, finance, payroll. A spin-out will ideally want to get these things from providers outside the council because there are great deals to be had in the market. But the council doesn't want to be left with a big overhead that it now needs either to shrink down or spread over a diminishing base. The logical thing – and what we see happening a lot – is that the spin-out takes the back-office services from the council on a tapering basis as part of the deal. It's not ideal – but it gets over a lot of the immediate financial problems that a spin-out, especially a large one, might pose to the council.
Thirdly, politicians and senior managers need to know that they can influence the new body. For councillors and top executives, who are used to directly managing services, a spin-out can present a big operational and financial threat. They can no longer just recover a deficit elsewhere by plundering your budget. Nor, if they are no longer in charge, can they, in the event of a bad headline, tell voters they are putting a rocket under you! Again, the answer here lies in giving them a place at the table and moving the relationship from one governed by command and control to one where influence is exercised through a contract.
My main advice to public managers is to start talking to both politicians and senior managers early in the game. It can save you a lot of time and generate important early support. Keeping them close and with you makes them feel involved and gives them "buy-in". As well as being a spin-out leader, you have also to act as a change manager in your organisation, keeping a coalition of people with you from the top right through to the front-line.
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