Markets or mutuals?

Should public services be delivered by co-operatives and mutuals? For some, the answer is ‘never’ on the grounds that this is dismantling the state. For others, the answer is ‘sometimes’ on the grounds that if you are going to move something away from state control, you are better off with a model of social ownership and co-operative values than the pursuit of private interest.

I certainly tend to the ‘sometimes’ camp. The public realm is worth defending, but that is not the preserve of the state. The everyday democracy of co-operatives has a role to play in widening the constituency of concern for collective action and social justice. And one of the things that the state has never done well, except for the upper echelons, is to empower the people who are paid to work for it.

The recent report of the Mutuals Taskforce, which I contributed to and which has now closed, has a series of practical recommendations which could start to make more of a reality of mutual options. This is set out in its report ‘Public Service Mutuals – the Next Steps’.

A lot rides on the model of commissioning and a recent Policy Network paper authored by Robin Murray, associate of Co-operatives UK, is helpful in arguing that we need new models of commissioning that do not assume that all public services should be commodities to be bought in the market (with the role of commissioning being to create the very market it assumes is necessary).

The current model of commissioning has two stages. First the terms of the contract and the process of its letting follow the established procedures of public service. Second, the contractor is held to account in the terms of the contract. It sounds simple, but the downside in practice of this tradition of ‘rule based public administration’ is not just its rigidity and barriers to entry, but also that the successful contractor ends up with the information with which to game the system.

Instead of a single, vertical line of accountability, Robin suggests that co-operatives can add “multiple lines of direct accountability to those directly involved in the use and production of the service. The public partner as a primary source of funds is part of this granular system, in part through engagement in the governance of the co-op (and where appropriate in its operational support), in part through the principles of regular information flow and independent assessment. It is a primary feature of co-operative partnerships that they operate on the principle of open books and mutual learning, both of them central not just to accountability but to social innovation in such collaborative services.”

So far, co-operative school trusts and academies are the outstanding success story, with five times as many conversions as wider mutual spin-outs. The Schools Co-operative Society is now a focused and practical force for what is an inspiring movement – as this fabulous video from the Co-operative College shows.

There is also growing union recognition that here is a model that is neatly compatible with the interests of staff. Elsewhere, the union view on employee ownership in public services has been curiously muted, as if neither government nor labour movement wanted to recognise how central they ought to be.

Ironically, co-operative schools have yet really to be embraced by Central Government as part of its Mutuals Programme and more effort has gone into quasi-mutuals that stretch to minority employee ownership and external investors.

The truth is that those who want to see public service mutuals in practice are typically those who do not want to see services turned over to shareholders and private markets. There is a world of difference between being a stepping stone to privatisation and being an alternative to it.

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