Mutual and co-operative approaches to delivering local services - Communities and Local Government Committee Contents


2012 is the International Year of Cooperatives. The Cabinet Office is promoting the use of employee owned mutuals across the public sector and the Department for Communities and Local Government, through its localism reforms, has provided both a stimulus and opportunities for co-operatives and mutuals to take over local services. Many local authorities themselves are examining mutual and co-operative approaches to working and delivering services. A small number of authorities are significantly changing their methods of work and organisation to mutual and co-operative approaches to the delivery of their services. It was against this background that we held our inquiry.

Although the prevailing winds favour mutual and co-operative approaches to delivering local services, we found less change than might be expected in local government. The lack of progress was surprising given the benefits claimed for mutuals and co-operatives. Their organisational structures offer employees, and in many cases service users too, a say in how the organisation is run and services are provided and adapted to changing local needs. They have the potential to provide greater customer satisfaction, an improved ability to innovate and a more motivated and productive workforce. While there is some evidence (from the health sector) to underpin these claims, the evidence for the benefits of mutuals and co-operatives operating in local government is limited. That may accumulate in time but we are in a "chicken and egg" situation with local authorities holding back until the evidence is stronger and the evidence cannot be produced until more authorities move to a mutual or co-operative approach.

The Government has encouraged mutuals, especially employee-owned mutuals. We welcome the Government's proactive approach but it needs to go further to help remove the barriers we found that were preventing more mutuals and co-operatives from starting up. First, the Government has a responsibility to inform and educate financial institutions about lending to mutuals and co-operatives. We also see an opportunity for the Government to examine tax incentives for mutuals and co-operatives. In addition, we found a case for ensuring procurement rules gave the maximum flexibility in tendering for services so that mutuals and co-operatives are able fairly to compete with large companies and in-house providers.

From the handful of authorities adopting new approaches to their services a number of models with some or all of the characteristics of a mutual or a traditional co-operative are emerging. It must be right that no one model will fit the diversity of local circumstances in England but we see scope for the Government and local government itself to provide "off-the-shelf" models and guidance and advice. This is needed to reduce the confusion and risks that deter local authorities from considering using mutuals and co-operatives. Two key areas we indentified were, first, that all new organisations had to remain accountable to the Council—this will usually be through a contract—and they have to be transparent in their operations. Second, through commissioning processes and subsequent oversight authorities must be able to prevent services from fragmenting and the beneficial use of local public assets has to be protected.

We see scope for greater co-ordination between the Government's Mutuals Support Programme, the Department for Communities and Local Government and the Local Government Association in gathering evidence on the operation of mutuals and co-operatives in delivering local services and making that available. The Government and local government have a choice: if they want more mutuals and co-operatives to develop, they must take action to provide support. Without additional assistance it seems likely that the potential which is obviously there will not be developed.

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© Parliamentary copyright 2012
Prepared 6 December 2012