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

1  Introduction

1. The Government's policy to promote localism provides an impetus and opportunity for local authorities to explore new models for delivering services. We have been aware that in a number of local authorities co-operative and mutuals provide local services and that the Government has been promoting mutuals to deliver services across Whitehall.[1] 2012 has been declared by the United Nations as the 'International Year of Cooperatives' and there have also been indications that more local authorities may be considering adopting them.[2]

2. Significant claims have been made to support mutuals and co-operatives. The Labour Co-op councils group, a network of Labour Councils that are implementing co-operative principles, indicate that co-operatives provide a means of tackling public disengagement from local democracy,[3] and the Government said that:

Progressive councils across the country are already revolutionising the way they operate, by giving councillors and communities more control over budgets and commissioning or encouraging small businesses, charities and social enterprises to bid for contracts. These approaches to running councils are becoming more common as local government addresses the challenges of rising social care costs, the need to cut the nation's deficit but also the need to engage with communities and increase trust and confidence in public services and local democracy.[4]

3. From the Government's perspective, mutuals fit with its 'Big Society' ambition which includes rolling out new rights across the public sector to provide employees with a right to take over and run the services they provide. The Open Public Services White Paper saw mutuals playing an important role in the future delivery of public services and set out a series of steps to support their introduction. The Government envisages that:

Ownership and control, through mutualisation, empower employees to innovate and redesign services around service users and communities, driving up quality. We will not dictate the precise form of these mutuals; rather, this should be driven by what is best for the users of services and by employees as co-owners of the business. Options include wholly employee-led, multi-stakeholder and mutual joint venture models. [...]

Wherever possible, we will increase choice by giving people direct control over the services they use. And where it is not possible to give people direct control, elected representatives should also have more choice about who provides services and how. This is the first principle of open public services.[5]

Our inquiry

4. It was against the background of increased interest by local authorities and support across political parties for mutuals and co-operatives that we undertook this inquiry. Our main purpose is to investigate what local authorities are doing, to identify the benefits that such approaches might offer, to assess the risks and to examine the support being provided by Government to assist in setting up mutuals and co-operatives.

5. On launching this inquiry as well as calling for written memoranda we sent a questionnaire to every principal local authority in England, to ask how many co-operative or not-for-profit organisations were providing services or were being formed. We received 81 completed questionnaires in addition to 21 written memoranda.

6. We took oral evidence from councillors, local authority officers and employees of mutuals and co-operatives. We also took evidence from a range of academics, the Chair of the Cabinet Office's Mutuals Taskforce, Professor Julian Le Grand, and from Rt Hon Francis Maude MP, the Minister for the Cabinet Office, and Rt Hon Don Foster MP, the Parliamentary Under Secretary of State for Housing and Local Government. On 25 June we visited the Blenheim Gardens Estate in the London Borough of Lambeth to hear about Lambeth Council's vision of a 'co-operative council' and from representatives of local community groups. We thank all those who took the trouble to complete the questionnaire and to submit or give evidence, to Lambeth Council and the Blenheim Gardens Resident's Management Organisation for arranging our visit and to our specialist adviser Professor Tony Travers.[6]

This Report

7. Our Report addresses three main issues. First, it provides, in chapter 2, an overview of the mutuals and co-operatives that are in operation or are being developed by local authorities. Second, in chapter 3 we review the benefits that are being claimed for mutuals and co-operatives. The third issue we consider is the adequacy of the support for those setting up mutuals and co-operatives and the barriers and risks that appear to be preventing authorities from using mutuals and co-operatives. We cover the issues in three chapters. Chapter 4 covers the Government's support for mutuals and co-operatives. Chapter 5 examines barriers and chapter 0 risks in using mutuals and co-operatives to deliver local services. Our recommendations are concentrated towards the latter chapters of the Report.

1   For example, "Lambeth Council launches as a co-op", Social Enterprise, 31 January 2011 and "Backing for mutuals to enhance public services", Cabinet Office press release, CAB240-11, 5 December 2011 Back

2   For example, "Why are Co-op councils important?", Co-operative Councils Network, 9 September 2011 Back

3   See website of co-operative councils website,, and Co-operative Communities: Creating a shared stake in our society for everyone, LGA and LGA Labour Group September 2010. Back

4   Ev 134, para 7 Back

5   Open Public Services: White Paper, Cabinet Office, July 2011, paras 6.15 and 1.12 Back

6   Tony Travers declares the following interests: Remunerated employment at the London School of Economics (since 1987); Remunerated consultancy for organisations and institutions in the public, private and not-for-profit sectors; Member of commissions for public and private agencies (short-term and unremunerated); Speaker at conferences and seminars (some remunerated); Freelance writer for several newspapers and periodicals; Formerly member of the City Finance Commission, which undertook an inquiry "to review, explore and set out recommendations for the future of city local government finance with the aim of producing a system that fosters growth, is self-sufficient, fair, transparent and responsive to the needs of effective city governance in England."; the Commission reported in May 2011. Back

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© Parliamentary copyright 2012
Prepared 6 December 2012