Communities and Local Government Committee - Mutual and cooperative approaches to delivering local servicesWritten evidence from Lord Glasman

Thank you for the opportunity to give evidence to the committee and for these questions.

Before answering them directly a few sentences of clarification on the “multi-stakeholder model” are required. It is rooted in the English tradition of the balance of interests. Democratic self-government is not a form of DIY governance but puts a central stress on professionalism and leadership development. The governing body is made up of users, funders and workers who employ professionals to do the jobs but they are answerable to the governing body which sets out the strategic direction. Civil service and parliament is quite a good guide here. It is also rooted in the assumption that neither exclusively state nor market models have worked out very well. There are good working examples in Germany, Quebec and parts of the United States and this model draws upon them while embedding it in a distinctively English tradition and institutional structure.

Question 1. Must there be agreement from the different stakeholder groups before decisions can be implemented?

Answer. No. What is required is a majority of one for decisions to be binding on the group but this does require some agreement between the interests. It is not a unilateral management model in which either funders or workers, for example, are in control. To facilitate good practice and change there needs to be an agreement between stakeholders. The common good of any organisation can only emerge through the negotiation of a position between interests and this requires a balance of power between the groups to ensure that no one interest dominates. Schools are a good example. As it stands with free schools, parents are dominant, or in the status quo, the local authority or in the case of Academies, the State. In this model there are legitimate interests in all three stakeholder groups, funders, workers and users and each have a third of the seats and the decision making is predicated on finding a path that can make sense to at least some of the others. As with German Industry, Canadian care homes or Tuscan co-ops the decisions made are binding upon all. The evidence gathered by Kent State University’s Cooperative Development Centre, for example, in relation to this specific model is that there is a fluidity of position within the groups and a binding outcome follows discussion within the board. (Solidarity as a business model: A multistakeholder co-op manual. Kent State University, 2012: available online at www.oeockent.org/library/category/46/cooperatives )

Question 2. What happens when stakeholders disagree? Is organisational paralysis an inevitable consequence?

Answer. No. In the select committee evidence I addressed this point relating to decision making within professional stakeholder governance. This was the argument put forward against the German economic model in the 1980s and 1990s and it turned out that the negotiation of corporate strategy was far more effective in engaging the kind of changes required by globalisation and technological change. Volkswagen or Rover? It was also dismissed for the same reason in the 1990s and 2000s when it came to pubic sector reform. The results are in and explain why we are having this exchange. The lack of engagement of the workforce and users led to clientalistic culture in which there was not enough leadership, reciprocity or responsibility in the relationship between core groups. The negotiation of a common position is far more effective as a strategy than the imposition of a unilateral one and directly addresses the issue of cultural change in which users and workers have to engage responsibly with the improvement and delivery of services that are in their interests. As with all organisations there is a time frame, legal responsibilities and the necessity of decision. The outcome of a negotiated strategy is binding on all and has proved in the German case, for example, to be resilient and effective in sustaining a course of action. If there is no agreement on the proposals of one group, a new position has to be negotiated. Paralysis sets in when there is no link between the motor neurons and the body, this model establishes that link between mind and body through the tripartite corporate structure. There may be tensions, arguments and negotiation but that is the opposite of paralysis.

Question 3. Do you think processes might be needed to assist the stakeholders to come to an agreement and make decisions? If so, what might these be?

Answer. Maybe, and my preference would be for leadership development where the definition of leadership is having followers and bringing them with you. When it comes to the workforce and the users they will be democratically elected and will represent interests. The key capacity building must lie in organising and leadership and this is recognised in the role of Locality in the Big Society initiative. Each interest will also need to negotiate among themselves, but ultimately governance is complicated, mundane and difficult. The awareness of this reality needs to be passed down the food chain so that workers and users recognise constraints and the importance of judgement and decision. Leadership training along the model of the IAF in the States in which relationship building, an understanding of power and strategic action are at the fore would be the best preparation and then learning from doing, which is the best teaching method of all. Evaluation is a neglected aspect of this, and should follow all board meeting within the interests.

Question 4. Do mutuals require particular organisational structures to guarantee accountability. What might these be?

If there is one lesson of the crash it is that accountability is too important to be left to accountants. Services are delivered by institutions and those institutions are responsible for the delivery of services. Funding requires accountability, but so does the work. The move from client to citizen also requires this of users. So, the institution; school, care home, doctors surgery, social service, should be understood not as a policy or a programme but as an institution and the institution is legally responsible for its delivery. The representation of the funders, the local authority in this case, requires that they pursue their interest in accountability, efficiency, transparency and the integration of policy into wider social goals. The local authority is the force that stops the institution becoming entirely self-referential and closed. It upholds legality as a fundamental norm. The assumption is that an exclusive or dominant role for funders leads to the neglect of the internal particularities of the service as they relate to the specific nature of the work and the people who are served by the institution. The legal framework sets the bounds. This is enforced by the local authority and by the institution. The publication of accounts is one aspect of this, but people don’t pay much attention which is why there needs to be internal accountability where the workforce question the use of funds with some internal specialist knowledge as do users. If the institution fails that is a political matter in which the State, local authority and the police can be involved, as happened with Hackney Council a couple of decades ago under the local authority model.

Question 5. What role would the local authority play in a world where all services were delivered by mutuals? Should multi-stakeholder models involve just those who currently use the service, or members of the community as a whole?

Answer. The local authority is a key stakeholder and would have a third of the seats on the governing board. It would actively engage in the internal governance and delivery of the service in partnership with the workforce and users. It would share responsibility in the delivery of the service, that is the point. The institution itself would be legally responsible for the delivery of the service, of which the local authority is a crucial part. The election of the users would be done by users who would be free to elect who they thought best. One possibility that my experience would suggest might happen is that in a heavily Muslim area, for example, users might elect a representative of the Mosque, who lived locally, to represent sensitive religious issues relating to food, autopsy and the treatment of the body in relation to hospitals. Once again, this would have to be negotiated with doctors, coroners and funders but would give some idea of the mix expected on the corporate governance board. The key point, as ever, is the balance of power in the corporate governance of the institution.

I hope this is sufficient but please let me know if you wish anything more and it is a great honour to be asked.

July 2012

Prepared 6th December 2012