Communities and Local Government Committee - Mutual and cooperative approaches to delivering local servicesWritten evidence from West Midlands Councils

This submission is presented by West Midlands Councils. It follows discussion at an informal event on 1 May 2012 co-hosted by West Midlands Councils and Ecorys, with specialist input from Primetimers and Russel-Cooke Solicitors. The event was attended by a small number of elected members and senior officers from councils in the West Midlands.

Below we have provided a short set of bullet points, which reflect the discussion we had and which we hope will assist the Select Committee as it considers the setting-up and operation of not-for-profit businesses to provide local services that local authorities traditionally provide:

For many employees in local government the prospect of being part of a new mutual organisation is potentially exciting.

But for a much greater number it is a frightening prospect and not one which is preferred over the perceived “safety” of being directly employed by the Council.

This maybe because the concept of mutuals and co-ops as alternative employing bodies or service providers is not understood. There is little awareness of the benefits or opportunities offered or of the development of a mutual in preference to a TUPE transfer to another provider.

Part of raising awareness could include each Council or a group of Councils developing a strategy for mutualisation. Such a strategy would include a robust communications plan and encourage managers and staff to think through the opportunities across all services.

The motivation for setting up the mutual is also key, such as the push from the Council or pull from the employees? The short-term or long-term thinking? The community drive for social enterprise and the drive to make money or preserve jobs/services?

Due consideration should be given to the additional value that mutualisation could bring over and above what could be achieved by improvement and efficiency activities.

When developing a mutual, due account must be taken of the objectives all concerned including the sponsor, the staff, the public, the service users and key stakeholders.

All involved need to understand and share the values which will be core to the business/service.

The motivation, objectives and values need to sit alongside a clear and tested business case.

Councils should commission services from mutuals for a minimum of five years to allow the organisation to develop, be viable and competitive and to provide a “safety net” to encourage staff participation.

There are a range of legal structures which lend themselves to mutuals; all options should be considered before the preferred option is taken. When weighing up the options consideration should also be given as to how “profit” is handled—reinvested, banked, distributed to employees etc.

Each Council as a commissioning body must retain expertise in house to ensure that the right services are commissioned, at the right price. If that expertise is lost the Council is in danger of being over reliant on the service provider for the cost setting and service level of the contract.

Consideration must be given to the impact that other regulatory activity may have on the mutualised service eg the Care Quality Commission or Ofsted.

There are recognisable tensions on the part of commissioners—do they procure purely on a cost basis or to support the recently established mutual? Unit cost and quality are key but not easy to balance.

Those gathered recognised that there are hidden costs to Councils of supporting fledgling mutuals. With Council officer time taken to ensure that the service required are delivered, rather than the services the mutual has always provided when staff were previously part of the Council.

May 2012

Prepared 6th December 2012