Andrew Laird is a founder and Director of Mutual Ventures.
Theresa May has made it clear she wants to spend the coming months setting out her domestic policy agenda. While some will complain that she should be “all about Brexit”, a focus closer to home is a very good idea both politically and for the good of the country. Brexit-obsessed politicos must surely realise that the public expect the Government to get on with the job of governing? Of course they do.
The domestic agenda it is, then – and the Prime Minister has made “an economy that works for everyone” a key ambition. In order to achieve this, it looks as though central government will be more hands-on in setting the rules of the market and the behaviour of the players. The front-and -centre addition of “Industrial Strategy” to the remit of the Business Department was a pretty clear sign of this. So, too, were May’s statements about employee representatives on company boards and the (spot-on) ambition of closing the gap between bosses and frontline staff. There are a range of sensible measures that can be taken to nudge all the market players towards more sensible behaviour without interfering in the fair operation of the market itself.
But we will always need a market that produces winners and losers in order to drive innovation and progress. Let’s consider a key part of the economy where the government has significant influence – i.e: the public services market place. Taking out benefits, pensions, servicing debt and (whisper it) EU contributions, each year various government bodies deliver or commission about £450 billion of services.
Is this a market that currently works for everyone? The simple answer is no. In the public sector, the gap between bosses and front line staff is as big as anywhere else in the economy – bigger, in some cases. In the NHS, we’ve seen the dire results of hospital managers being totally disconnected from what’s going on with frontline staff. We’ve also seen the disarray caused by junior doctors feeling disempowered and let down by bosses who, in turn, are only really trying to meet the needs of patients. At times, it’s been a real mess.
The reason is that traditional methods of delivering public services do not always allow the easy alignment of the needs of managers, front-line staff and service users. The market is dominated by in-house public sector delivery and traditional outsourcing to large scale private sector providers. Both of these methods have strengths. The public sector brings a strong public service ethos (most of the time) and the private sector focuses on delivering value for money (most of the time) – but both seem to lack something the other has and neither particularly make staff or service users feel in control.
So how can we introduce a dose of One Nation mentality under which both staff and public both feel they have a genuine say? The good news is that it’s already happening on a small scale. Over the last few years, a new breed of organisation has emerged, formed by services transferring out of the public sector to form independent staff-owned social enterprises (often called public service mutuals). These organisations occupy the fertile middle ground between state and traditional private sector. They have that strong public service ethos – but also employ the entrepreneurialism and commercial discipline of the private sector.
There are about 150 of these organisations now sitting alongside other social enterprises and charities who are increasingly taking on public service contracts. They aren’t perfect, and a small number have been unsuccessful – but, overwhelmingly, they have been a revelation. Staff are happier and productivity has increased (i.e: there are fewer sick days) and service user satisfaction has increased. They are also delivering savings to their public sector commissioners through staff actively identifying waste and also through increasing their customer base.
The disruptive effect these organisations are starting to have on the behaviour of the public and private sectors is almost more impressive. They are making the public sector think more commercially, and private sector providers are focusing more on staff empowerment and social impact. A good example is the last year’s outsourcing of Remploy by the Department of Work and Pensions. This tender included a requirement that the successful bidder had to include a substantial element of formal employee ownership.
Maximus, the organisation who won the contract, could see the benefits of this and ceded a 30 per cent ownership share to the Remploy staff team. We need more of this positive disruption in order to create a public service economy that works for everyone. May clearly gets this – and, in the last few weeks, has voiced her support for more staff taking ownership of services. It aligns perfectly with her key theme of giving people genuine control of their lives and work – and this can only be a good thing for the long term health of our public services.