1. That value in public services is created through relationships: between citizen and service, formal and informal resources, private business and public institutions;
2. That public services should support individual capabilities and social resilience over the long term, not patch-and-mend failures in the short term; and
3. That locally crafted and democratically owned public service strategies should be part and parcel of building economically productive as well as socially productive places.

It’s a vision we first shared back in 2010, when it was developed as the central insight of the Commission on 2020 Public Services. Change was in the air, and a fresh-faced Coalition was drawing up plans for Open Public Services that would see numerous services ‘spinning out’ of public control and ownership and into the control and ownership of their staff.

The new public service mutuals would unlock ‘untapped entrepreneurial drive’, bringing much needed efficiency and diversity to the supply side. While some questioned why the Coalition’s appetite for mutuals did not appear to extend to business more broadly, and unions expressed anxiety about terms and conditions, change had, in fact, begun under the previous administration, so stepping up the pace of mutualisation was generally welcomed as a promising development. Certainly, the 2020 Commission report which introduced social productivity was upbeat about spinning out: ‘If taken forward on a large scale, these changes could constitute a radical, positive move towards citizen and professional ownership in the services they deliver and consume.’

So how has public service mutualisation progressed? And is it still in step with our vision of socially productive public services? Through our partnership with the Transition Institute, we’ve had an inside seat on change in four London Councils. Our Enterprise Solutions programme supported by London Council’s Capital Ambition has gathered learning from library, youth, communications and social care services. We launched its final reports this week, along with an animation that directly answers one of the research findings – namely a low level of awareness among frontline public servants of social enterprise options and understandable staff bewilderment when the process gets underway and the jargon begins to fly. The animation is an accessible way of kick-starting plain-speaking conversations.

But from a social productivity perspective, are these conversations worth having? From what we now know, is the march of the mutuals a good thing or a bad thing? The most obvious thing to note is that the march has been a good deal slower than the Coalition had envisaged. As the chair of the Mutuals Taskforce recently conceded, ‘a complete mutuals revolution is not yet upon us’.

This matters because part of the promise of mutualisation was that it could unsettle the private and public incumbents that dominate public service provision, generating value by blending skills, cultures and resources from a variety of sectors. Yet while mutuals are expanding slowly, outsourcing of public services to established private sector companies is surging forward at an unprecedented rate. The value of government contracts to the private sector has doubled in four years to £20bn. What’s been termed a ‘Shadow State’ of private providers has grown in size and strength.

For new mutuals, this has practical implications for entering the market for public services. Our Enterprise Solutions research suggests that in some circumstances, a joint venture with a well-established private – or indeed voluntary – organisation  can be a smart move for fledgling mutuals in order to enter the market and access capital and specialist expertise. But there is clearly a risk that the new organisations lose distinctiveness, and that mutuals become a politically helpful veneer to crudely marketised public service provision.

This is a significant risk. Some may think that it’s a risk not worth running for the sake of a process which is – at best – resource intensive and challenging for the spin-out service and its parent authority. But as Tim Cooper of Accenture pointed out in last week’s guest blog for 2020, social enterprise solutions – partial spin-outs, partnerships, in-house trading companies – are gathering pace, and are not simply a veneer to cover incumbent interests. There are many creative solutions that go with the grain of local expertise and culture.

As we heard at the launch event for Enterprise Solutions, mutualism -and the wider hybrid family now growing around it – can give local authorities and other public bodies confidence that change and improvement are possible. They are helping local authorities and other public bodies to think much more creatively about their economic roles – not only in terms of providing employment, but also in supporting skills, opportunity and entrepreneurialism. We know that in local authorities like Sunderland, staff are actively supported to consider setting up in business, potentially through spinning-out, but equally through setting up new enterprises beyond the public sector.

Mutuals, in other words, could be one of the ways in which public services play a smarter and stronger role in supporting sustainable local economic growth. Local authorities in particular will need to find ways to link their labour market and skills policies with encouraging business creation from within their own staff.

Against two of the three social productivity criteria, then, public service mutuals today still seem to be positive – though vulnerable – players in public service reform. They could help bring sustainable economic and social development together; and they could accelerate the growth of hybrid organisational forms, drawing from a variety of sectors, institutions and networks. But how do mutuals measure up against the remaining social productivity criteria, that is, the need to shift our public service interventions away from failure response and towards long term resilience and capabilities?

The signs are mixed. Working closely with communities and service users, some mutuals have developed packages of support that respond to the strengths and needs of the whole person and their wider community. But more often mutualised services have not had the ability, nor perhaps the inclination, to radically redefine their offer.

Ultimately, as players in a market, mutuals can only create interventions that commissioners are willing to buy. Under the last government, the voluntary sector won a greatly expanded role in the provision of public services. But the sector was not encouraged or allowed to renew the type of services that were delivered. Public services changed hands, but barely changed in nature. If we want mutuals and other social businesses to develop their full social productivity potential, political leaders and public service commissioners will have to involve them in creating a radically different model of public services.

RSA 2020 Public Services and colleagues at the Transition Institute have worked with Lambeth, Lewisham, Richmond and Kensington and Chelsea councils to explore what value mutualisation might or might not bring, or whether other enterprise solutions could better meet local needs and circumstances.  The learning from their journeys is captured in a series of reports and resources.

Barriers and solutions to public sector spin outs looks at the range of challenges facing services considering spinning out. It considers how solutions other than straight mutualisation – such as new relationships with existing social enterprises, or new council trading models – might be preferable in some circumstances.

For public services considering mutualisation, finding the right advice can be a problem.  Boroughs that have participated in the ‘Enterprise Solutions’ project have used the growing literature of guides and toolkits, but criticised a lack of easily accessible information for staff members, or guidance that honestly captures the frustrations, complications and excitement of the transition.  A practitioners’ guide to spinning out from public ownership addresses this gap, and is based on a co-design workshop with frontline professionals.

A video of the workshop is available below:

For public service staff teams, the idea of mutualisation can be alien and alarming.  An animation – Public service mutuals: The story of a spin-out – gives a fictionalised account of what teams can expect if they decide to form an employee led mutual, based on the real experiences of projects within the Enterprise Solutions project.

Library services, faced with rapid technological change and severely tightening public budgets, have been in the forefront of innovation.  The experiences of library services trying new models of ownership and control to meet these challenges – including mutualisation – are explored and contrasted in a filmed roundtable event, available as a video below.

New approaches to commissioning and public service mutuals: Lessons from co-operative councils looks to the future, considering where mutualised spin-outs might sit within new approaches to commissioning.  It suggests how a clearer focus on social value brings with it a clearer focus on where mutualisation could be strategically fruitful.

Public service mutuals: Spinning out or standing still? assesses how the evidence base and the policy arguments around mutualisation have evolved in recent years. Richard Hazenberg and Kelly Hall from the University of Northampton and Allison Ogden-Newton, Chair of the Transition Institute, consider how a more nuanced discussion of where, and under what conditions mutualisation brings social and financial value would be helpful.

As public libraries face huge financial challenges due to public spending cuts, this roundtable event brought together expert stakeholders to discuss future models for the library, building on existing case studies including community management, employee-led mutuals, social enterprises and new forms of consolidated or collaborative library services.

Click here to read this event briefing paper.

The event speakers were:
Paul Buddery, Partner at RSA Public Services (Chair)
Fiona Williams, Head of Libraries and Heritage, City of York Council
Darren Taylor, Chief Executive Officer and Founder, Eco Computer Systems
Ben Lee, Programme Director, Shared Intelligence
Sue Thiedeman, Director, STAR cic
Mark Johnson, Managing Director, TPP Law

The following video provides an overview of the discussion:

Each of the speakers’ presentations is available below:

Social-value hybrids are an increasingly common feature on the UK public service landscape. These new entities encompass a broad range of organisational models — from mutuals and cooperatives to social enterprises, benefit corporations and industrial & provident societies — that are increasingly being spun out of the public sector as a way of reconciling fiscal austerity with rising citizen demands and the need for economic growth.

Why do we call them social-value hybrids (SVHs)? In researching these entities as part of a new Accenture report on hybrid public service delivery models, we have been struck by the fact that there is no single blueprint of success. As Mark Sesnan, Managing Director of Greenwich Leisure Limited (now trading as ‘Better’) put it to us, “there are as many organisational models in this space as there are individual companies.”

However, despite this diversity, SVHs appear to share five common characteristics: primarily, a social mission that guides decision-making at every level; autonomy from government but the delivery of a public service; a focus on the unmet needs of citizens, particularly from vulnerable groups; robust revenue-earning business models; and non-traditional enterprise structures, where profits are reinvested and employee ownership is common. In this way, SVHs focus on “what works” with capabilities and processes operating in service of their social mission.

The combination of these ingredients appears to deliver an appealing brew of both improved citizen outcomes and better economic outcomes, a central theme for Accenture’s global program, Delivering Public Service for the Future. For example, at Sunderland Home Care Associates, employee ownership contributes to an annual staff turnover of less than 5 percent, compared with an industry average of more than 20 percent in the United Kingdom. With continuity of care being paramount in such services, such statistics translate directly into better citizen outcomes. Furthermore, one study of employee-owned enterprises in the United Kingdom found that they generated employment growth from 2005 to 2008 at 7.5 per cent per year, nearly twice the 3.9 per cent growth rate of non-employee-owned enterprises.

However, if the early signs of promise are to grow into a permanent and more significant feature on the public service landscape, a number of enablers need to be in place. The following actions would provide a good place to start:

1. Adopt common standards: SVHs often struggle to attract investment. Banks can be wary of their unconventional organisational structures, and a potential skills deficit may hinder efforts to pitch successfully to investors. Mainstreaming common definitions and frameworks of “social return on investment” would help build a stronger case for public investment, while developing a private market would open up individual and institutional investment. Institutions such as Big Society Capital can help in this regard, but further ballast could be provided in the form of investment guarantee mechanisms (particularly at the early stages of SVH development).

2. Develop public entrepreneurship: the skills required to thrive in a SVH are hard to find. A commitment to a social mission must be matched by hard-nosed business acumen. Ensuring a pipeline of future skills must start early. Incorporating social entrepreneurship into school curricula is a step in the right direction. But beyond that, policymakers can target experienced public managers with “social sabbaticals,” using simulation exercises and gaming techniques to prepare them for a period of absence to test and launch their own social enterprises.

3. Incentivise smarter commissioning: SVHs often have difficulty breaking into new markets, given their size and (often) relative inexperience versus larger incumbents. But commissioning approaches need to recognise the wider networks and relationships that SVHs can foster within communities. As part of this, local councils may well need to enter into a more symbiotic relationship with their service providers in the form of secondments, management expertise or even infrastructure, both physical and technological.

4. Embed innovation in social-value chains: Creating innovation hubs that bring together public managers, social entrepreneurs and private-sector entrepreneurs operating in the same space can offer significant opportunities to start conversations, create synergies, and share best practices and innovation across the board. This interplay can be embedded in contracting and tendering mechanisms, introducing diversity of delivery provision in the rules of the tendering process. For example, requiring large-scale service providers to partner with third-sector organizations in service design and delivery can be a useful tool to foster the uptake of spinouts. Subcontracting—but perhaps more effectively co-creation—can enable the establishment of “social value chains” spanning across sectors. These social value chains would cement hybrids’ rightful place in the economy as drivers of economic growth and social benefits—the best of all worlds.

Tim Cooper FRSA is a senior manager and research fellow at the Accenture Institute for High Performance. He can be reached on tim.e.cooper@accenture.com

RSA 2020 Public Services will be launching a series of new resources and guidance on public sector spin outs on Wednesday 29th May 2013. For more information please contact paul@2020psh.org.

The kindest interpretation of events is that the Coalition is deliberately underlining that the way we’ve expanded our caring capacity as a society in recent years is unsustainable, fiscally and socially.  We cannot continue to rely on professional services, often offering low-pay, low-prestige jobs, intervening at points of crisis or severe infirmity and offering relationships between carer and cared-for that are so tightly rationed that care itself struggles to keep a foothold.  A high-quality care sector can only be part of the solution to living well in a silver society.  A much larger role needs to be played in future by softer interventions that maintain wellbeing, respect independence and nurture social-interdependence across the life-course.  With its stress on reducing people’s dependency on formal care services through earlier intervention, the Care Bill is a useful step in the right direction.  But as a pamphlet we published this week argues, its attachment to needs rather than strengths may ultimately perpetuate a system in which rationing around individual thresholds distorts our overall social investment and can create perverse individual incentives and unfair outcomes.

We believe that the Bill should go further.  At the same time, we believe that the onus for change doesn’t rest exclusively with the Government, or even local government.  How we function as a society will need to change as who we are as a society changes.  Work in support of the National Dementia Strategy is instructive and important in this respect, reframing a medical condition as a social challenge with implications for communities and employers, as well as health professionals and care services. In a paper that we published last year, Craig Berry struck some important cautionary notes; yet many of the opportunities for improving the lives of our older citizens lie outside of traditional services.  For example, we are currently working with Asda to explore how they could operate in ways that generate greater social value.  The amount of store space that will be needed for retail is falling, so what other functions could the store spaces provide?  How could stores like Asda, in partnership with community groups or mainstream public services, create opportunities for isolated older people to come together, share skills with each other or with younger people, perhaps learning how to pool personal budgets in order to access care that they would value?  We have also been working with the Scottish Environment Protection Agency and Scottish Natural Heritage to look at the role of access to high quality natural environments in supporting health and wellbeing throughout the life course. The importance of green space for healthy childhoods is now widely recognised, but designing healthy green space for active older communities is just as important, yet receives relatively little practical attention.

It’s unfortunate to see our older population routinely referred to as a burden, a timebomb or – more recently – the sharpest teeth in the LGA’s jaws of doom, threatening imminent financial breakdown. A whole-place, strengths-based approach doesn’t substitute fantasy for reality, but it is useful because it puts all of us in the frame.

This new pamphlet, produced in collaboration with Shared Lives Plus and edited by Alex Fox, examines strengths-based approaches to social care in light of changing social and policy trends.

For far too long, social care has been dominated by a deficit model. Services have often focused exclusively on needs and vulnerabilities, ignoring people’s strengths and their networks of relationships with friends, families and communities. Yet it is this social resource that underpins the majority of social care and support in the country, with unpaid family care alone holding a value equivalent to ten times the state’s care budget.

The 2012 Care and Support White Paper was a call to action that championed an asset-based approach to stem the tide of need and harness the strengths of the individual and their community. But more needs to be done to translate the broad ideas and aspirations of the white paper into practice. As the Joint Parliamentary Committee’s report on the Draft Care and Support Bill is published, this pamphlet argues that there is a critical missing element in the Bill – it isn’t explicit enough about the need to understand people’s assets from the outset.

The contributors to this pamphlet, including former Care and Support Minister Paul Burstow MP, argue that we need to see growing ‘social productivity’ as the core business of social care services and commissioners. This means supporting families and communities by developing their strengths and resources. Often vulnerable people’s well-being can be ignored or undermined by ineffective or ill-considered interventions. This pamphlet contains many examples of the right kind of interventions happening already, even where care budgets are shrinking. A ‘networked’ model of care – when formal services fit themselves around informal networks and develop people’s strengths – is much more effective and less wasteful.

Contributors include:

• Paul Burstow MP, Former Care and Support Minister
• Alex Fox, CEO of Shared Lives Plus
• Lynne Elwell, Partners in Policymaking
• Sandie Keene, Director of Adult Social Care at Leeds City Council and President of the Association of Adult Social Services
• Steve Reed MP, Member of Parliament for Croydon North
• David Burbage, Leader of the Royal Borough of Windsor and Maidenhead Council
• Ben Lucas, Chair of Public Services at the RSA

Click here to download the pamphlet.

Follow the conversation on Twitter  via #RSACare and #SocialCare

Anna has been involved in local government policy in wide range of roles through her career. She was Special Advisor to the Rt Hon Ruth Kelly MP at the Department of Communities and Local Government and the Department of Transport from 2006-08. Prior to that Anna was Senior Researcher at the Lyons Inquiry on the role and funding of local government, based at HM Treasury, and Head of Policy at the New Local Government Network. She has also worked as freelance public policy specialist, helping private sector organisations understand national and local policy developments, managing their thought leadership programmes and authoring thought leadership pieces. Anna contributed to the Localism report produced by the Commission on 2020 Public Services.

Anna tweets on @annarandle

Last month I took part in a session of SCVO’s Gathering about public service reform and citizen engagement. What struck me as an English outsider is that public service reform in Scotland is in danger of going off the boil. Christie set the direction of travel, but the pace has been slow. Communities are not being trusted and empowered fast enough and the role of the voluntary sector has been underdeveloped.

This may have something to do with the impending referendum in Scotland and the desire not to open up battles that go to the heart of a culture of municipal authority and statism in public services. But it’s also a symptom of a wider malaise across the UK political economy – an inability on the part of politicians to engage citizens in an honest debate about the full extent of the social and economic challenges we face.

What seemed a crisis following the banking collapse in 2008, is now the new norm – a decade of austerity, low to no growth, declining living standards and the rising costs of an ageing society. Yet public policy carries on as if not much has changed, as if growth will inevitably return and with it the funding to run centralised public services that can meet all the demands of the future.

In fact, the current system is already stretched to breaking point. As the Christie report pointed out, it’s not delivering the social outcomes we aspire to on equality, public health and education. And that’s before you add in the toxic mix of the longest period of cuts on record, with rapidly escalating demand.  Little wonder that Councils in England have dubbed the diagram which charts these pressures as the ‘graph of doom’.

All of which points to the need to develop a new approach to social and economic growth, that starts from citizens and communities and their assets and capabilities. The 2020 Public Services Commission called this approach social productivity. It is about mobilising social and citizen resource, and improving the quality of the relationship between citizens and services – to develop a co-operative approach to public services.

At the heart of this is social citizenship. The notion that that ‘society is good for your health’, is actually based on a whole body of recent research about how the brain functions, how we make decisions, and how societies and economies operate. When I was a student the old argument was about whether humans are co-operative or competitive. The way in which you answered this question determined your politics.

Now there is a remarkable consensus across much of neuroscience, social psychology and behavioural economics that we humans are social animals.   We are shaped by evolution, by the social networks to which we belong, by habits, by social and cultural norms and we are more prone to rationalising than to pure reason. This puts the boot on the other foot, so far as the wider debate about human nature and the organisation of society is concerned. It’s now rational economic man, which is a nice idea that will never work in practice.

The must read book in politics last year was New York Times’ columnist David Brooks bestseller “The Social Animal”. This followed hot on the heels of Thaler and Sunstein’s book “Nudge” which popularised the latest findings from behavioural economics, to undermine much of the foundations of neo-liberal public choice theory. And before that there was the groundbreaking work of Robert Puttnam in “Bowling alone” which linked the decline of social capital through group and community participation to the collapse in social economic trust. For long in the tooth social scientists, this must feel like 1970s déjà vu. Sociology is in fashion, and beards are back. Next we will be watching Open University repeats on Gold.

But public policy has been slow to respond to the implications of this new scientific orthodoxy. New Public Management has given us a huge array of data about service performance, but very little useful information about how communities operate, how social norms are formed, and why some communities are more resilient than others.  The focus should now be on  understanding social networks within communities  – identifying the connectors and bridge-builders and the institutions that are most effective at supporting social capital. These community hubs should be the building blocks for public services of the future, with local groups commissioning and sometimes running their own services.

The major challenges in society and the most significant drivers of demand for public services are the ones which most cry out for a more pro-social approach – public health, social care, worklessness and loneliness. We know that the biggest predictor of whether you smoke is whether your friends smoke.  Banning smoking in public places can get you only so far, the rest is down to social networks and social norms.

Similarly, the real answer to improving the wellbeing of an ageing society, whilst not being overwhelmed by rising statutory costs, is social.  Instead of undermining the resilience of older people by only seeking to understand their eligibility and service entitlements, we should start by understanding what’s important to them, what they want to do and the strength and nature of their social networks.  Personal budgets have helped to empower older people. The next step should be to enable these to be socialised, so that people can collectively commission services through their social networks. This is in turn creates the potential to create new micro social enterprises to respond to this opportunity.

It’s no coincidence that the group of Councils that have most enthusiastically embraced social innovation in their relationship with local citizens, have done so under the banner of Co-operative Councils.  The most ambitious of these are trying to create new social compacts, that focus on what citizens, communities and services can do together to make their places more socially and economically productive.  This is not a new idea, it’s what Ken Loach identifies as “The Spirit of 45” in his new film about the post-war settlement. It is more naturally to be found in social and mutual institutions than in many state and private sector bureaucracies. So the priority now, at a point where we are experiencing the greatest economic disjuncture since 1945, should be to support communities to develop new social and economic institutions, based on their own assets and networks.