Mutuals need better access to finance, report claims
Author: Mark Conrad, the MJ |
Public servants who form ‘John Lewis’ style mutuals to deliver key services need better access to external finance, a government-backed report has concluded.
A study by the Boston Consulting Group, published by the Cabinet Office on 22 July, warns that ‘greater consideration must be given to attracting social and private capital investment to ensure long-term sustainability’ for mutuals.
The Cabinet Office has long backed moves to make greater use of mutuals to deliver public services and, along with the Department for Communities and Local Government, has encouraged their establishment. Despite this, the predicted rush to mutuals has not quite materialised ? the attempt to establish a staff-led mutual from the remnants of the Audit Commission failed, for example.
Few large mutuals have spun-out of local government, often because they struggle to access finance.
Around 62 public mutuals have been launched since 2010, covering just 3,000 new jobs.
In response, the Boston Consulting report has recommended that: mutuals seek out board members with private sector experience; Whitehall should ensure ‘soft finance’ such as grants do not crowd out commercial finance; mutuals’ parent organisations should provide greater support for long-term strategic planning; Big Society Capital takes a lead in social finance; and commercial investors attach greater weight to the track-record of services before it became a mutual when making investment decisions.
Despite the difficulties in establishing a wide-ranging mutuals market, Boston Consutling’s researchers said they ‘found clear evidence mutuals are improving service quality and driving innovation’ where they exist.
Nick Hurd, minister for civil society, said: ‘The early pioneers have shown that giving frontline staff more power to make decisions can lead to better, more efficient, public services.
‘Many new mutuals are now in development. We need to prepare now to ensure that the market is ready to support thousands of mutuals.’