Assisting the industrious economy drive

With the future of UK business still clouded in uncertainty, Deb Oxley, of the Employee Ownership Association, discusses how employee owned mutuals are playing their part in the future

The UK faces an uncertain future. Growth is still frustratingly slow and the prospect of Brexit looms large, with its impact on the economy still not clear. In the midst of this, however, there is a steadily growing group of entrepreneurs and business owners who, despite this economic uncertainty, are part of a quiet revolution that has suddenly come under the spotlight.

As we look for new ideas and solutions to a range of economic challenges including low levels of productivity, distasteful corporate behaviours and deep rooted social mobility issues, and the prime minister and her cabinet commit to delivering an economy that works for everyone, there is a part of the UK economy that can rightly claim to have ‘been there and got the t-shirt’.

Employee ownership is a structure of business ownership that can support the UK as it seeks to create a new inclusive, more productive and industrious economy. Employee ownership supports businesses that put people right at the heart of the enterprise through shared ownership. Businesses that are already demonstrating how positioning employee directors on their boards can and does work. Businesses that share wealth and earnings more fairly – ensuring that everyone is rewarded appropriately for their endeavours. Businesses that are trusted by suppliers, clients and employees alike. And businesses that think and act for the long term – making decisions for the future of their continued and sustained growth and not to simply satisfy hungry shareholders.

Central to this revolution are the public sector entrepreneurs who are spinning out the services they manage into new employee owned businesses (sometimes called mutuals) that are free from the controls of their former public sector parent organisations.

Supported by the previous government, employee owned public service spin outs currently operate, or are developing, across the economy in sectors including health, social care, music services, libraries, dental care, and youth services. There is compelling evidence that these spin outs raise the quality of the public services received by users, increase returns on investment for funders and improve well-being and working conditions for employees.

Active involvement
A recent survey by the Employee Ownership Association (EOA) and Chartered Institute of Public Finance and Accountancy revealed that the majority of respondents reported their employees as being actively involved in decision-making processes within their organisations, with many involved at a high level. Reported benefits of spinning out included; freedom to innovate, the ability to make decisions quickly, reduced bureaucracy, motivated and productive staff, connectivity with local communities and, importantly for many of the staff, the ability to retain public sector values.

There is now a small, but growing, group of such businesses, with leading pioneers such as CSH Surrey, City Health Care Partnership, 3BM and North Somerset Community Partnership, who are inspiring others to make the journey. Many of these spin outs are energetic members of the Employee Ownership Association and are rightly admired for their achievements.

At a recent conference organised by the EOA, with partners including Social Enterprise UK, Prospects and Local Partnerships, some of these pioneers shared their experiences, insights and knowledge as the sector now looks inwards for support so that it can continue to grow, diversify and compete. But there is still more to do if this innovative part of the economy is to deliver more value.

Despite some wonderful progress, the majority of public services that are not run in house continue to be outsourced in a routine, traditional, way, to externally owned private sector providers. There has yet to be a step change in the overall quantum of services that are contracted to employee owned organisations. In the health economy in particular, the advent of Sustainability and Transformation Plans (STP) has the potential to stall the take up of the mutuals model as local authorities and health providers are pushed to deliver services for the lowest cost possible.

If this quiet revolution is to change the long standing regime of in-house delivery of services, it will require the commissioners of services to change their behaviour at pace. The purchasers of services, the commissioners, need to prioritise the importance of their pursuit of best value above any ideological or cultural opposition some stakeholders have in principle to employee owned spin outs.

They also need to end the way that they often force these spin outs to compete for contracts within old processes that are designed for, and favour transactions with, large and long established, corporate organisations. Furthermore, they should proactively market to employees contemplating spinning out, the range of information, advice, mentoring and finance that is available and play a supportive role in encouraging them on their journey to spinning out. There is an increasing range of funders and advisers who are now able to support the journey towards transition, reducing the risk of establishing these new enterprises.

Employee ownership in our public services has not yet reached the critically necessary tipping point beyond which it will become mainstream. Getting there certainly requires a further, major injection of resource, energy and enthusiasm by those who commission public services. The prize at stake is the transformation, through a greater role for employee ownership, of how public services are delivered.

So we should all continue to do what we can to help. As part of our long term commitment to helping, the EOA continues to support the sector and this month joins the newly formed Mutuals Strategy Advisory Group, to contribute to the shared challenge of bringing more of this part of the economy to life. We look forward to public service entrepreneurs creating more new employee owned spin out businesses across the UK over the coming months.