Mutuals and the privatisation of public services

The do-it-yourself, Big Society British project took another great leap forwards yesterday when Francis Maude announced another massive step away from state-run services (like the dismantling of the NHS, this has so far received disappointingly small media coverage, maybe because media bosses think it's too complicated for their readers and viewers. Tragic really).

This blog has talked before about the elastic use of language by the Coalition - 'freedom' so often appears to equate to reductions in public services or the axing of often sensible regulations. There are numerous questions as to whether giving whole swathes of the public sector the right to run their own outfits is really about freedom, or merely cover for brutal spending cuts. In particular, the following is worth thinking about:

• A postcode lottery. Dismantling centralised services will result in a proliferation of local organisations. The result will significantly increase the chances of a postcode lottery developing in services across the piece, with a real danger that richer areas will benefit to the detriment of those most in need of good public provision of services.
• Accountability and communication. A problem hugely fragmented services is around accountability, duplication of services and joined-up thinking:
• Who is responsible when something goes wrong? Anyone who has ever had a delayed train knows that the various parts of the network (train companies, Network Rail, private sub-contractors) invariably blame one another. Mind you, for ministers in Westminster wielding an axe, this lack of accountability might be a blessing.
• Will those individuals who most need good communication between different parts of the public sector suffer as large numbers of competing services inevitably fail to communicate and, more problematically, fail to work together?  To make matters worse, so many of the organisations designed to encourage existing public sector services to work together are simultaneously being dismantled. Primary Care Trusts, for example, which were explicitly created to encourage the various parts of the health and social care systems to collaborate in the interests of the public.
• Corruption and Inefficiency. As public money flows to countless Free Schools, Academies, social enterprises and mutuals, the danger of inefficiency and, worse, corruption increases. How, for example, do thousands of public mutuals, each with their own finance, IT and HR needs make better value for money than larger outfits with centralised back-room functions? This is exactly the opposite of how the private sector would act to find efficiencies. More importantly, how can new mutuals and for that matter Free Schools be expected to find the expertise to run specialist parts of their businesses such as these?

Which leads us on to the obvious answer:

• Privatisation. When Michael Gove first floated his Free Schools proposals, a number of commentators questioned how a group of parents, most likely without relevant experience, could run a school and undertake to successfully navigate through the various legal and financial obligations that go with it. the answer is simple - they won't. As Toby Young himself acknowledged, the most likely result is that they will contract out such activities to the private sector. 

With mutuals the danger is the privatisation of delivery of public services like those related to Free Schools noted above will be accompanied by the privatisation of the ownership of services. Interestingly The Social Enterprise Coalition, who you would expect to be ecstatic about these proposals, have sounded just this alarm:

"Without the necessary safeguards there is a danger that the mutuals could be demutualised and sold off to the private sector, reminiscent of what happened to British building societies in the 1980s.... It would be criminal to see that happen to our public services. To prevent this from occurring, all mutuals need to be asset locked to ensure that they operate for the benefit of the public, forever".

UPDATE 19 NOVEMBER: For two different takes on this topic, Seumas Milne over at the Guardian has written this excellent piece on the creeping corporate takeover of government policy, whilst you can read another take on mutualism and the government's appropriation of left-wing language here.