Mutuals

Just because it is in the Government's "Making Quality Your Business" (AKA the NHS Initial Public Offering) document, I thought I would blog about mutuals and social enterprises.

First: why are the government so excited about mutuals and social enterprises? Answer: because it absolves them completely from doing it themselves. The government does not want the responsibility of providing public services. Kinda lazy, really.

Mutuals

The model of mutuals that we are use to, are organisations that are owned by their customers. The building societies are the most well known example, where some customers save their money (and are paid interest) and others borrow money (and pay interest). There are no shareholders so no dividend payments. The organisation is owned by the customers and is run for the benefit of its customers.
Other than building societies, there were insurance and pension companies who were mutuals. As part of the selfish 80s attitude the Thatcher government legislated so that mutuals could demutualise and as a result few building societies remain. Cameron calls himself a "son of Thatcher" so it is rather surprising that he is now championing an organisation that Thatcher clearly hated to destruction. Cameron has not commented on whether mutualised public services will be prevented from demutualising, but it is a distinct possibility because the mutuals will not be publicly-owned and so can determine themselves what happens to them.

The building society model is that the customers own the mutual, and in the NHS the "customers" are us. As a public service we already own the NHS! Public Benefit Corporations are a form of mutual owned by the public. In this case the organisation has a public membership (non-fee paying) who elect governors to oversee the board of directors who run the organisation. The idea is that the public owns the Public Benefit Corporation and provides public governance. This is the model used for Foundation Trusts.

The mutual model that the government is pushing for the privatisation of NHS services is staff-led mutuals. In this case the mutual is owned by the staff and is a profit-share organisation. This is very different to the publicly-owned Public Benefit Corporations, because a staff-led mutual organisation is not publicly owned. Mutuals are usually profit-share: if they make a profit they distribute this between the mutual owners. Since a staff-led mutual is owned by the staff, this means that profits are shared between the staff. However, be aware that while all staff are equal owners of a mutual, some are more equal than others, so the result of profit share may well mean that those who earn the most get a bigger share of the profit.

Social Enterprises

Social enterprises have two important aspects: they serve a social purpose and they are not-for-profit. Not-for-profit does not mean that they do not make a profit, it just means that all surpluses they make are re-invested back into the social enterprise. If you think that this describes every public service, then you are right! Every public service is not-for-profit and serves a social purpose. However, social enterprises are not publicly owned, and the government's enthusiasm for social enterprises highlights that the reason is the actual ownership of the organisation, not how the organisation is run. The government wants to absolve itself from the responsibility for providing public services.

It is important to reiterate many times that neither mutuals, nor social enterprises are publicly owned. The government has no responsibility for them: once they get a contract to provide a public service this does not guarantee that they will always provide the service. The mutual or social enterprise is just yet another service provider. Indeed, they will be treated exactly the same as Serco, Capita or G4S. Except, of course, these large private service companies have millions to spend on marketing and will easily outbid the mutual/soc ents when their contracts expire.

If a mutual or social enterprise goes bankrupt then the government has no responsibility (however, if you are part of a employee-led mutual or co-op, then you will be liable). Will there be much to be liable for? Well, of course there will be, every business has assets and mutuals and social enterprises will need to purchase such assets possibly through commercial loans. They may have to purchase the asset of the NHS organisation they are replacing, which will result in public assets moving into private hands.

Since mutuals and social enterprise are private, non-public companies, and they are intended to provide at least 10% of NHS services, this is clearly privatisation of the NHS.