The Ownership State
Read the report that started the mutualism debate
Executive Summary
It is hard to underestimate the challenge faced by our public services. Not only must they contend with ever increasing public expectations and societal challenges such as an ageing population, but they must do this in the face of the biggest shock to public finances in living memory.
Our current model of public sector reform is not up to this challenge. Over the last ten years, our public services have experienced a real terms funding increase of 55 per cent, financed by an increase of 5 per cent of GDP in public expenditure since 2000. Yet public sector productivity has continued to fall: by 3.4 per cent over the last ten years, compared to the private sector’s 27.9 per cent productivity gain over the same period.
A new approach is needed. This report argues that real improvement depends on harnessing two powerful forces: the insight and dedication of frontline workers, and the engagement and involvement of citizens and communities.
Too often these forces have been underexploited or set in opposition to one another. What is required is a new model that binds their interests together so that provision most effectively meets need.
Unless we allow nurses to ensure that hospital wards are clean, unless someone takes responsibility for abused children, unless the single mother can obtain her benefits quickly when she loses her parttime job, then UK citizens will carry on dying unnecessarily from MRSA, scandals like Baby P will continue to occur and vulnerable members of society won’t seek the part-time paths out of welfare they so desperately need for fear of losing all income and security.
Likewise, without active and vocal engagement from citizens, making clear what they want from the public sector and taking an active role in its delivery, services will be unresponsive to users’ needs, and the burden of care will increase as problems like obesity and inactivity multiply. Engaging providers and recipients multiplies the effect of individual action and changes group behaviour and social outcome.
It enables ordinary people to make a difference by giving government the tools to realise the actions and concerns of its citizens, it takes out the costs and burdens of ineffective management and promotes self-organisation and social transformation. It is the future of public services.
Not only do engaged workers and citizens promote better public services, they also make them cheaper. The experience of private sector businesses from Toyota to John Lewis is that empowered staff are better at cutting costs and correcting failure than those managed by command-and-control methods. Wasteful middle management can be reduced. Examples of this approach applied in the public sector suggest that empowering frontline staff to drive service improvement can result in very significant savings: in the order of 20-40 per cent. At the same time, citizens who take an active interest in their health and welfare initiate behaviour change and cost the state less than those who are passive and de-motivated recipients of government largesse.
But engagement, whether of the people who use services or frontline staff who deliver them, is a hard thing to achieve.
The very structure of our public services militates against it. Trying to achieve true engagement in existing structures invariably feels like a partial fix in an otherwise hopelessly compromised system. Frontline leadership is a scarce commodity in large multidisciplinary organisations with centralised cost control and management by target. User involvement often becomes not cocreation but the choreographed rubberstamping of top-down decision making.
We argue that the way to unleash the energies of frontline staff and citizens and scale up their impact is through the power of shared ownership. We propose a new model of public sector delivery, in which services are provided by social enterprises led by frontline workers and owned by them and the communities they serve. These new social businesses would exchange economies of scale (which are all too often illusory) with the real economies that derive from empowered workers and an engaged public.
The involvement of both the public and frontline workers provides a vital safeguard for the interests of the vulnerable: a powerful public stake prevents organisations from becoming producer interest groups, while the role of public sector experts helps ensure fair and high quality provision.
To deliver this, we recommend that a new power of civil association be granted to all frontline service providers in the public sector. This power would allow the formation, under specific conditions, of new employee and community-owned ‘civil companies’ that would deliver the services previously monopolised by the state. Central to this power would be the obligation to ensure that full budgetary delegation of all the supporting services goes along with new responsibility. The new civil company would be structured as a social enterprise, with the scope and flexibility to allow a number of different governance structures in the light of local conditions. Such structures include community interest companies with an asset lock that prevents external transfer of the resources of the new organisation, or alternatively a similar level of social reassurance could be provided by a partnership trust along the lines of the John Lewis model.
Governed neither by the public state or the private market, this new civil association would localise responsibility, direct agency and promote ethos. It would do this by spreading the ownership of publicly funded provision, revolutionising public service delivery for the benefit of all.
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Comments (11)
This is an exciting vision which builds on the work of Osborne and Gaebler in their book Reinventing Government. What I find exciting is that you have dealt with the challenge from the "left" re. their objection to using public dollars to pay private companies to deliver public services, i.e. "privitization". By funding social enterprises which are community/or employee controlled you have created an new paradigm "communitization". I would argue that "civil companies" are one way to do this but a renewed focus on the cooperative sector would also be an appropriate way to accomplish your ends. I look forward to following your progress on this matter.
Hoped for improvements in productivity will not happen without competition. John Lewis do not operate in a vacuum but have to compete in a very tough market. Monopoly providers whoever they are will become complacent, wasteful and self absorbed and eventually the service will be captured by producer interests. There are many reasons for this. First, without paying customers the provider lose feedback and an intense concern for what people want. Second, they get no price signals to guide investment decisions. Third, without customer choices the customers themselves become complacent. Fourth, the provider does not have competitors to compare themselves to. Fifth, it is human nature to try to better secure ones income, security, status and comfort and this is done best by empire building, raising prices, cosy relations with suppliers and making few demands on employees.
Thus, while your business plan sounds nice you will never know how good it is unless it has to compete against others who want your customers.
Ideas from "The Ownership State" have been taken up as Conservative Party policy:
A healthy policy development
http://www.respublica.org.uk/media/healthy-policy-development
Tories would create employee partnerships in the NHS
http://www.respublica.org.uk/media/tories-would-create-employee-partners...
"Labour's plan for 'John Lewis' public services: Partnership model would let staff and users control schools and hospitals"
http://www.guardian.co.uk/society/2009/nov/11/labour-manifesto-public-se...
the recent article in social enterprise magazine regarding David Camerons pledge to community 'right to buy' led me here, and my own personal opinion is that it is a practical and innovative solution.
We've been working here on ways to use the CIC legislation to attract more capital inflows into SE, and I think our planned CIC Bonds could well provide a simple solution to allow community groups to buy and transform community assets.
Its by no means the whole answer, but coupled with standardised contracts will provide the community with a point to point solution, and the CIC asset lock and regulatory overview with provide a standardised reporting structure.
Social business is being looked at with fresh eyes, and we're happy to feed into any development of these concepts.
John Mulkerrin
www.cicassociation.org.uk
I heard Phillip being interviewed on Late Night Live (ABC radio in Oz). Refreshing to hear and now read about this transformative agenda (the last one we inherited from good old mother England, i.e. Maggie's neo-liberalism) turned chunks of our public service into a self-serving non-service. The point of the post is to point to some ideas that bear a family resemblance to some of the ideas in The Ownership State. Ricardo Semler of Managing without Managers fame and Dee Hock, are two folk whose ideas come to mind.
I listened to your interview on mw 909 5 live and what a breath of fresh air.
It was like a light switch on in my head when you gave your views.
Then I read your views here and was coverted by your logic.
Everywhere I go in my work (own small business) I am met with so much red tape and protocol
produced by quangos paid by the public purse to produce documentation on how a farmer should use a fork and spade just to justify their own existance and misplaced importance
Privatisation paid the same way is also out dated and has failed miserably.
There are now more managers in some industries than frontline workers!
I am not an intelectual as many are here but I do know what works and what doesn't and at the moment it's broken.
I look forward to repairing it with your vision and ideas.
Yours
Peter
An obvious area for implementation is retail financial services.
Today we have;
* privately owned retail banks that have no responsibility to anyone but shareholders (most of whom live overseas);
* publicly owned retail banks (Lloyds Banking Group and RBS) that act only in the interests of their executives and private shareholders (and continue to carry the risks of their investment banking arms);
* undersized mutuals that are being squeezed by government-required guarantees aimed at supporting the big players; and,
* an amatuerish Post Office and National Savings business punching well-below its potential weight.
It is high time that the Post Office and National Savings became serious. As long as state ownership confers no commercial advantage there is no reason to stop the state creating a commercial (retail) bank that competes for wholesale and retail funding and uses these funds for UK plc, whether it be personal or commercial lending. The Post Office and National Savings already provide the legal vehicle. There are enough skilled retail bankers (at all levels) in the UK to overhaul the Post Office and run it as effectively as the privately run institutions. Unfortunately very few of them work in The Post Office or National Savings.
I have held senior positions in UK retail banks and know that there are many, like me, who have become disenchanted with the practices and duplicity employed on the high street, are tired of the skewing of business decisions by the capital-hungry invetsment banking arms and would relish the opportunity to "do it right".....and may I conclude by saying that these people had reached this conclusion way before the banking clash....in my case some 6 months before.
Am I making some technical mistake, or is this blog subject to censorship?
I have tried to produce a short and critical response to this debate on 3 occasions. But it still does not appear here.
Is there anybody out there?
Brendan Caffrey.
Can "The Ownership State" abolish public sector management?
Res Publica has produced a series of provocative ideas about real public concerns. This is to be welcomed. But there are serious reservations about the proposals so far.
Philip Blond argues that over the last 10 years public sector productivity has only risen by 3.4%, whereas private sector productivity has risen by 27.9% over the same period. Where these figures come from is not revealed. How productivity is measured is a complex business. What to measure, and what is measureable, raises a host of problems in both the private and public sectors. Toyota is an example given of cutting costs. I am not aware of recent research on Toyota; but my research on other Japanese firms showed cost cutting came from wages that were high relative to local wage rates, but low relative to national rates. Trade unions were not made very welcome either.
There is an attractive demand for "front line leadership". But this sits uneasily with "public sector experts" retained! Workers self management has a long history in Britain, and also in Yugoslavia under a socialist government. What one needs here is real world examples of what decisions front line managers can take; and those only experts could take; and how any conflict between these two groups could be resolved. One is left with a feeling that a strong local group could, or should win. The debate in the 1990's around communitarianism in America is instructive here. Specifically, how Catholic priests organised housing and employment, but only for "good" catholics.
The death of full time managers still seems a long way off.
Responses to the above are welcome at:
whyworktoday@live.co.uk
This is an exciting vision which builds on the work of Osborne and Gaebler in their book Reinventing Government. What I find exciting is that you have dealt with the challenge from the "left" re. their objection to using public dollars to pay private companies to deliver public services, i.e. "privitization". By funding social enterprises which are community/or employee controlled you have created an new paradigm "communitization". I would argue that "civil companies" are one way to do this but a renewed focus on the cooperative sector would also be an appropriate way to accomplish your ends. I look forward to following your progress on this matter.
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