Interview: Francis Maude MP

Mark D’Arcy interviews Francis Maude MP about public mutual companies.

It’s the public service conundrum of the post Credit-Crunch age – how do you wring better, cheaper services out of frozen or even shrinking budgets.

In his Whitehall office, Francis Maude, Minister of State at the Cabinet Office, believes he has, if not the answer, then certainly an answer; hand services over to a new breed of public sector mutual company, and watch productivity soar, absenteeism plummet and services blossom.

In 2011 this sounds as novel and alien as privatisation and contracting out probably sounded in 1980. But the drive to mutualise is already much more than a gleam in a policy wonk’s eye; it is one of the central tenets of David Cameron’s Big Society vision and Maude, who is in charge of re-engineering the machinery of government, is seeking to promote it across every possible department and agency in England.

And that most particularly includes local government(similar initiatives in Scotland, Wales and Northern Ireland will have to come from their devolved administrations).

Imagine, say, a fairly traditional adult social care set up, in a medium sized authority. Coordination with closely related NHS services is patchy, and the result is an unsatisfactory service for clients and resources wasted by bed blocking and all the other usual inefficiencies.

But suppose the staff in the relevant bits of the local council and the NHS formed a co-op, a not for profit mutual company, and reorganised themselves into a client centred organisation, providing, services like ‘end to end’ care for stroke or accident victims, from leaving acute care to returning (with proper support) to their own homes, and delivering better results at lowercost.

This alchemy is achieved by freeing staff from top down direction and allowing grassroots initiative to transform services, drive down costs and allow innovation at every level.

Actually, you don’t have to imagine it, because it is what has happened in Swindon – one of the pathfinder public sector mutuals whose progress is being monitored closely by the Cabinet Office. Maude is keen for more of them to emerge in public services across the board.

The government doesn’t need to pass laws to make it happen – although it is working hard to create a mutual-friendly environment across the public sector, creating a ‘Right to Provide’ in government departments. And the Localism Bill, now before Parliament, will ensure that the public ‘Right of Challenge,’ under which local people can challenge the way a service is delivered, will also allow mutuals and co-ops to bid to take over local services.

Beyond that, he’s reluctant to legislate and set an inflexible template for mutuals; he wants them to bubble up spontaneously, and subject only to concerns about security and stability, every public service will be up for grabs. The new breed of mutuals will have to negotiate contracts with local commissioning bodies – local councils and the local NHS – or

government departments, or perhaps with all of them.

The contracts will detail how they plan to deliver services while minimising spend on administration and overheads. There may be joint ventures with social enterprises or private companies – the exact shape of arrangements will follow the dictates of the service provided.

Julian Le Grand, the LSE professor heading the government’s Mutualism Taskforce believes it is realistic to imagine that a million public sector workers, a sixth of the total, could be working in mutuals by the time of the next election in 2015.

Maude, though, is cautious about committing himself to any kind of target figure. “It depends how much momentum develops behind it,” he says. “The experience so far is very good, the pathfinders are impressive and the tories from people who have taken this route are inspiring – productivity massively improves and job satisfaction massively improves. People with a strong public sector vocation find they can give effect to it.”

And, Maude adds, those who have transferred to mutuals invariably say that they would never want to go back to the old mode of working. Even when their new organisation is not-for-profit and there are no extra bonuses or dividends, they still feel a real sense of ownership.

But, he says, this is change that cannot be imposed; it only works if the people involved want it – so one of his key aims is simply to build awareness that such a thing is possible, and that support mechanisms, like funding from the Big Society Bank, are available.

One stumbling block is that while employees at the grassroots may know how to do their job better, they might not have much idea how to create and run the multi million pound organisation needed to underpin it.

But they can buy in expertise to help – and Maude says that one of the pleasant surprises so far has been the number of “latent entrepreneurs” who turn out to have been lurking in the public sector, yearning to breathe free from central direction, targets and red tape. And even if the right managerial skills and capabilities are not there at first, they can be acquired or developed, he insists.

He believes the mutual model works particularly well in services where the funding follows the client and the challenge is to meet complex and varied individual needs – social care being a prime example. Ministers are also examining how the Right to Provide could be applied to Sure Start centres.

The advantage of this breed of mutual is sheer agility, and Maude can imagine an organisation receiving funding streams from local authority social services, the NHS, and perhaps a DWP programme to help people off benefits and into work, and devising a well tailored and cost-effective programme to meet the care and social policy objectives.

They will be accountable to the public through their contracts, but he points out, most large authorities are already well-versed in contract negotiation, so there is no new problem here. Of course, he accepts that some mutualised services will not succeed – no model for service provision is ever 100 per cent successful, and some mutuals are bound to make mistakes.

But he expects their failure rate to be lower. And if his predicted “massive improvements” are available, he believes local authorities would be foolish to reject mutuals, simply out of an instinct to cling to the old way of doing things.

Transparency will, he expects, mean that voters in one area start to wonder why their local services don’t meet the standards achieved by neighbouring authorities which have embraced mutuals. And eventually, the leadership of the under-performing councils will be punished at the polls.

The old alternatives of traditional direct public service provision and privatisation can both be successful, Maude says – but there is now a new alternative. The government is nurturing it by setting aside funding to help innovative new employee-led mutuals get off the ground, and by encouraging them to network and spread the word.

TUPE rules will apply to the pay and conditions for staff that transfer into mutuals, but the government has not yet resolved issues around pension rights – the consultation about the future of public sector pensions is still under way. But even at the end of that process Maude predicts the pensions available to staff will remain “the envy of most in the private sector.”

The TUC, he adds “are not opposed, at all,” to the idea of mutuals delivering public services. He even draws on the views of Mark Serwotka, leader of the civil service union PCS – suggesting mutuals are the antidote to the frustration Serwotka complains about among his members at the effect on their work of targets and top down controls.

Maude is not to be underestimated. He is the product of a political dynasty, the son of the Heath-Thatcher era minister Angus Maude. He was an up and coming minister in the Major years, and prospered in the City after losing his Commons seat in 1992. He returned to the Commons in 1997 and emerged as a crucial behind the scenes player in the Conservative Party.

Long before the last election, David Cameron gave Maude the task of preparing

the Conservatives for power, working out a new approach to the machinery of government which he believes will work better than what he dismisses as the “hierarchical” “target driven” and “top down” approach of the Labour years.

Those ideas are now being applied from Maude’s lair in the Cabinet Office, the rabbit warren of official buildings next to Downing Street, where subtle courtiers have pulled the levers of power since Henry VIII had a palace there.

He may not be one of the more visible public faces of the Coalition, but his influence extends into almost every corner of its activities – and it is now reaching out into local government, too.

This article was first published in C’llr Mag.