What can we learn from European public service mutuals?

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Co-operatives UK have published a new report looking at the experience of mutuals delivering public services in Europe. It is one of the more useful contributions to the growing debate around public service mutuals and well worth a read.

There are a number of lessons that can be drawn from the European experience. There are three that struck me in particular. Public service mutuals succeed when they meet specific community needs, where the state supports and nutures them and where models are clearly defined.

The poorly defined and market-orientated model proposed by the Coalition fails on all accounts. Which probably accounts for the lack of interest from the public and resistance from the workforce.

Responding to demand

All the successful models outlined in the paper have been set up to meet specific demands from local communities based on tangible needs. Spain’s co-operative schools were set up to respond to specific regional needs, reflecting complex local cultural imperatives in places like Catalonia, Valencia and the Basque Country. Italy’s co-operative social care sector plugged the gap left by the absence of state provision and diminishing family support as traditional roles at home changed in post-War Italy. Sweden’s co-operative pre-schools met need created by the local authorities’ lack of capacity to meet the strict duties placed on them to provide places to all residents within 3 months of application.

As we have shown on here before, demand for public service mutuals remains low among workers and the public in the UK. Public opinion largely supports public services being delivered by the public sector. It might be that demands for mutualisation grows in response to crises in specific sectors or institutions, I’m thinking here of social care or Northern Rock.

State support

In Spain, Italy and Sweden the state plays a very active role in funding, capacity building and supporting mutuals. Whether this is achieved through creating specific funding mechanisms, through procurement or capacity-building, state support is integral to the growth of mutuals.

In all three cases mutuals grew in partnership with state services. In Spain, co-operative schools are provided with long term contracts, up to 40 years in some cases. In Italy, local authorities can become members of a mutual through their status as investors, thereby safeguarding their success and protecting public assets. And the social purpose outlined in the legal model of mutuals used in Italy, enables them preferential treatment in the public procurement process. In Sweden, co-operative pre-schools add capacity and niche choices while 80% of provision remains within the state.

The Coalition Government may believe that mutuals will flourish where the state withdraws but evidence from Europe suggests that the relationship is a lot more complex than that. Mutuals flourish in partnership with the state.

Clearly defined models

In all three countries, there are clearly defined models of public service mutual. For example, in Italy, the legal structure makes specific reference to community interest and the procurement regime allows preferred bidder status on the basis of this.

As the report states “in the UK there is an array of different models and some risk therefore that core elements of being a mutual or a co-operative could be watered down in favour of quasi-mutual private enterprises”.

The likes of MyCSP and Circle Healthcare Ltd would suggest that this certainly is the experience in the UK.