Maude unveils £10m mutuals fund

A £10 million government fund aimed at helping public sector workers create mutual businesses that will take over the running of public services has been launched by the coalition Government.

Maude: £10m fund would help fledgling mutuals 'reach investment readiness'
Maude: £10m fund would help fledgling mutuals 'reach investment readiness'
Cabinet Office minister Francis Maude announced the fund as part of a package of measures intended to encourage employee ownership of public services through a social enterprise business model.

Speaking at the head offices of the Royal Borough of Kensington & Chelsea, where staff are developing plans to mutualise youth services, Maude said that the £10 million fund would help fledgling mutuals "reach investment readiness".

Other measures announced by Maude this morning included a telephone and online service for public sector staff interested in setting up mutuals to be run by the Cabinet Office and the formation of an independent advisory group involving employee-ownership practitioners such as John Lewis, to investigate ways to improve regulation.

The new online service will be run in partnership with umbrella bodies Co-operatives UK, Local Partnerships and the Employee Ownership Association.

The package of support forms part of the Government’s new "right to provide" policy, where public sector employers will be expected to consider suitable proposals from front-line staff who want to take over and run services themselves.

Prisons, Sure Start children’s centres, hospitals and the civil service are examples of services that mutuals could deliver, Maude said.

Earlier this summer the coalition announced 12 public service mutual pilots, intended to help the Government understand what structures would best enable the development of employee-led mutuals.

In his speech this morning, Maude announced a 13th member of the pilot programme, employee-owned social enterprise Circle Healthcare.

He said: "This is part of the Big Society approach to public service reform, devolving power to people on the front line who know how things can be done better.

"The right to provide will challenge traditional public service structures and unleash the pent-up ideas and innovation that has been stifled by bureaucracy."

Peter Holbrook, chief executive of the Social Enterprise Coalition, which represents UK social enterprises, said: "We welcome this news. But 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 have an 'asset lock' [be legally bound in their constitutions] to ensure that they operate for the benefit of the public forever."

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