A mutual feeling

Those working in public services have become used to a small circuit of countries that are cited as role models for reform. Sweden is an example for its childcare and, latterly, free schools. The USA has influenced benefits reform over many years and Australia with its targeted marketing on smoking and public health is held in high regard in the NHS. Denmark offers renewable energy, with community involvement. Eyebrows may be raised, though, at the news that the country that has done more to influence coalition government thinking on public service reform than any of these is in fact Chavez-led Venezuela. One of the UK government's central planks for public services is that employees will be able to bid to run their own services as co-operatives. Allowing staff to form their own, employee-owned mutual moves them off the public sector rolls and, in theory, allows them to take ownership not just of the service but of new ways of doing it better – and often cheaper. The Conservative manifesto, where this originated, declared that this would be "the most significant shift in power from the state to working people since the sale of council houses in the 1980s." In Venezuela, the spin-out of public services into worker co-operatives has been a defining success of the so-called Bolivarian revolution. In 1998, there were fewer than 800 legally registered cooperatives in Venezuela. Over ten years later, and there are over 100,000 co-operatives with over 1.5 million members. By some accounts cooperatives across the public and private sectors now constitute 18% of the entire workforce. The government has facilitated the creation of new co-operatives by giving them access to credit, opportunities around state procurement and technical support. State help has been instrumental in facilitating the expansion of the cooperatives across the economy, without compromising their independence. The model here is likely to be more pluralistic. Cabinet Office minister Francis Maude has indicated that he wants to see experimentation and different models of partnership. There is also the opportunity to learn from some existing mutual models. The fastest growing sector in education, for now, are not free but co-operatives schools – both trusts and academies: there are now around 100. The NHS has for some years promoted the idea of employee co-operatives spinning out from directly managed provider units, an early example being the mid-Surrey community nursing services. The NHS has established the Social Enterprise Investment Fund to loan capital to start-up employee co-operatives. The health secretary Andrew Lansley has stated that he wants some of the world's biggest social enterprises and worker co-operatives to be delivering NHS services commissioned by general practitioners who themselves could form co-operatives. In local government there are moves to adopt different forms of mutualism including Lambeth council's commitment to become the "John Lewis council". Other local authorities across the political spectrum are also encouraging their staff to consider setting up co-operatives which would contract with the authority or sell their services directly. During the Labour leadership campaign David Milliband even suggested that the BBC could be mutualised . The communities secretary Eric Pickles has proposed that the Audit Commisison's audit practice could be formed into a co-operative . While mutualism and co-operatives can offer a major opportunity to reshape and galvanize some public services they will not always be a panacea. Setting up co-operatives takes time, finance, leadership and consensus. They require funding for set up and realistic revenues to meet operational costs and developmental investment. Any change at a time of massive cuts can be daunting, but working in a mutual way could be a welcome change for public service staff. It offers an approach that is not privatisation – ownership and control is not ceded to external investors but retained in social ownership, with clear accountability to members. And where staff can can have some control over terms and conditions with management accountable to them. Co-operatives should not be seen as an easy way to reduce costs. They can have lower overheads than the public sector and can often be more innovative. There is a risk that, whereas Venezuela has been careful to ensure that co-operatives live up to the core principles set down by the International Co-operative Alliance, including independence and open membership, the UK's pluralism will open up a set of models that are no more than stepping stones to privatisation. To safeguard against this, there needs to be an asset lock against demutualisation and a presumption throughout of staff consent, from top to bottom and at every stage of the process. More information on setting up a public service cooperative can be found here . Ed Mayo is director of Co-operatives UK and John Tizard is director of the Centre for Public Service Partnerships