MPs report on employee ownership

PUBLIC SERVICE MUTUALS PROGRAMME NEEDS STRONGER SUPPORT FROM GOVERNMENT, MPs' REPORT WARNS

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07 June: The Government's public service mutuals programme is an important step forward in creating new options for public service delivery, but it is not yet very well understood within central and local government, a new report published by the employee ownership all party parliamentary group has revealed today.

The report, Sharing ownership; the role of employee ownership in public service delivery, confirms that the benefits of employee-led ownership, including increased engagement and productivity, are being felt by public sector employees and service users. However, it needs still stronger support and communication from central government if it is to build on its initial success.

The Group's report backs vigorous coordination and leadership from the Cabinet Office, supported by the Prime Minister, in order for all government departments and local authorities to step up action that will allow viable 'employee mutuals' to run public services.

The report follows an inquiry into the government's commitment to co-ownership in the public sector, which sought to identify policy challenges and practical solutions to ensure employee ownership can be both meaningful and successful for public service workers. It's the second inquiry the Group has published; the first focused on private sector businesses owned by their employees.

Chair of the Group, Jesse Norman MP, said, "The Coalition Government has made significant progress with their commitment to employee ownership in public sector services. Nonetheless, evidence from our inquiry suggests that more is needed to connect would-be mutuals with experts who have genuine experience in an advisory role, and to ensure that the expertise is affordable for organisations which may well be initially financially vulnerable and under pressure to perform".

He added, "Mutual and co-owned models offer a hugely exciting long-term opportunity to transform the way in which many of our public services are provided, for the benefit of employees, users and the taxpayer alike. Employee ownership in the public sector is to be encouraged, and in the coming months we on the APPG will pursue our recommendations with Government and with other influential bodies to ensure that employee ownership continues to grow."

Other key findings and recommendations include:

* Advice and support systems, driven by Government, need to be put in place to help employees facing difficulties in moving out of public ownership and into an employee-led ownership model. There needs to be particular focus on helping potential spin-outs to navigate complex tax implications, TUPE and pension regulations, and stakeholder management, particularly with the relevant trade unions;

* Government should capitalise on the success of the Mutual Pathfinders Programme and collate evidence to allow the progress and outcomes of the mutuals programme to be tracked, ensuring it is line with the initiative's aims and objectives;

* More work is needed on safeguards against the possibility that mutualised public assets could be sold off before they have had a chance to show their value;

* The report backs the intention of the Postal Services Bill to introduce employee ownership to the Royal Mail, but the Secretary of State needs to consider a future option for a larger than 10% employee stake.

Roberta Blackman Woods, Shadow Minister for Civil Society said, "I welcome the report from the EO APPG and hope that it will stimulate further discussion and debate about how best to extend the employee ownership model in the UK, especially as some of our leading companies have embraced this system. There is considerable cross-party support for enhancing the role of employee owned companies, mutuals and co-ops to improve the delivery of our vital public services. I'm sure this report will assist those that are wishing to establish employee owned companies in the future."

Ends

Notes to editors

The APPG on Employee Ownership aims to raise awareness of employee ownership and the benefits it can offer to the business community and economy.

The Group's inquiry into employee ownership in the public sector was launched on 22nd July 2010.

To inform the report, the APPG held five oral evidence sessions between July 2010 and March 2011, and received a number of written submissions from stakeholders including the Department of Health, Cabinet Office, Department of Business Innovation and Skills, Royal Mail, King's Fund, Unions, Mutual Pathfinders and Mentors, and established alternative delivery model organisations.

The mutuals programme is supported by Government through initiatives such as the 'Right to Provide', Pathfinder Programme, Mutual Taskforce and Mutual Information Service.

If you have further inquiries, please contact Harriet Crosthwaite, Natalie Bateman or Sarah Davis at 0207 618 9177 or eoa@luther.co.uk