The government is set to renew its drive to provide public services through mutual companies and cooperatives as part of its response to the collapse of Carillion, Cabinet Office minister David Lidington has said.
In a speech at the Reform think tank yesterday, Lidington told Civil Service World that although they would not be applicable in every situation, part of the government’s procurement changes in response to the collapse of Carillion would include encouraging mutuals, including spin-outs of existing government employees.
In the speech, Lidington insisted that the high-profile closure of Carillion, which collapsed on 15 January after months of speculation that it was unable to service its debts, would not dim the government’s commitment to the private and voluntary sector delivery of public services.
“We are determined to build a society where people from all parts of our country can access the best public services, and for those services to run efficiently and smoothly for them and their families. Whether that service is delivered by public, private or voluntary sectors, what matters is that it works for them and their everyday needs, while providing value for money for the taxpayer,” he said.
This would include supporting a competitive and vibrant market of suppliers, including encouraging “small businesses, mutuals, charities, cooperatives and social enterprises – and therefore harness the finest talent from across the public, private and voluntary sectors”, said Lidington.
Moves to encourage spin-out mutuals from central and local government to provide public services was a flagship priority of former Cabinet Office minster Francis Maude in the coalition government from 2010 to 2015. He led moves to spin out public service mutuals including the so-called ‘Nudge Unit’ from the Cabinet Office, in order to give public sector workers “an ownership stake” in their work.
However, this foundered in recent years amid little appetite for the change among public sector workers, including civil servants.
Lidington announced yesterday that the government will extend the provisions of the Social Value Act, which currently instructs government departments to consider wider social values when awarding contracts, to ensure that these evaluations are explicitly made in procurement decisions. This will help level the playing field for mutuals, cooperatives and social enterprises bidding to win government contracts, he said.
Asked by CSW after his speech to Reform if his plans would include encouraging the creation of new mutuals, Lidington said yes – where there was support for it.
“I would very much like to see more mutuals, whether as spin-offs, or a mutual of some kind being part of a tender process or a contract of whatever size,” he said. “I think realistically a lot of these are maybe going to be in the subcontractor chain rather than as a main contractor for very big contracts. It is not going to be the right model for everything, but I would be keen to encourage mutuals where there is the appetite for those.”
In the speech, Lidington insisted the government will not move away from using private providers to deliver public services, but acknowledged the need to increase the range of suppliers after the collapse of outsourcing giant Carillion.
Alongside plans to revitalise the use of mutuals and cooperatives to provide services, the government will also change its procurement rules so that "social value" was now included in all assessments of all providers.
The Social Value Act, which currently instructs government departments to consider wider social values when awarding contracts, would be toughened to ensure these evaluations are explicitly made in procurement decisions.
“By doing so, we will ensure that contracts are awarded on the basis of more than just value for money – but a company’s values too, so that their actions in society are rightly recognised and rewarded,” Lidington said.
The government will also require outsourcing companies to publish more details on their own quality and diversity by making this a requirement to provider services. They will also need to maintain "living wills" that set out how services will be maintained if a provider hits difficulties.