The Mutual State - Models for Managing Public Services

History:

The craft guilds were the small companies of the eleventh century.
Indeed the term 'company' comes from the Latin terms con
and panis, meaning to take bread together. As the workshop
and sales shop was also the master’s house in the town, all
the members of the guild, journeymen and apprentices
included, had lunch together.

Each guild was defined by common work and common trade.
They ranged from lawyers, priests and scholars to butchers,
bakers and hosiers. Work was strictly regulated. An average
day was eight hours – though this varied with the seasons.
Night work was strictly forbidden. Guild work was not
allowed on Saints’ Days, of which there were at least 150:
there have never been so many annual holidays since. Saint
Days were not “days off”, though. They were reserved for
civic work – building a cathedral, attending to the needs of
the poor and elderly.

By the rise to ascendancy of the nation state the local
regulation of commerce was lost and the long-distance merchant
guilds gained the upper hand over the local craft guilds.
Social service guilds (the neighbourhood guilds and almshouses) either
went into decline, were brought under the 1601 Charity Law or
made the responsibility of the national poor law rate system.

The cooperative movement started with the Friendly Society Act of 1757 - leaders of this movement, in 18 century Britain, Ireland, USA and France shared a utopian socialist ideal – that of creating a mutual aid economy. The Co-op shop movement in the UK grew in strength until the 1950s.

Demutualisation, a word which came to prominence in the 1990s, simply accelerated
the same trend. Mutuality on a large scale failed to engage members, who opted for the benefits of private ownership. There is remarkable upsurge in "social enterprises" – credit unions, social firms, housing co-operatives, fair-trade and ecological enterprises, managed workspaces, farmers’ markets, recycling initiatives, employment services, community shops, arts ventures, social care co-operatives and time banks.



Building the Mutual State

The search for more responsive models for managing public services, and the discovery of the limits to market and state, forms the background to the new-found interest in “social enterprise”. The business minded non-profits and voluntary organisations, led by social entrepreneurs. They operate with a public ethos, but they are entrepreneurial, selfgoverning and have proved effective at engaging the participation of users.

Self-governance is an essential recipe for what we have described as the Mutual State. After all, if management is to have significant freedom to innovate and respond to need, then creating single-purpose self-governing organisations is the way to do it. But how do you promote self governance without creating incentives for free-riding, lack of coordination and poor quality? The answer is to look for models of organisation that internalise public service excellence and cooperation with other parts of the public service jigsaw, rather than have to have this imposed through costly regulation. This is the “new mutuality”. The rationale was that there is a lot of practice already going on,
but it is rarely brought together or properly understood.

outline the underlying principles that inform the new mutuality: co-production, accountability, citizenship and scale. models for mutualisation, covering legal and other aspects designed to create replicable social enterprises across public services within a framework of quality assurance. However, the decentralisation of power in this way also creates firstly, the need for new forms of accountability /governance and secondly, the opportunity for new forms of citizens’ involvement. opportunities for creative mutualisation across a range of public services.


CO-PRODUCTION

The time banking, as “co-production”. The idea of coproduction reconceives public services. Instead of a traditional model, in which disinterested and expert professionals deliver services on behalf of, or for the use of, passive users, coproduction is about finding ways to unlock the knowledge and contribution of service users, valuing them as partners. The co-production approach also addresses one of the major paradoxes of the welfare state, which is that, in trying to target assistance to people in need, it can generate stigma and, in fields such as welfare benefit, deny people’s dignity. And where inflexible systems combine with a lack of human scale, as David Boyle argues in Section A, the result is a public disservice. Coproduction is an opportunity for people to act as citizens from the most effective of motives, which is the combination of selfinterest and public concern.


GOVERNANCE AND ACCOUNTABILITY

Co-production is clearly linked to issues of governance and accountability. Decentralisation moves decision-making closer to users and improves the quality of service, whilst participation in governance can clarify lines of accountability and responsibility. A key concern here is how to promote innovation and social entrepreneurship allied to
democratically managed and accessible services, improved autonomy for workers, and more control and choice for citizens as discussed by Jack Dromey. Successful innovations in social enterprise stitch together aspects of the public, private and voluntary sectors. What is at issue here is capacity building: the development of skills and
resources from across sectors to develop future capacity within social enterprises. The view here is that regeneration projects are more likely to succeed if local people are involved, and if best use is made of public, private and voluntary sector expertise in the local area. Co-ordination of effort would lead to the bundling together of assets and services on a neighbourhood basis.


ENTREPRENEURIAL CITIZENSHIP

Involving citizens in the design and delivery of public services, and thus in the running of the Mutual State, inevitably changes the relationship between the citizen and the state. In sum, it extends the notion of citizenship for the simple reason that, in contrast to the myth of standardised, universal services, the more you put in, the more
you get out. There is a sense in which the new forms of civil society are demanding the creation of new democratic and public spaces within social life. Such spaces are not necessarily antagonistic to, but certainly cannot be simply mapped onto, older forms of community and solidarity.

This is the impetus behind the Mutual State. But, how can changing ideas about citizenship, democratic participation, community and the social good be linked to the changing role of the State and to a new vision of the relationship between the social and the economic? The key issue here, as we have already stressed, is that communities and individuals need to be involved, alongside the State and professionals, in the design and delivery of public services. having a clear public service ethos and not-for-profit basis;

• giving greater control to patients and service users and opening up options for greater accountability to local communities;
• more active involvement and control for both staff and management;
• offering freedom from “topdown” management from Whitehall;
• immunity to takeover by organisations which will not provide such benefits.


CITIZENSHIP

Marking a name of electoral form might be, and, for many people may well be, the sum total of our participation as a citizen in our country’s democratic and civic process.
We are all now customers or consumers, being treated as a customer or consumer, we are likely to insist on our consumer rights, demanding performance of the contract under which we are paying for services, and seeking compensation if we do not get it. We are consumers, not citizens. Clearly not everyone would be interested in participation, though with modern communications systems, many are interested in receiving more information. Modern mutuals are aware of the need to nurture active membership, and the variety of means of communication and methods of engaging people are being used to deliver this. Citizenship is the life-blood of the new mutuality.
A society in which links that bind people are stronger, where people have respect for community assets, and where they treat each other with respect, is a desirable goal. The benefits in reducing crime, promoting employment, and improving the quality of life do not need elaborating.


CONCLUSION

The big prize of democratic and institutional renewal in public services won’t happen by itself. It won’t happen by the heroic but scattered experimentation
of pioneers. To come close, the government now needs to do is to develop a systematic policy framework to remove the barriers and to let mutuality work.
As a first step, therefore, we need to assess how good we
are as a society, and a state, in securing genuine
participation. We need, in other words, a participation
audit, to draw out the lessons from existing community
involvement and act as a focus for best practice in the
future.

A mutuality agenda would enable local authorities to respond better to citizens’ needs. To an extent, this is already happening. The 1999 Local Government Act places a legal duty on local authorities to consult with stakeholders. However, hand in hand with decentralisation we also need a new professionalism for the public services that is based on empowerment and inclusion. It is not hard for paid experts
to pick up a degree of conceit. It is hard, but ultimately more rewarding, to learn how to share knowledge, occasionally to let go of control and to enable the participation of users.

A social enterprise is not an arm of government: it is an independent model outside the traditional public sector. Typically it is led by a social entrepreneur and is
socially owned or accountable. It may make profits, but they are not for private benefit. They are reinvested socially, either in the service or the community. This is to ensure that community resources are held in trust for future generations. We also need new powers to raise finance. The issue of local bonds, for example, enables
citizens to become social investors, with a stake in the improvement of local services beyond that of passive taxpayer. In Sheffield, the employment bond pioneered by Citylife has raised over £1 million for job creation from local people,
including celebrities such as Michael Palin. In Italy, co-operatives and voluntary organisations are able to apply for a special social enterprise status, in this case with tax advantages. In the USA, public services can operate as public benefit
corporations, with powers to raise finance. In cities such as Bristol and Brighton, trades unions have been active in promoting worker co-operatives as a successful alternative to privatisation. One of the benefits of mutuality would be the emergence of “horizontal accountability”, in which the immediate stakeholders – the local people and organisations who are in the best position to judge what is going on – hold public service organisations to account. The role of the National Audit Office would shift from straightforward inspection to enabling – providing the knowledge and capacity that would equip stakeholders to “self-audit”. The new generation of mutuals will need to be root-fed – patiently, methodically, with the right mixture of nutrients. As the Sure Start programme has shown, developing the capacity in communities to assume governance and management roles takes time.
The key word, perhaps, is pragmatism – mutuality, whether or not we are aware of it as such, has made striking advances in recent years, because people have come to realise it is often the best practical solution.

Some of the most positive examples are in health. The remarkable rise of self-help groups – there are now as many of these per thousand adults as there are doctors – is a reminder that a nation’s health is not primarily delivered by a state service that cares for us when we are sick. Through education, nutrition or exercise we can take responsibility for our own health. West Walker primary school in Newcastle, once close to collapse, has been “rescued” through participation, with parents and the wider local community pulling out all the stops to help turn it round. The school now boasts an adult education centre, a lively cafe and a nature garden, built of course by the children and parents.

Time banking, pioneered in the UK by the New Economics Foundation, has shown what can be achieved through social reciprocity – getting something back in return for helping the community. In Watford older residents earn time “credits” for monitoring council cleaning and waste and recycling services, and for reporting dog fouling, litter and abandoned shopping trolleys Local school children conducted a crime survey in Merthyr Tydfil in 1996, which the police recognised to be more reliable than their local records because people were prepared to tell them the truth!

Similarly what makes for good health or social services is the relationship and quality of interaction between user and provider. This is not something that you can set out in contracts. So if you are going to contract out, organisations that work in a participative or “mission driven” way offer the best guarantee of quality.
At best, this could produce a paradigm shift in the way good public services are conceived and delivered. Participation is the key to this – helping people feel they have a relationship with, and an influence over, the public services they pay for
through taxation. There are now many examples of successful mutuality, in health, housing, education, leisure, transport, social services and environmental work. The last two decades have seen a remarkable upsurge in social businesses, from credit unions and housing co- operatives to farmers’ markets, community shops, and time banks.

The priorities for mutualisation are: health, primary and secondary education, care for the elderly, childcare, employment advice, parks and libraries, leisure, recycling, housing, youth justice and regeneration partnerships.

The concept of the Mutual State represents not a step away from the collective interest but rather a new form of democratic governance. As Manuel Castells argues, NGOs “are to my taste the most innovative, dynamic and representative forms of aggregation of social interests. But I have a tendency to consider them ‘neogovernmental organisations’ rather than non-governmental organisations, because in many instances they are directly or indirectly subsidised by governments, and ultimately represent a form of political decentralisation rather than an alternative form of democracy. They are part of the emerging network state, with its variable geometry of institutional levels and political constituencies.” there are in principle, widespread opportunities to test:

• user participation in existing public services;

• social enterprises to operate public services, while the involvement of different stakeholders will vary according to the nature of the service; citizens auditing of public
services;

• Multi-stakeholder models of governance for public services.

One motto for public service reform in the 21st century is going to be not “rolling back the state”, but “rolling forward the community”. If this vision is to become a reality then ordinary people, as well as policy makers, politicians and public service staff, will have to champion it and to make it part of their understanding of what they expect from a modern state. What this report both demonstrates and argues is that there is a compelling case for allowing them the opportunity to do so. In an era of globalisation, we can advance a new, forward-looking model of democratic, network governance.





Extracts:

The Mutual State, Ed Mayo and Henrietta Moore, NEF, 2003,
www.worldbank.com/participation/webfiles/MutualState.pdf
Web: www.neweconomics.org.uk
www.themutualstate.org