Why the UK’s public service mutuals must be viewed with caution

Recent UK examples of so-called public service mutuals must be viewed with caution by Australian governments, says Australia’s new peak body for member-owned firms, and the public service union. The rhetoric no longer matches the reality.

This time last year, former federal front bencher Kevin Andrews was quite taken with the idea of public service mutuals and, as Minister for Social Services, enthusiastically helped the sector’s newish peak body launch a white paper on the topic.

“Indeed, I am extremely pleased to be here this morning, because the Business Council for Co-operatives and Mutuals exemplifies the philosophical world view that governs the Liberal approach to public policy,” Andrews told the BCCM’s guests in a committee room at Parliament House last September. Individuals working together to “achieve good things through self initiated co-operation rather than through state-imposed sanction” went hand in hand with small government, he contended.

“It absolutely must be driven by the staff. They have to want it, and not only want it but it has to be at their initiative.”

Encouraging public service business units to morph into genuine workers’ co-operatives could deliver a range of benefits including improved service quality and productivity, advocates like the BCCM argue, as well as better outcomes for employees than either privatisation or continued public ownership can deliver.

The United Kingdom’s current public service mutual program, begun by the coalition government in 2010, promised an improbably large and rapid expansion of PSMs and all the attendant benefits. Five years later, neither has materialised at anything like the scale that was originally talked about. The government continues to celebrate the project as though it were a runaway success, but its achievements are mediocre.

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