Maude slams "iron cladding" of contracts as mutual support programme launched
The Cabinet Office Minister hit out this week at commissioners’ practice of “iron cladding” contracts – which means all bar a few big companies can win tenders – as the government launched a fresh drive to create more staff-led mutual organisations.
Francis Maude made the comments after a report revealed that public sector staff who have been looking to establish mutuals have faced a range of barriers. According to the Cabinet Office, the report raised issues such as a tendency for contract tenders to include requirements beyond what is legally necessary, such as demanding that the organisation has a multi-million pound bond before taking the contract.
The report, which examined the progress made by the government’s pathfinder schemes, revealed that seven projects had launched as mutuals, eight were “progressing well to go live within the next 12 months”, and three were still in early stages of development.
However, four projects had at this stage been unable to, or had decided not to, apply a mutual model to their services. “This is for a range of reasons, including uncertainty over future service needs and the impact of restructuring on the funding and delivery of the service,” the report said.
The pathfinders highlighted the need for support in several key areas, including:
- Access to professional expertise, for example legal and business advice
- A way to communicate, share and network with each other
- Advice on cross-cutting technical issues, “such as procurement, and liabilities from VAT, pensions and TUPE".
The government has responded to the report by launching a £10m support programme in a bid to kick start more projects led by public sector staff.
The programme, which will be made available to groups of staff or existing mutual organisations, will be managed by PA Consulting. It will purchase legal, HR, financial, tax and business planning services as well as help organisations tackle common barriers and share information.
The government said the pathfinders’ experience was also being fed into its work to simplify procurement and give SMEs greater opportunities to win public sector contracts.
The Cabinet Office Minister – who earlier this year predicted that up to one million public sector employees could be part of mutuals by 2015 – also unveiled a new mutuals website and a telephone hotline.
Maude said: “Too often tender processes go way beyond what’s necessary, asking for massive bonds up front and insisting that the organisations have existed for years. Iron cladding contracts bars all but a few big companies from winning them. It is a fundamental barrier to creating the vibrant, innovative and competitive public services this country needs.
“Through our Mystery Shopper exercise mutuals and other small businesses can tell us about discriminatory practice. We will intervene when problems are exposed.”
The minister said he understood that commissioners “may feel stuck in the middle”. He urged them – in cases where they feel they are forced to over complicate things – to contact the Cabinet Office’s Tell us How website and seek help to address the problem.”
On the new support programme, the minister said: “The Government is getting support in place, developing a pipeline of innovative new mutual ‘spin outs’ where employees have real power. The evidence is clear – mutuals can provide better, more efficient public services.
“It’s time for politicians and public sector bosses to cut the apron strings and trust frontline staff to make decisions. They are the real experts, they know what’s important to the people who use the service and they know how things can be done better.”
Maude also hailed an evidence paper issued by the Mutuals Taskforce which claimed that mutuals:
- had lower absenteeism and staff turnover than non-employee-owned organisations
- had lower production costs and generally higher productivity;
- delivered greater customer satisfaction, and
- were innovative, profitable and resilient to changes in the economic climate.
Philip Hoult
