Francis Maude talks about mutuals and “mutual joint ventures” fairly interchangeably. He defines mutual joint ventures as “A co-owned joint venture to deliver public services, bringing together public service employees and private sector partners, may harness the best of both worlds in a new form of partnership.”
The first such joint venture was created in 2012, when the government transferred the Civil Service pension scheme to a company called MyCSP. The government called it a “mutual” after giving employees 25% of the shares, keeping 35% and selling the remaining 40% to a private company, Equiniti. But in October this year, the government decided to sell 11% of the total company from its share to Equiniti, conveniently pushing their holdings up to 51% of the company and majority ownership. Maude still calls it a mutual, though.
A similar trick has been played by Circle Holdings. Circle run the first NHS hospital to be franchised out. Maude calls it a “mutual”, because the original “Partnership” structure gave consultants and GPs just under 50% of the “Partnership”. Recent restructuring of the company (“Project Reset”) mean that now “staff” only own 25%. Ultimate control, however, always resided with an offshore Holding Company majority owned by private equity firms.
In spite of claims in the right wing Press, Circle is not a successful company. In 2012 Circle had to beg its shareholders for £46m of cash, on threat of insolvency. It got the money - but it’s still struggling to balance the books - and delivering poor service to boot, even as it’s held up as an exemplar of a health ‘mutual’.
The Cabinet Office pages present mutuals as a panacea, But in truth they are private companies and are subject to all the pressures and failings that are found in private companies.
Cornwall has been a testbed of privatisation. The failings of Serco as their out-of-hours provider are well known. But less well known is that the community services provider is a so-called mutual, and it is failing too:
“In Cornwall, Peninsula Community Health, a non-profit staff operated company that runs 14 community hospitals, is seeking a rescue through merger with Cornwall Partnership Foundation Trust.”
The social enterprise cannot balance their books. They reported a deficit of £328k this year. The local Lib Dem MP, Andrew George, said “the best outcome would be putting the whole community health sector back in public hands”.
Then there’s Central Surrey Health (CSH), regarded as one of the “successes” of mutuals and social enterprises. It had a fundamental weakness: its reliance on an assumption that its NHS origins meant it would still get NHS contracts. This assumption came crashing down when it lost a £500m contract to Virgin. CSH is reported to have failed in its tender because it could not provide a £10m bond as surety; the company was just too small to have access to such capital.
