Company part of a joint venture mutual ,offering school support services
Nick Hurd, Minister for Civil Society at the Cabinet Office was at the launch of the first ever joint venture mutual, 3BM ,in April. It provides a range of critical school support services. The business is made up of staff from three London boroughs; Hammersmith & Fulham, Kensington & Chelsea and Westminster. They are delivering services such as financial management, IT and building development to schools allowing them to focus on education.
3BM is the first ever mutual joint venture to spin out of local government. The business is owned by a partnership between the employees and the the education employment company, Prospects. The employees own 75.1% of the business, giving them a controlling stake. Prospects has a 24.9% share and brings capital and business expertise needed to make the business grow. As a result of 3BM spinning out, the local councils could see £1 million in savings over the next four years. The mutualisation project has been supported by the Cabinet Office which had previously designated Hammersmith and Fulham Council as a national Pathfinder in 2010 to explore new ways of delivering public services more efficiently. Prospects is an employee- owned private company, and was chosen in an innovative “dragons den” process but with the partner’s shareholding capped at no more than 25% in return for their input and support. All mutual staff will own shares, with Prospects, as stated, owning up to 24.9% of the company, but subject to them meeting key performance targets to the satisfaction of the mutual.
Ministers have talked in glowing terms about the John Lewis model in business. All 84,700 permanent staff of John Lewis are Partners who own the 39 John Lewis shops across the UK and the 291 Waitrose supermarkets , an on-line catalogue business a production unit and a farm. Policy Exchange, the Prime Ministers favourite think tank, published a report recently ‘ Social Enterprise Schools’ championing the John Lewis model in education. The report said Private companies should be encouraged to take over and run state schools as profit making enterprises under a “John Lewis-style” business model. It argued the new schools, in which teachers and staff are encouraged to become shareholders, would create strong incentives to drive up standards. Under the proposals, half of any profits made by the schools would be distributed as a dividend to its partners on an annual basis, while the remaining half would be reinvested.
There are quite a few ‘ co-operative schools’ operating in England. The Co-operative College, a Manchester-based organisation, is helping to support and promote the ground-up, democratically driven growth of Co-operative trust schools. The Co-operative College has over recent years worked with the Co-operative Party and schools to develop a distinct co-operative trust model that enables schools to embed co-operative values into the long term ethos of the school. These schools are part of the Co-operative movement, with a history dating back to the 19th century. Despite some legal challenges, in just five years, co-operative schools have become the third largest grouping within the English education system, with currently over 450 operating. 30 have become co-operative converter academies, a small number are co-operative sponsor academies and we have seen the creation of the first co-operative multi-academy trust.
Cabinet Office Minister, Francis Maude, has launched a programme to introduce employee mutuals into public services and has endorsed the aim of a million public sector workers – around 15% of the total – transferring to staff-led mutuals by 2015.
Patrick Burns, Director of Mutuals Development for Prospects says that the reason for this Ministerial enthusiasm is the increasing evidence that employee ownership can help organizations perform better than conventional counterparts in the private and public sector; as well as the micro and macro benefits to the wider economy. Prospects had elected to make the transition from conventional ownership to employee ownership. It is a former spin-out from the public sector – formed from the careers services of four London boroughs in 1996 – which now offers advice and support to authorities and staff groups interested in forming employee-led mutuals [ELMs] alongside its extensive other work in education, training and employment. Prospects services include careers services for adults and young people; the Government’s Work Programme initiative to help long term unemployed people back to work; the largest Ofsted Early Years Inspection Services contract in the country; advice and guidance for offenders; and an extensive range of education consultancy and school improvement services.
Patrick Burns was until December 2011 Chief Executive of the Employee Ownership Association. He written a paper about employee ownership (see below) in the private and public sector of the British economy, and how Government can help it spread.
Knowingly Undersold- How Government can spread the John Lewis effect–Prospects Policy Paper-Patrick Burns