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Tories will invite public sector workers to own primary schools, job centres and other state-funded services as co-operatives

Three years after the launch of the Conservative Co-operative Movement the party is today announcing what it says will be the biggest transfer of power from the state to working people since Margaret Thatcher handed ownership of council homes to their tenants. It's not a perfect comparison. State employees will be able to bid to run state services but they must remain not-for-profit although the resulting co-operatives will be able to award themselves higher pay as part of their control of budgets.

A CCHQ briefing note states that "employee owned co-operatives will continue to be funded by the state so long as they meet national standards, but will be freed from centralised bureaucracy and political micromanagement."

The same briefing lists some of the idea's key advantages:

  1. "Create a powerful new right to become your own boss. Staff in the vast majority of front-line public service functions will be able to bid to transfer to independence by creating a co-operative enterprise. There are already legally-recognised organisational forms they can simply adopt ‘off the shelf’."
  2. "Enable shared ownership. Staff in the new co-operative would be genuine owners of the enterprise. Like employees in co-owned businesses, they would all be able to benefit from its financial success and could vote on how things are run." On this morning's Today programme George Osborne confirmed that teachers in a co-operatively run school would be able to fire their headteacher.
  3. "Create the freedom to innovate. They would simply be contracted by a relevant government department to deliver the desired outcomes – no more bureaucratic government process targets dictating how to achieve them."
  4. "Allow staff co-ops to bring in the best expertise. To help overcome the barriers to rapid progress that co-ops can experience, they will be able to go into joint-venture with outside organisations. Partners could be offered a share of the revenues in exchange for management and operational expertise."
  5. "Give staff co-ops the freedom to grow. Once successful, staff co-ops will be able to bid for other areas of government activity, or merge with other co-ops if they wish."
  6. "Ban profiteering. While staff will fully own their new organisation, they will not be able to sell off any of the state’s assets they continue to use, like land and buildings. And because we expect them to make big efficiencies and improvements to services, their contracts will ensure any big surpluses they make will be shared with the taxpayer."

This is another radical idea from the Conservatives (as James Crabtree at Prospect recognises) that may not produce immediate benefits but will end the monolithic management practices currently dominant in the public sector. It will allow new models of service delivery to emerge and that can only be a good thing. It will be interesting to see if a public sector entity threatened with large budget cuts over the next few years will see that as a spur to become co-operative and learn, itself, to live within the smaller budget rather than have the new tighter regime dictated from on high.

On Platform today Stephan Shakespeare explores another massive Cameron idea. Noting that French firm Steria enjoys an operating margin on UK contracts of 11.4%; almost twice that on its French contracts (6.5%) Stephan explains how bringing transparency to government contracts will save billions of pounds for taxpayers and improve public services.

The Co-Op idea and transparent government idea are both part of the same phenomenon. The state will no longer be controlled by a few politicians and civil servants in Whitehall but every public sector worker, every business and every taxpayer will have new powers to determine how the state is managed.

Tim Montgomerie


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