Unions, co-operatives and “fourth sector pathfinders”…

Earlier this year I blogged on the proposal by the Conservatives (then in opposition – ah, happy days, happy days…) to allow public sector workers to set up employee co-operatives. Last month, Francis Maude announced twelve pilot projects for the initiative.

I must admit I’d missed the substance of this, being too distracted by the general chortling about Maude’s use of the term “pathfinders” (as in “fourth-sector pathfinders”). The schemes involve a variety of forms of social enterprises, trusts and co-operatives, running services such as NHS services for homeless people and an awarding body for FE colleges. In addition, the government’s NHS White Paper stated its desire to create “the largest social enterprise sector in the world” in place of a unitary NHS through a “right to request” scheme in which NHS staff can request to run their services as a co-operative.

In late August, it was reported that Unison have launched a legal action against the Department of Health in relation to the NHS social enterprise proposals. The union’s main concerns about the proposals are:

  • back-door privatisation: as I suspected in February, the social enterprises only have a contract for three years, after which the services will be open to “any willing provider”. Many NHS staff will therefore find that their employee co-operative is a short-lived interlude between employment by the NHS and the commercial sector: or, to put it another way, a means by which the government can privatise the NHS by putting otherwise sacrosanct services into the marketplace using employee co-operatives to make the transition politically palatable.
  • management-led, not employee-led: the union suggests that most of these schemes will add a patina of employee involvement to what are otherwise conventional spin-outs of services to existing management.

Another relevant observation that could be made is that spun-out services are more vulnerable to cuts: it’s much easier to terminate a contract with an external service provider than it is to make your own people redundant directly.

An NHS run as a federation of social enterprises is an attractive idea in principle, but it is only viable in the long term if services are required to remain on a not-for-profit basis. Otherwise they are simply an instrument of marketisation. I’d also like to see more use of “multi-stakeholder” models that involve users of services as well as employees.

But what this case also demonstrates is a certain tension between the concept of co-operatives (and other forms of social enterprise) and trade unions. I’m sure this is one reason why the Tories have warmed to the idea of employee co-operatives in the public sector: their potential to undermine trade unions. Why join a union to help protect you from “the management” if you and your colleagues are “the management”?

This is not just an issue as regards Conservative plans. All the Labour leadership contenders have emphasised their support for increased use of co-operatives and mutuals – for example, David Miliband has proposed that the BBC become a mutual owned by licence-fee payers.

I’m sure there are many examples out there of how trade unions and co-operatives can work together effectively. After all, even in an employee co-operative there will be plenty of occasions when employees face problems in their relationship with managers.

So that’s the main purpose of this post: not to give my opinion, but to ask for information, in particular for examples of how trade unions and co-operatives (and other social enterprises) can interact well. How can trade unions adapt to a world in which co-operatives become more common, especially in the public sector? Is this an area where unions should actually be taking a lead and helping their members to form co-operatives? Are there examples of this already happening? And so on.

Over to you…

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2 thoughts on “Unions, co-operatives and “fourth sector pathfinders”…”

  1. John,

    How are these employee cooperatives different from the organisations (such as the Scot Bader company) that Schumacher lauded all those years ago?

    Or are distributist ideas suspect only when the Tories are hawking them?

    1. Chris: as I said in my post, the idea of using co-operatives as a decentralised and less statist way of providing public services is attractive. The post ends with an appeal for examples of non-oppositionalist responses to the concept.

      However, the “any willing provider” principle, coupled with the short-term nature of the contracts (most existing spin-outs of public services have initial contracts of ten years or more), means that the practical effect of these proposals is that they will not provide a long-term, stable form of public service, but instead will be a pathway to commercialisation and marketisation of public services.

      Now, some will see that as a good thing, that the NHS should become merely a commissioning organisation purchasing commercial services in a free market. In which case, let them argue for that openly. I’m coming at this from the perspective of seeing co-operative models as an /alternative/ to both centralised state control and privatisation, rather than as a route from one to the other.

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