In the wake of the credit crisis and the expenses scandal, the British public are demanding more control over the issues that matter to them most, and greater ownership of the services on which their communities depend.

Public services are not immune from this mood and, indeed, many of the challenges we face as a society – from climate change to managing long-term health conditions – require a delicate calibration of individual and collective action and an ‘ethic of engagement’ between empowered citizens and frontline staff.

So the model we must look to in order to increase this sense of ownership and is no longer simply the PLC, but the Co-operative and John Lewis: companies that are owned, respectively, by their customers and staff.

That’s why I will argue tonight that mutualism is not only right for the public mood, it also helps to deliver the accountability, individual empowerment, and community responsibility that the public both wants and needs.

A year of profound change

The past year has been a period of profound and unprecedented change, both for our economy and for our society.

In the wake of the credit crunch, the public have made it very clear that they are unwilling to put their trust in large organisations that they feel are not run in their interests and operate too far outside their control.

And, since the expenses scandal, the public have signalled the need for wide-ranging democratic renewal that will provide them with greater power over the issues that matter to them most – which is why, for example, I have been making the case for open primaries, electoral reform, and more directly elected mayors.

The evidence is that public support has shifted towards organisations with values; those in which long-term social returns are put ahead of short-term gains and which are accountable to those with a stake in their success.

A new public mood

So a new public mood has emerged.

Nearly two-thirds of those surveyed this year said they mistrusted the financial services industry, with almost three-quarters saying that they are concerned that these businesses put shareholders’ interests ahead of those of policyholders.

By contrast, 69% said that they were more attracted to companies run by their customers.

In banking, where trust has been severely hit, co-operative banks, mutual institutions and building societies stand out as ethical, values-led businesses, behaving responsibly in an industry where too many have not.

And the fact that John Lewis was named ‘Britain’s favourite retailer’ last year testifies to the way in which the public is willing to get behind a company with a ‘partnership’ model that promotes greater engagement, loyalty and co-operation amongst staff and thereby generates trust in its customers.

The public service challenge

So in the post-banking crisis, post-expenses Britain, people want to feel a sense of ownership and control: something which both free market fundamentalism and remote and centralised statism are unable to meet.

And public services are not immune from this mood.

Nearly two-thirds of people say that they would choose a business that reinvests its profits for the benefit of the community to run their local services, instead of public or private organisations.

And there is a strong sense that the public want to deepen their involvement with public service delivery.

An ethic of engagement

Already, more than half of people say they often get involved in public services – a figure that puts the UK at the top of an EU wide ‘index of co-production’.
It is clear that engaging citizens and service users in public services and giving them a greater sense of ownership is the key to maintaining the public’s support and confidence.

This should be seen as the next stage in the journey of investment and reform we began 12 years ago.

The investment we have made has already helped to bring about innovative, breakthrough policy developments such as Foundation Hospitals and Co-operative Trust Schools.

And our reforms over recent years have demonstrated that public services can learn a lot by importing lessons from the private sector.

In particular, the focus on citizens as consumers – with the right and the ability to exercise choice over the services provided to them – has played an important role in driving up standards, and making services more flexible and more citizen focused.

The nature of demand for public services has therefore changed, with the loosening of old constraints and the habit of accepting whatever is on offer declining.

But on the supply side, we now need to do far more than hold up the model of the relentlessly managed PLC. We need, therefore, to look at other successful ways of delivering goods and services.

The reason is simple: instead of an approach that implies that service providers alone have the responsibility for services, the challenge of engaging citizens is to achieve the opposite: to build shared responsibility for services and improve them by harnessing the efforts of both professionals and those they serve.

So there are important lessons to be learned from studying models such as the Co-operative and John Lewis – companies owned, respectively, by their customers and their staff.

After all, public services are owned by the public, so the public must have the right to influence how those services are delivered.

Indeed, can we really expect citizens to take on greater responsibility for their own health, learning, and environmental impact if public services fail to give them the right to shape the ways they work?

That is why the government’s public service reform agenda continues to focus on strengthening relationships between empowered citizens and front-line professionals, building what the Innovation Unit calls ‘an ethic of engagement’.

And I believe that now is the moment to make mutualism an increasingly vital part of the government’s reform agenda.

The mutual moment

Not only are the principles of mutualism right for the public mood – based as they are on trust and reciprocity, common ownership and co-operation, and the premise that ‘everyone has something to contribute’.

They also mean that mutualism is uniquely placed to deliver real practical benefits in three critical areas: accountability, individual empowerment, and community responsibility.

By bringing users, employees, and other stakeholders together as members of the same establishment, mutualism transforms the organisational culture and embeds real democratic accountability.

As well as promoting greater levels of trust, it is a model for co-ownership that allows communities to effect genuine change in an organisation.

Whether it’s the 390 members of the Reddish Vale Co-operative Trust taking ownership of their school; or the staff at Leicester City PCT who have taken over general medical and substance misuse services for homeless people, or 1.3 million members of 122 NHS Foundation Trusts across England.

Because this combination of ownership and participatory involvement can ensure that public service staff feel themselves to be leading the reform process, rather than having it imposed upon them.

And it is also the key to unlocking enhanced performance – with employee ownership turning public service workers into champions of improvement and reform.

Take the example of Sunderland Homecare Associates, where staff turnover is 5% per year, compared to an average of 20% in the private sector and Margaret Elliott can point to higher customer satisfaction.

Indeed, more widely, the first half of 2009 saw employee owned companies once more outperform FTSE All-Share companies, a trend that has been in evidence for the past 17 years.

Above all, it is a model that offers a new sense of common ownership: one that marries collective action and individual aspiration.

The collective alternative

And this point is crucial. Because the biggest challenges that we currently face, from preventative health to climate change, require a delicate calibration of collective and individual action.

This cannot be achieved by those who continue to peddle the fiction that there is some inherent conflict between an active state and a strong society; that the former necessarily crowds out the latter.

The response to the credit crisis is a case in point.

It is a crisis that brought down the curtain on the age of ‘cowboy capitalism’. And despite Cameron’s spurious claims that ‘big government’ lay behind the banking crisis, we all know that this is simply a diversionary tactic.

For let’s be clear: the demutualisation of the building societies – a policy actively encouraged by the Tories – symbolised the very attitude that caused the crisis: the prioritisation of short-term gains over long-term consequences.

Power, ownership and the left

But let’s not forget that demutualisation was just one part of a much wider project, one in which the right successfully challenged existing notions of public ownership.

The council house sales of Margaret Thatcher’s first term, the ‘Tell Sid’ mass privatisations of her second, and the wave of demutualisations of the third and fourth Tory terms, together, these policies created a politically compelling vision of ownership, centred on the notion of a mass property and share-owning democracy.

So just as mutualism captures the mood of these times, so demutualisation reflected and symbolised popular sentiment in the 1980s

And let’s remember, the Tories were aided in selling their vision by Labour’s failure to provide a modern, attractive alternative. We didn’t so much as lose the match, as fail to turn up on pitch – clinging on to an outdated notion of ‘public ownership’ – remote, Whitehall-run nationalised industries and town hall-run municipal housing.

While the solution that the right offered was lacking in so many respects, it was correct in identifying that the public were, as they are now, looking for new ways to feel a greater sense of ownership and control.

So we walked away from the notion of ‘ownership’ as a political issue. In retrospect, we were far too hasty. Because ownership does matter. With ownership comes power. And if we are to achieve our goals of advancing social justice, then we have to be concerned about the distribution of power.

However, thanks to the choices we made, both in opposition and in government, New Labour provides us with a new opportunity to win the ownership argument.

First, the new clause IV liberated Labour from the myth – encapsulated in the way so many chose to interpret the words of the old 1918 clause IV – that public ownership was synonymous with central state control and ownership.

Second, we won the argument about the importance of public services, not simply by closing the gross underinvestment gap built up under the Tories, but also by focusing on the needs and demands of citizens, rather than on whether the provider of the service is from the public, private or third sectors.

Most importantly, this approach has brought about real improvements in the way individuals and communities experience public services. But it has also served to break down the old barriers between public, private and third sectors.

The question of ownership is, therefore, no longer a simple binary choice: public or private. And this is graphically demonstrated by the example of mutuals and cooperatives.

Unsurprisingly, the Tories are now attempting to lay claim to mutualism. After their part in the demutualisation of the 1980s, it is not hard to see why. But anyone who has visited the somewhat threadbare Conservative Co-operative Movement website, launched with such fanfare by David Cameron two years ago, will see that their commitment is skin deep.

Indeed, there is a fundamental difference between our approach and that of the Conservatives. Instead of learning lessons from the Co-operative and John Lewis, Tory local authorities – which David Cameron offers as a model for how the Tories would govern – have decided that their model of public service delivery is the budget airline.

Budget airlines have their place – many people enjoy a cheap weekend break.

But, in the hands of the Tories, the principle this appears to encapsulate – that ability to pay should determine the level and quality of the service – is not how most of us think care of the elderly or children’s services should be delivered.

It is also far removed from the principles of mutualism – of collective action as a means to fulfil individual aspiration, of equity, democracy and accountability. The reason is a simple one: the values of mutualism are inherently progressive values.

Indeed, it was out of the mutual tradition that the modern Labour and co-operative movement emerged. We can trace its origins back to the English Civil War and the demands of Nonconformists and Dissenters to be free from the authority of an oppressive state.

It was an ethic of democracy, fellowship and commonality which would, in the 19th century, feed into the emerging Labour movement.

By then, the quest was for economic and social freedom as much as religious liberty.

Unable to vote or hold power, the new working classes realised the need to take charge of their own affairs and stepped outside the controls of the state to organise for themselves.

Tired of exploitation and profiteering, they set up a network of organisations dedicated to fair trade, a moral economy and mutual support.

In Manchester, the followers of the early socialist Robert Owen came together under the banner of the British Association for the Promotion of Co-operative Knowledge to establish a series of co-operative shops in London and Brighton, ‘labour exchanges’ for the direct marketing of goods, and trade unions to advance the cause of labour.

Soon, joining the co-operatives were burial societies and savings banks, credit unions and building societies.

And then, of course, the great invention of the era – the friendly society, the largest of which had, by 1860, 300,000 members in affiliated societies contributing weekly payments of a few pence in return for the promise of sick allowance, medical help and if need be funeral costs.

This was the Labour and co-operative tradition: mutualism, self-improvement, self-help.

Consciously opposed both to the aristocratic state and do-nothing liberals, the early leaders of Labour believed in popular action, grass-roots activism and civic association.

From this culture came the meeting in 1868 of the Manchester and Salford Trades Union Council which set in train the establishment of the Trades Union Congress and, ultimately, the formation of the Labour Party.

And it is no surprise that when the party itself was founded, its birthplace was the Memorial Hall, Farringdon Road – a monument to our Dissenting, mutualist tradition.

The Government role

So by tradition, and by its very nature, mutualism is driven by and relies upon the commitment and active participation of the people involved. It is not something government can, or should, impose.

Governments can, however, create the conditions in which new social movements can thrive.

And, today, the opportunity exists to create a new social movement that can ensure citizens and communities can choose mutualism as and when they see fit.

Taking mutualism forward

We’ve already made progress in health with foundation trusts and in education with co-op trust schools. And I believe there are three other areas – Sure Start, social care and housing – where mutualism has a particular contribution to make and where I know the Co-operative party has been setting out a new agenda.

There is already one Sure Start Mutual in existence at Millmead in Kent. Through involving local residents in its membership structures, the centre has been able to design services around the needs of its users, as well as developing increased satisfaction, support and loyalty.

Community ownership has helped remove barriers and develop trust, so that the organisation is accessible to many people who would otherwise be less likely to use the services.

The potential for holders of social care personal budgets and citizens in receipt of direct payments to come together collectively, to improve the quantity and quality of the services they commission and receive should not be underestimated.

Indeed, five pilot projects have examined precisely the feasibility of co-operative models enabling people to collaboratively manage their care using direct payments.

These pilots have brought together service users, informal carers and personal care assistants to ensure that both users and employees can benefit from a more formalised system of care and economies of scale.

This means that recipients are able to remain in control of the day to day provision of how their care is provided, while personal care assistants can ensure they receive appropriate employment conditions.

Finally, I have been closely watching the development of the Brixton Green Community Land Trust development in my own constituency.

And I have been impressed by the ability of models such as this to ensure that homes remain permanently affordable, through separating the cost of the land from the purchase price, taking it out of the marketplace through a community land trust. This means that the homes will remain in the permanent ownership of the community.

In the new year, therefore, I will be meeting with Ed Balls, Andy Burnham, and John Healey to discuss how, together, we might encourage the further development of mutualism in Sure Start, social care, and housing where that is the wish of local communities.

A Commission on Ownership

So if we are to achieve what we want to achieve for reforming public services and redistributing power, ownership matters.

That is why I am delighted this evening to be able to announce the creation of a new, independent Commission on Ownership.

Supported by Co-operative Financial Services, and chaired by Will Hutton, it will work to enhance our understanding of the influence that ownership has on the governance of our country. And I’m very pleased that Peter Marks, Chief Executive of the Co-operative, has agreed to be one of the first commissioners.

The Commission will seek to answer the big questions: how much does ownership matter? What is the link between fairness and ownership and how does that affect the distribution of power in our country? And what can, and should, government do about ownership?

It will look at how ownership affects accountability and community and staff participation in the public sector, as well as customer service, staff engagement, and entrepreneurialism in the corporate sector.

The Innovation Unit report – published today – explores some of these issues and considers some of the practical steps that we can take.

And I would like to close this evening by putting three propositions on the Commission’s agenda.

Practical interventions

First, can we extend the principles behind the right-to-request to services beyond health, and enhance it by giving local communities a greater voice in changes which affect their local service?

Second, should we develop what I would term ‘a community right to ownership’ which would enable groups of staff and service users to request a system of governance that gives them greater influence over local services?

Finally, how can we create a level playing field for mutuals and co-ops, allowing them to thrive in an environment in which all providers are encouraged to listen to and support their staff and users?

Conclusion

Let me clear: the argument I am making today is not that mutual or cooperative governance is a panacea for public services, but that for too long we have relied on a single, corporate view of what good governance looks like.

Instead, I am arguing that mutualism should be seen as a model that can play a powerful role in embedding the ethic of engagement at the heart of public services, rather than continuing to see excellent examples of engagement at its margins.