The u-turn away from creating a level playing field so that private companies could bid for public services has run into more turbulence. A report from Co-operatives UK claims that the building blocks for turning public services into mutuals are not yet in place.

The delayed White Paper, Open Public Services, which is being re-drafted to reflect the u-turn, is now expected to place more reliance on outsourcing services to the third sector, including mutuals where, for example, NHS staff launch an employee-owned social enterprise to help homeless patients, or employees from local authorities get together to form a mutual to deliver children’s services.

It is also possible that the scale of outsourcing to the private sector may be limited to match that outsourced to the third sector. If this proves to be correct, slow development of mutualisation will be even more crucial.

The report from Co-operatives UK undermines the revised thinking. ‘Time to Get Serious, International Lessons for Developing Public Service Mutuals’ highlights how the UK must learn from the experiences of Spain, Italy and Sweden, where public service co-operatives are flourishing because government creates a supportive environment and provides workers with appropriate business support and knowledge. These building blocks are not in place in the UK.

The report shows that in all three countries, the growth of public service co-operatives has been closely linked to enabling legal and fiscal frameworks, with sector-led support structures that are able to provide specialist advice and share learning.

Key findings in the new review show that where public service co-operatives are thriving, there has been long-term commitment and investment by government. In Italy, there are over 7,000 co-operatives that provide social care, health and employment services, which is arguably the most extensive and successful programme of mutualisation anywhere in the world. Their success comes from creating a clearly defined legal structure for ‘social co-operatives.’

In Spain, there are around 550 co-operative schools, and their success reflects links with a wider, successful co-operative business sector but also benefits from long-term thinking from the state, particularly clear legislation and favourable taxation.

In Sweden, 1,200 childcare co-operatives provide pre-school care for around 30,000 children. The state has helped to grow childcare co-operatives by investing in a national framework of co-operative business advice.

Ed Mayo, Secretary General of Co-operatives UK, said: “The government has ambitious targets for the number of public sector workers setting up co-operatives, and predicts that as many as one million people, one in six public sector employees, could be working in new mutual enterprises delivering public services by 2015.

“However, with the international review concluding that the UK policy context does not emerge particularly well from the comparison with other countries, this must be something of a reality check.”