Are Elected Mayors An Opportunity Or Threat For Social Enterprise?

19/09/2016 11:29

Over the last five years, the government has put the country on a devolution course with increasing spending powers going to local areas. In many places, such as Manchester and Liverpool, devolution deals are tied to an elected mayor and there has been quite a lot of chatter recently suggesting Theresa May is less enthusiastic about this than her predecessor. Various people including former Whitehall Mandarin, Bob Kerslake, and former Chancellor George Osborne (who is setting up a new think tank - the Northern Powerhouse Partnership) have warned against any resistance to the devolution revolution. Personally, I don't think the new PM has a serious problem with devolution, she is just taking time to review progress to date. She may have some reservations about elected mayors (possibly for the reasons discussed in this article) but I expect we will continue to see a drive towards genuine devolution throughout this parliament.

As far as social enterprise and mutuals who deliver public services are concerned, the impact of devolution and elected mayors may largely depend on the impact on the public service market place. A fair and open marketplace would (in theory) allow the social enterprise and mutuals sector to bid for and deliver more services. So what is likely to happen?

Until recently, the principle of choice and competition for a wide range of public services has been undisputed. All the major political parties accepted (to varying degrees) that choice for consumers and a mix of public and independent providers were good things. There is no doubt Theresa May is a fan of a mixed market place. In her Conservative Home speech back in 2013 the PM argued that we should allow "thousands of organisations to provide public services". The Labour Government (under Blair especially) did a significant amount to open up the public service market place to a range of providers, including social enterprises. Let's not forget Labour did start the ball rolling by allowing NHS services to spin out into independent social enterprises through the NHS Right to Request programme.

This consensus looks to have been seriously disrupted by the rise of Jeremy Corbyn. Corbyn is no fan of markets and he has already set out plans to "renationalise" both the railways and also the NHS (at least the 8% of the NHS that is delivered outside the public sector).

So what does this mean for the public service market place within the context of devolution?
The context is important here. According to the NAO, councils have seen their budgets reduced by 25% since 2010-11 with a further 8% cut coming between now and 2019-20. In the NHS this year, Foundation Trusts and NHS Trusts have a combined deficit of £2.45bn, which can't be allowed to continue to grow. Under this type of financial pressure, public service leaders simply must look at new ways of delivering services, Devolution or elected Mayors will not magic up any new money but it will provide opportunities for councils and other public bodies to reimagine how they use the range of providers (public and independent) available to them. This should provide opportunities for social enterprises and mutuals, especially those who are ready to work together to create scale, service breadth and value for money.

Add to this financial imperative the fact that the public are generally supportive of a mixed market place. The Reform think tank has shown that 62% of people are supportive of the private sector providing NHS services with only 17% against. People are more concerned with quality and access. They do not tend to be dogmatic about who provides their services.

So within this context, and with strong central government support, a mixed public service marketplace looks to be safe doesn't it? Perhaps not. Central Government is after all rapidly devolving power to local areas where the political climate may be quite different.

In Manchester, Andy Burnham is the Labour candidate and favourite to win. We hope Burnham will be sensible and balanced - but he hasn't exactly embraced the mixed market place. As far back as 2009, he was assuring the TUC that for health services, non-NHS providers should only be used as a last resort. It can also be no coincidence that Owen Smith, Corbyn's leadership rival, made a speech about a "Tory secret plan" to privatise the NHS at Trafford General Hospital in Manchester. Burnham has been talking up increased collaboration with Liverpool where the Labour candidate and favourite to win is Jeremy Corbyn's former Parliamentary Private Secretary Steve Rotherham.

Whilst it is unclear exactly what power these mayors will wield, it doesn't take much analysis to identify a potential policy clash in these areas. This is all well and good until it starts to threaten some of the best and most innovative social enterprises and mutuals, many of whom are in the North West. Could they face having their services taken back into the public sector for ideological rather than performance based reasons?

These are going to be uncertain and challenging times for social enterprises and mutuals and the government must be vigilant as it settles devolution deals. We must all be wary of the unintended consequences of devolution and be careful not to undo the fantastic progress that has been made building up the social enterprise and mutual sector.