Is the Government trying to copy imutual?

richard@imutual
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Is the Government trying to copy imutual?

Post by richard@imutual » Mon Jun 06, 2011 10:46 am

The Government is keen to explore new forms of 'mutual' ownership for public services, as an alternative to state-run departments, outsourcing to the private sector or full privatisation. They have announced plans for the first such initiative

Well, of course imutual is ahead of the game here but welcomes the fact that the Govt shares its interest in creating new forms of ownership structure. The problem is, I have to take issue with their use of the word 'mutual'. Quote from the above linked article:
Mutuals, as they are known, give employees a financial stake in a business whose ownership is shared between the public and private sectors.
Um, no, that's not what a mutual is. To quote from Wikipedia's definition:
A mutual, mutual organization, or mutual society is an organization (which is often, but not always, a company or business) based on the principle of mutuality. Unlike a true cooperative, members usually do not contribute to the capital of the company by direct investment, but derive their right to profits and votes through their customer relationship. A mutual organization or society is often simply referred to as a mutual.
A mutual exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organization or society. A mutual is therefore owned by, and run for the benefit of, its members - it has no external shareholders to pay in the form of dividends, and as such does not usually seek to maximize and make large profits or capital gains. Mutuals exist for the members to benefit from the services they provide and often do not pay income tax.
Profits made will usually be re-invested in the mutual for the benefit of the members, although some profit may also be necessary in the case of mutuals for internal financing to sustain or grow the organization, and to make sure it remains safe and secure.
The key point about a mutual is that the customers (not necessarily the employees) are also the owners. Giving employees a stake in the organisation is hardly a definition a mutuality; in fact, it's much more prevalent in public companies courtesy of employee share incentives. Employees like these because they can eventually sell these shares and get a tangible benefit

The customers - in this case, pension holders - aren't being offered any ownership or control explicitly.

I realise that the Govt is using John Lewis (an employee-owned partnership) as its role model, and that may well be a suitable model to use for certain public services; time will tell. But to call it "mutualisation" is misleading.

Perhaps they need to be bolder and develop a true mutual model, where those who use a public service actually get a stake in it or some form of control?

Does anyone else have thoughts on this?
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