In making a bid for the mutualisation agenda, the Tories are cheekily encroaching on traditional Labour ground. Matt Ross finds that Francis Maude’s mutuals initiative is causing confusion within the Labour Party’s ranks.

The Labour Party, whose former leader Tony Blair won three elections by stealing all the Tories’ best ideas, is only too aware that David Cameron’s decontaminated party is quite capable of pulling off the same trick. Cabinet Office minister Francis Maude is certainly giving it a go: his department has been urging public sector workers to spin off as staff-owned cooperatives. This is deeply irritating to Labour, which has strong ties to the co-operative movement; 29 of the party’s MPs are formally elected to represent the Labour & Co-operative Party.

“The Tories are stealing our language and our ideas and perverting them, and we can’t let that happen,” Steve Reed, the leader of Lambeth Council, told a fringe meeting at last week’s Labour conference. Reed is taking the initiative: arguing that traditional public services too often “take control of people’s lives away”, he’s handing the council’s youth services to a community trust. Local people have already demonstrated that they can tackle gang culture more effectively than the council, he explained: “They know the kids. They know which families have problems.”

There was also support for the mutuals model from Labour’s shadow universities and science minister, Gareth Thomas, who said that mutuals “can move much more quickly and flexibly to meet the needs of their communities”. Maude, he warned, “clearly wants to create mutuals of the kind created in the 1980s. They didn’t stay mutuals for long: they were bought out by multinationals.” New public mutuals must have an ‘asset lock’ to prevent them being taken over by private businesses, he argued. “We need to be extremely wary of what Francis Maude is doing – but perhaps now we do really need to embrace the right kind of mutuals in Labour’s policy review.”

The ‘right kind’ of mutuals, argued the Co-operative Group’s head of membership Russell Gill, are those in which the users of a service have a voice alongside its workforce. Maude often cites the John Lewis model, said Gill, but that’s “a very specific type of mutual. It would be a great shame if the discussion was limited to employee-owned co-operatives.” Asked afterwards why that would be disappointing, Gill told CSW that under the John Lewis model, “all the power is in the hands of the producer – and there are risks with that.”

Even the right kind of mutual finds sceptics among the unions, though, where many are suspicious of any move away from publicly-owned delivery. “The great danger here is that mutualisation is being used as a way to give the cuts an acceptable face,” said UNISON’s Heather Wakefield, warning that even well-regarded ex-public sector mutuals such as Greenwich Leisure and Sunderland Home Care have only thrived by imposing “major cuts on staff pay and conditions”. Mutualisation is better than privatisation, she said, “but it can’t be done on the back of the workers’ jobs and benefits”.

For Reed, the focus was not the workers, but service users. When the new trust takes over Lambeth’s youth services, “the community will feel that they’ve retaken control of their services and their lives,” he said. Asked why he can’t simply make council services more responsive, he replied that within the local authority “the culture of delivering services top-down and telling people what to do is so strong, I’m finding it almost impossible to break.”

Wakefield wasn’t impressed: offered a Lambeth Council brochure explaining the mutuals scheme, she pointedly declined it. But the mutuals agenda is clearly gaining ground among local authorities: asked by CSW how much interest there’s been in the Co-operative’s new mutualisation advice services, Gill replied: “We see the most productive area as working with the Co-operative Councils Network, because there’s political buy-in.” But surely Maude’s backing means that there’s also that buy-in at a national level? “All parties have been talking about this for a long time, but there’s perhaps been less progress than we might have hoped,” he replied carefully.

In Lambeth, at least, it’s Labour that is pushing forward with mutualisation of public services. Quoting the now-abolished Clause 4 of Labour’s constitution – which promised “the common ownership of the means of production, distribution and exchange” – Reed concluded: “Common ownership doesn’t just mean the state. There are much older models; and I think we need to go back to our roots to give local people much more control over the services delivered to them.”

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Written by Matt Ross, CSW