Assessing the state of the spin-out sector in England

The provision of public services in England has received large amounts of policy attention over the last three decades. During this time there have been numerous and far-reaching reforms to the public sector in England, which have resulted in less direct provision of public services by Local Authorities and an increased ‘marketisation’ of the public sector (Hall et al., 2012b; Simmons, 2008). This marketisation of public services has been led by a desire to create more cost-efficient services that are also responsive to service user’s needs. This reform is being driven by central government, which is using funding reforms and legislation to create greater public choice in the services that they use and the providers that they ‘buy’ these services from. In doing so, the government have encouraged the transfer of Local Authority staff into new provider and employee-owned mutual organisations (also known as ‘spin-outs’). ‘Public service mutuals’ have been defined as ‘…organisations which have left the public sector i.e. spun out, but continue to deliver public services and in which employee control plays a significant role in their operation’ (LeGrand and Mutuals Taskforce, 2012:9). Prior research exploring the spin-out sector has identified that policy initiatives such as ‘Right to Request’, ‘Right to Provide’ and ‘Mutual Pathfinders’ are having an impact and increasing the number of spin-outs from the public sector (Miller et al., 2012a; Cabinet Office, 2011). Spin-outs are seen as enabling services to be made more efficient and responsive to user’s needs, whilst at the same time reducing public expenditure (Addicott, 2011; Hall et al., 2012b; Alcock et al., 2012). However, much of the prior research on spin-outs is sector focused (i.e. exploring health and social care spin-outs only), whilst the spin-out sector in England is heterogeneous and includes leisure trusts, housing associations and employment services. There remains a limited amount of academic research that approaches the sector as a whole and that seeks to uncover common barriers to spinning-out and the challenges facing new and existing spin-outs. This research undertook a review of secondary literature in order to identify potential spin-outs and then invited the 210 organisations identified to participate in an online survey (of which 59 have responded to date). The online survey explored organisational demographics, the policy process adopted in spinning-out, the perceptions of future challenges and the ‘fit’ of commissioning frameworks. The results revealed that the spin-out sector is experiencing growth and that government policy initiatives are having partial success in promoting spin-outs. The research also revealed that the most significant challenge facing spin-outs in the future is related to access to finance and ‘payment by results’ contracting. Finally, the data also suggests that the greatest growth is experienced by those spin-outs that trade directly with consumers and that receive repayable investment