DWP staff to be 'spun off' into first central government mutual from March

Out-Law News | 02 Feb 2012 | 10:24 am | 2 min. read

Part of the Department for Work and Pensions (DWP) is to be 'spun off' from the public sector into a mutual with part employee ownership in the next few weeks, the Government has announced.

My Civil Service Pension (MyCSP), which administers pensions for 1.5 million civil servants, is to operate as a mutual joint venture. Under this structure its 475 staff will share ownership of the organisation along with a private sector partner and the Government, which will also retain a stake in the new company.

Four private sector firms – Capita, JLT Ltd, Wipro and Xafinity – have been shortlisted to provide business sector expertise. A spokesman for the Cabinet Office told Out-Law.com that the selection process was underway, with the successful bidder likely to be announced in late February or early March.

The spokesman said that it was the Government's aspiration to have one million public sector staff part of similar arrangements by 2015. That would represent 15-20% of its workforce.

In addition new 'Rights to Provide' across public services will encourage front line staff to take business proposals to their employers, with the onus on employers to "prove why a particular plan wouldn't work" he said.

A public service mutual is an organisation which has left the public sector but continues to deliver public services. Mutuals are already used in the public sector to run some health, social care and youth work services but MyCSP is the first time the model has been used for staff previously employed by a central Government department.

The Government said that employee control would play a "significant role" in the new arrangement. However, the three-way ownership structure of the joint venture means that the model differs from outright employee ownership used by high street mutuals such as John Lewis.

Announcing the new arrangement last year Cabinet Office Minister Francis Maude said that mutualisation "busts the old fashioned choice between state control and privatisation".

"The evidence is clear, when staff have a stake in their business productivity rises and innovation flourishes. Mutuals are more stable than other businesses and just as profitable. This means a better service, better value for taxpayers and more rewarding careers for employees," he said.

Phil Bartlett, employee leader and chief executive of MyCSP, said that the mutual idea had "captured people's imagination".

"We're proud to be pioneering this approach, there's a real sense that we're grasping the opportunity to collectively build the premier supplier of pension administration in the UK's public sector," he said.

The new organisation has also made a commitment to "engage with the local community" by donating 1% of its profits to charities and community projects selected by employee partners, having partners spend 1% of their time volunteering on such projects and giving over 1% of its staff headcount to apprenticeships and internships.

The scheme has met with resistance from public sector unions who have claimed that the vast majority of existing MyCSP staff are "opposed to joining a mutual".

The Public and Commercial Services Union (PCS) has already organised industrial action and instigated an overtime ban from 31 October 2011. It claims the joint venture creates a "quasi-mutual private enterprise" which will not empower staff rather than a "real mutual in the accepted sense of the term".

"MyCSP management has consistently refused to canvas staff views on the decision to move them out of the civil service and into a mutual joint venture. PCS balloted its members in MyCSP and received overwhelming support for action," Ian Pope, DWP group negotiator for the union, said in the latest issue of PCS Voice.

Earlier this month Prime Minister David Cameron announced that a Co-operatives Bill would be put before Parliament before the next election, giving public sector workers new rights to create mutuals and "own a stake in their success".

A new Mutuals Information Service and a £10 million support programme aimed at providing business and professional services to groups of staff and existing mutual organisations in the public sector was announced in December.