Get in a time machine back to Britain in 2010 and what do you find? A new Con-Lib Dem government, a Coalition, the first since Second World War. A country facing the legacy of the financial crash and confronting a huge budget deficit – the biggest in peacetime for over a century. In the midst of this very uncertain political and economic outlook, the government decided to embark on a programme of thorough going public service reform.

Building on the efforts made by the Labour Government to empower staff in the NHS, the Coalition Government promised to give:

“public sector staff new rights to form new mutuals and bid to take over the services they deliver, empowering millions of public sector staff to become their own bosses. This will free up the often untapped entrepreneurial and innovative drive of public sector professionals.”

Fast forward nearly nine years on from this and there are now 400 staff-led social enterprises that have spun out from the public sector, often called mutuals. They have transformed services across the country, from community health services to research.

New government commissioned research has showed the significant impact that these social enterprises have had on improving public services. According to the report:

  • Productivity in social enterprises has grown by 3.7% compared with just 0.3% across the rest of the public sector.
  • 88% of social enterprises report that they have been able to provide more response services
  • 68% of social enterprises say that they are able to be more innovative.
  • 75% of social enterprises report better value for money
  • 69% say that they have delivered better quality services.
  • 61% of social enterprises responded that their workforce is happier and more engaged.

At a time when the whole public sector faces a recruitment crisis, when money remains tight and where there is greater demand for services than ever before, these are very important findings.

Although the government has said that the “end of austerity” has finally come, we should not kid ourselves that there is suddenly going to be a flood of additional cash into public services. The end of austerity merely means that they won’t be cutting back as hard as before and it will take years before funding is back up to the level that we saw before the financial crisis. If we want to see better outcomes for users at a time when money is tight, then we need to look at delivering services differently.

We need to rediscover the interest for public service reform to ensure that new funds are spent wisely. We need to find models that give employees who care about service users greater control and which encourage innovation.

The social enterprise model has showed that in the delivery of public services it can not only work but outperform its peers in the public sector. In the NHS, for example, social enterprises are on average rated better than their peers and are more financially sustainable. There is no reason why we should not be going further in growing this sector.

Sadly, Brexit and inertia have slowed down the growth of social enterprise in the public sector. But we don’t have the luxury of waiting for politicians to respond.

The success of social enterprise is not some happy accident. Social entrepreneurs around the country will tell you that when you combine the financial discipline of running a business, with the right values and a focus on maximising social value, you can achieve tremendous things. This is true not only in the public sector, but in the private sector too. If we want to have public services which combine financial sustainability with innovation and efficiency, then we need to design them that way. Delivery models matter, that is the lesson from this research.

The Conservatives are going through a leadership contest as are the Liberal Democrats. This provides both parties with an opportunity to reflect on their successes and failures in government. Growing social enterprise in the public sector is something that both parties can be proud of but there is far more to do to deliver on the ambition of 2010. Let’s hope that 2019 marks the renaissance of public service reform.

Download ‘Public Service Mutuals: The State of the Sector’ here.