Plans to spin-off dozens of state-owned services into independent companies have been criticised by two members of a Government task force set up set-up to promote the idea.
On Wednesday, The Independent revealed details of proposals to part-sell millions of pounds’ worth of state-owned services to private-sector investors with employees being given a stake in the new companies.
Eventually as many as one in six civil servants could be transferred into the private sector with the Government maintaining a minority stake and offering long-term contracts to the new companies to encourage investment. But while ministers insist the move amounts to a “mutualisation” of state-owned assets, two independent members of its own task force set up to support the creation of public service mutuals have questioned whether the plan is the correct one.
In a letter to The Independent, published today, Ed Mayo, Secretary General of Co-operatives UK, said that the current proposals which only require 25 per cent staff ownership will “not necessarily result in true mutuals”. “Mutuals need to be set up as having a controlling stake held by the members – whether staff or users – rather than outside investors,” he said.
Another member of the task force, Peter Holbrook, chief executive of Social Enterprise UK, said there did not appear to be safeguards to prevent employees or the Government selling their stakes at a future time. “What we don’t want to see is public services being mutualised as a first step towards wholesale privatisation,” he said.
Cabinet Office sources said, “We are determined to set free the legions of entrepreneurs in the public sector and help them run their work in the ways they know best”.