Employee- and community-led services are still battling to change the philosophy and approach of staff and trusts alike, but the benefits these organisations could bring to service delivery are worth the effort, argues Kevin Jacquiss.

The NHS is now on the third wave of right to request projects and the government has confirmed and extended to public services generally the notion that staff should have the right to form employee-owned cooperatives and bid to take over the services they deliver.  

Despite this, there has been no step change in the way services are delivered. Part of the reason for this is the scale of change in philosophy and approach which is required from staff and the primary care trust as the initial commissioner of services if the new enterprise is to succeed.  

Most people who work in the NHS have never worked anywhere else and have therefore always operated, for better or worse, in a deficit funded environment. Budgets are important and are taken seriously but if they are exceeded the consequences are diffuse rather than immediate.  

The position in a new independent enterprise is radically different. If expenditure exceeds income, an inflexible banking facility and an unforgiving insolvency regime face the business and its directors. This means that a genuine desire to deliver good services and a commitment to work hard are not enough. There has to be a sustainable business with a robust business plan.

It is easy to see why this is in the interests of the directors and staff concerned but it is also significant for the PCT. 

For the first few years at least, the large part of the revenue of the new enterprise will be in the form of payments under a contract from the PCT. A large part of its overheads will be determined by the terms on which it acquires staff and assets from the PCT.  

The PCT’s role in agreeing the terms of the deal is not just that of a commissioner of services; the PCT is also the creator of the market in which the new enterprise and the commissioners of the future will operate. The new enterprise is intended to provide first class services as an alternative to other private and third sector organisations. The PCT has a vital interest in its viability.

It is unlikely to be sensible, for example, for the PCT to set a programme under which all the services delivered by the new enterprise will be retendered at the same point in time. The PCT may also wish to identify the features of the new enterprise which make it a potentially attractive provider of services – perhaps stakeholder engagement or ownership – and write those features into the contract and into the future commissioning strategy. 

Employee- and community-led organisations certainly have features which can impact positively in the quality of service they deliver and it is legitimate and appropriate for the PCT to seek to take advantage of those features.

In my experience working with people who have established employee-led enterprises, there is a recognisable positive effect when staff begin to feel ownership of the business in which they work. People feel a sense of responsibility for what they do and feel able to make changes for the better.

“Most people who work in the NHS have never worked anywhere else: they have always operated in a deficit funded environment”

It is also the case that, where changes in methods of working or even pay have to be made, properly run and managed businesses which are employee-led or owned have better and more positive conversations during the consultation process.

This is sometimes cynically described as getting people to downsize themselves but, if it is done properly, the reality is that those delivering the service make a rational decision about what is required to enable their business to compete effectively.  

If the PCT’s commissioning strategy is sound, contracts will not simply go to the cheapest provider but to the provider whose service makes the biggest difference. It is possible for staff to be better paid than those of other providers but they have to deliver a better service.

Some new enterprises, probably a small minority, will be established primarily as a vehicle for the employees concerned to make money, allowing them to share the financial benefit of efficiency gains. There is nothing disreputable about this from the point of view of the staff or the PCT if the aim is clear from the outset.

Most of the new enterprises which have been set up recently in health and elsewhere in the public sector have been committed to community benefit and have made provision for increasing community involvement. This recognises the practical difficulty of establishing effective community engagement and ownership from a standing start but also the potential benefit of giving the people who rely on a service a strong voice in the way the service is delivered. 

This is something a PCT can legitimately seek in a service provider under its commissioning strategy provided it is clear how the community voice is to be harnessed to improve the service.

New employee-led enterprises do have a role to play in improving NHS services but they will only play that role if there is clarity on the part of those involved and the PCT about the business model and the relationship between that business model and future commissioning strategy.