A NUMBER of years ago the Association for Public Service Excellence (APSE) together with the Centre for Local Economic Strategies (CLES) published a report called Creating Resilient Local Economies: exploring the economic footprint of public services.

The year was 2008 and it was an attempt to kick start a debate about the value of the public pound. Public spending by councils was not a drain but a means to support local economies through the people employed in local government who in turn spend in their local area, and in the public sector more generally; the ability to create positive outcomes for local firms by buying from them rather than faceless multinational corporations.

Fast forward a decade and the idea of a local economic footprint has gained traction through the work of Preston City Council, amongst others like Swansea Council, who are positively approaching how they spend their public funds.

Swansea actively pursue apprenticeships linked to any construction schemes and have encouraged other anchor institutions such as universities to do the same.

Derbyshire County Council, while under Labour control, provided transport support to rural youngsters to enable them to get into jobs and training.

The model of an ensuring municipal approach takes the power of the public pound, and fixes this in its community, stopping leakage from the local economy and delivering outcomes that matter to local people.

This model of co-operation and collaboration, now cited as “community wealth building” by local councils, should not however be mistaken for co-operative models of service delivery.

The two are very distinct. Some within the co-operative networks within the UK were quick to embrace David Cameron's Big Society, seeing this as an opportunity to expand into public services.

The realists knew full well that what this actually meant was being sucked into providing services on the cheap.

Co-ops, charities and volunteers quickly became part of Cameron's loin cloth to vaguely disguise austerity. But it seems that the arguments have not been put to bed. Either mischievously or deliberately factions of the soft left are once again pedalling co-ops as an alternative to public ownership. They are not interchangeable.

Two recent Labour conferences, one on Community Wealth Building held in Preston and one on Alternative Models of Ownership hosted in London, had a heavy presence from the co-op movement and it seems to be confusing the debate on what Corbyn and McDonnell mean by public ownership.

So let's nail some myths. Public services are owned by us all. What greater form of co-operation could there be than for us, the public, to own the means of production or our public services and for those services to be democratically answerable to voters?

Co-ops by contrast are owned by the distinct members of that co-op. The interests of members of a co-op may not be aligned to the wider public or community interest.

The wider public interest ought to be served by the democratic mandate afforded by the ballot box.

Co-op members are de facto company shareholders; the dividends may be less or may be reinvested, and of course they can have social justice outcomes and defined “community interest” at their core but there are many differing models of co-ops and essentially they are most often incorporated legal personalities.

This is not to say that co-op forms of ownership should not be encouraged. They are a genuine and desirable alternative to the retail giants who suck the lifeblood out of local high streets and produce toxic food at the expense of animal welfare but why would we need co-ops to run our public services?

Any “profit” or surplus in local public services is ploughed back into the public purse; any savings through better ways of working can be redirected towards local priorities determined by those locally elected.

If councillors decide an underspend in, say, leisure services can help towards the cost of social care they have the strategic capacity to redirect those resources.

If however leisure services are outsourced to a contractor or to a co-op they lose that capacity. And before anyone takes umbrage at comparing co-ops to private contractors, the impact on democratic decision-making is exactly the same.

It removes the ability of democratically elected councillors to determine local priorities because, just like private companies, co-ops running public services will need some guaranteed income streams, in the form of a contract, in order to survive.

You can't employ staff, holds assets or raise capital unless you have something on your order books — in exactly the same way that  private companies rely upon this. Whilst they may not be profit maximising they still need to make a return and with the margins lower that of course impacts on the ability of these co-op companies to have decent pay and pensions.

How many co-ops contracted to run local government services have admitted body status to the Local Government Pension Scheme? It was a major stumbling point over a decade ago when Unison tacitly explored a co-op model as an alternative care provider for older peoples services.

The latest sales pitch from the co-ops lobby is that local government does not have the capacity to run services for itself because it has lost the expertise through privatisation.

There are three responses to this. First of all, where do these embryonic co-ops get their capacity and expertise from?

Secondly councils are in-sourcing contracts and in doing so are taking the staff back in-house who bring the expertise with them.

Recent data from APSE suggests when services are in-sourced near to 80 per cent of councils are applying transfer of undertakings (Tupe) fully to those contracts.

Thirdly the public sector has retained capacity in many areas through client side management of the external contractors. So in-sourcing services, back into to truly public ownership, is not only possible but is a growing phenomenon.

Let us consider the practicalities of outsourcing to a co-op a service such as domiciliary care. 

A contract is awarded to a co-op specialising in the provision of care to older people in their own homes for a term of five years. The local council awarding the contract based on existing needs awards a contract worth around £10 million per annum based on the current criteria.

Year one and two go well but in year three the council faces a further funding crisis and reduces its care spend budget by 20 per cent, further tightening its criteria for those eligible to receive care.

The budget spend is now circa £800,000 leaving a £200,000 shortfall in anticipated income.

Given co-ops are based on the principles of shared risks and shared rewards how is this handled?

Does every member of the co-op take a pay cut or do they make workers redundant?

In much the same way as a private contractor the ultimate risk of contract failure sits with the local authority if the co-op is unable to adapt its service delivery model, and in much the same way as other contracted out services the co-op company form is  not a panacea against the loss of anticipated income.

Corbyn and McDonnell need to be unequivocal. Public needs to mean public.

By all means encourage co-ops as an alternative to the private-sector markets but they are not and never should be interchangeable with truly public services.