Would we have had social enterprise without Margaret Thatcher?

Thatcherism taught us that a mixed market in the public sector is the future, and that a 'state or market' debate is outdated

Margaret Thatcher – a key figure in the history of the social enterprise movement? Photograph: Sportsphoto Ltd./Graham Whitby-Boot/Allstar

There probably aren't many Margaret Thatcher fans among social entrepreneurs, with most attributing the growth of market economics in social arenas to the measures introduced by Tony Blair. But would we have had the Right to Request without de-nationalisation or the Right to Buy?

As Ed Miliband said during parliament's tribute sitting, Thatcher was right to recognise that our economy needed to change. In 1982, she said:"How absurd it will seem in a few years' time that the state ran Pickfords removals and the Gleneagles Hotel."

Thatcher introduced the idea that government should stop being the default employer and that the public sector needed mixed models of delivery – thinking that has been shared by successive governments ever since.

Looking at public sector reform through the point of view of theTransition Institute, set up to promote increased social value in public service created through non-public sector providers, we can see two major spikes in change; the first when Thatcher allowed the private sector to enter the domain of public services such as in municipal maintenance and waste collection; and the second when Blair introduced the concept of social enterprise into education, health and the then Department of Trade and Industry.

At my organisation, the Transition Institution, we know that the market economy drives down costs but can also fail if equal priority is not given to the needs of service users and the wider community, termed social value. Our work shows what can be achieved when the priority of cost effective services are shared with the needs of those that rely on services. We promote the work of co-operative schools, staff-led community interest youth services, and mutual delivery of community care.

The Transition Institution calls for plurality, a drive for an increase in social and economic value, demonstrating the coexistence of free market forces and social responsibility. The introduction of the Public Services (Social Value) Act 2012 and the support of the cabinet office, led by Francis Maude, for the promotion of mutuals within the public sector have encouraged those seeking change in this field, but progress is slow.

Thatcher was perhaps the great advocate of the free market, even though employment in the public sector was 3% higher when she left office than it is now. She undoubtedly questioned the monopoly of the state and did not limit her introduction of market forces to the nationalisation of British Airways, British Gas and British Telecom, but went on to assert that the state can not commission, deliver and appraise every service without the emergence of a conflict of interest that does not serve the wider public, an idea continued under Blair.

In 2011, David Cameron said: "The Blair government took some good steps, like foundation hospitals and academy schools, but they were too tentative … The public already benefits from services delivered by private and third sector providers, from running walk-in clinics to providing school caretakers, and the government is right to recognise that there is scope to do more."

Yet even with that commitment and other stated aims to grow mutualism, social value and community engagement, we have yet to see a third spike. Many prospective and new public sector spin-outs continue to be confronted by sceptical parent authorities and voracious private sector competitors with the advantage that they can get in quick. As in Thatcher's era, it is money that counts: then inflation hit 21% and drove the government to think the unthinkable. Today, it's the deficit and, with banks limiting borrowing, those with access to capital are moving faster. I do not have the results of the 2013 national Transition Institute surveyyet, but I am willing to guess that access to capital is a big issue for today's independent public service providers.

Margaret Thatcher introduced an idea that continues to grow, that of a mixed market in the public sector. Her scepticism about the public sector led to a deep-seated faith, shared by some in government today, that only unfettered competition can give us quality and affordability. In contrast, some on the left maintain that only the state can care for its citizens.

This is 2013 not 1983 and if the banking crisis and subsequent recession have taught us anything, it is that it may be hard to describe and tricky to measure but what the public sector needs is a mixed approach – only a combination of competition tempered by social value can create affordable and sustainable world-class public services.

Allison Ogden-Newton is chair of the Transition Institute.

Expert round up: how to make the most of city deals

Share in the advice of our expert panel on how cities can best use new powers over transport, education and infrastructure

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• Sarah Marsh
• Guardian Professional, Saturday 23 March 2013 10.28 GMT
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Salford, Greater Manchester – one of the first eight core cities to sign a city deal in 2012. Photograph: Christopher Furlong/Getty Images

Neil McInroy is chief executive of the Centre for Local Economic Strategies

Whitehall needs to be straight: What powers is it willing to devolve? Central government need to cut the process, horsetrading and lay down their red lines. Then cities can have a proper debate on whether they agree with the possibilities or want to play along.

Favouratism must be addressed: City deals need to be underpinned and hooked back into a new national economic narrative. The treasury needs to do things which favour a variety of localities. We've had decades of treasury policy which has favoured the city. Whitehall needs to be more committed to re-addressing this.

Adam Bryan is senior policy manager at Essex county council

Build a relationship between private and public sectors: It is about involving the private sector at the fulcrum of a reformed skills system, where they make the decisions to ensure that provision is driven by employer need. It's about them co-leading the decision making around the major infrastructure investments which will catalyse growth.

Lorna Gibbons is economic development officer at the Borough of Poole

Does competitive bidding help? It depends what the funding is intended to achieve – who and where can deliver the greatest impact. The second wave of city deals was a competition but in the end the government decided to accept all offers for delivery of growth.

Allison Ogden-Newton is chair of the Transition Institute

Geographical boundaries are a concern: Looking at areas of European growth, success stories cannot be captured with the use of city boundaries or terms like urban or rural. It's the magic of what will work that has captured local imagination and the vision of successful leaders.

Tom Stannard is director of policy and communications atBlackburn with Darwen borough council

We need strong partnerships: There's a stronger recognition now that local growth is best driven by meaningful local partnerships that know their areas. I think, irrespective of boundaries, the debate is there to be won on the proper local settlement that should come from this in the medium term.

Darryl Eyers is deputy director and head of economic planning atStaffordshire county council

Do we risk less innovation in the next round of city deals? It will utlimately come down to the appetite of the area for innovation and how compelling a case you can make to government. The cabinet office is very supportive and the first wave has shown that if you have a good enough idea then ministers will want to support it – whether it fits neatly into a core package or not. However, I think the real proof will be seen in November.

Genuine commitment is needed: Leaders of local areas (beyond the city) at a political and business level must be able to work collaboratively, identify genuine priorities, and be ready to challenge the status quo. They must be clear on what is required of government to make the deal work. Genuine commitment from government is also needed to back local areas to make the right decisions.

Lord Shipley is adviser to the minister for cities, Greg Clark

Cities must demonstrate that devolution is sustainable: The truth is that England is hugely dependent on London. The question remains, how do we drive growth outside London? If accountabilities are 'multiple, complex and overlapping' we need to work out how to make them work, as opposed to being barriers.

Phillip Woolley is a partner at Grant Thornton

Let's reward good investment: The initial round of city deals were in my view, perhaps with the exception of Manchester, missing the underpinning of a robust and flexible resourcing model that rewarded good investment decisions and growth performance.

David Marlow is director of Third Life Economics

It's a matter of faith: The faith in local enterprise partnerships (LEPs) and the faith in national agencies seem to be real issues that need further work in putting government's response to Heseltine into practice

Giles Rocca is head of policy and strategy at Westminster city council

Powers need to be fully devolved: I think that there is a risk that governance can be used as a tool for central government to decide how quickly and how far it will go around devolving powers. There are caveats in Heseltine's report about this. In a sense it turns into another bar to jump through.

Tom Bolton is senior analyst at the Centre for Cities thinktank

What happens next is important: Post budget, decisions on whether the single pot will include skills and employment funding are important. We won't know this until the spending review in June. It's a big test for Heseltine implementation.

Businesses can help to get local economic policy right: LEPs need to show that they can represent the wider business constituency in their areas, small or medium enterprises as well as the big employers, for a true picture of business needs and priorities.

You can read the discussion in full here

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What is a co-operative council? 

by Ed Mayo

Having contributed to the recent publication "Towards a Cooperative Council" alongside other cooperative advocates such as Ed Mayo, the Secretary General of Co-operatives UK, and co-founder of The Transition Institute, I read his recent blog which I really enjoyed and think offers important criteria for assessing what we need to see when we consider cooperative councils. I have therefore, lifted the argument which I hope you agree lends some substance to the growing idea of cooperation in local government.......

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The idea that local authorities might become ‘co-operative councils’ has emerged over recent years. From Oldham to Edinburgh, Newcastle to Rochdale, it is great to see the interest in and commitment to co-operative working.

There is an overlap between public ethos and co-operative values, not least around open and democratic models of organisation.

But the challenge is that it is not an entirely easy fit. Co-operatives are an established form, underpinned of course by an international definition and agreement. We are enterprises. Co-operatives can be many things, but not, without very significant stretch, can they be a local authority.

What matters then perhaps is not form but action. If a council is genuinely pro- co-operative, then the results ought over time to be clear. So it is welcome that a community of co-operative councils has started, slowly, to coalesce, kickstarted by the Co-operative Party, and last month, published a collection of policy contributions on the potential of the idea. The sections on education and housing, in particular, are strong because they talk to practical action, already happening.

It has taken time, not unreasonably, for this agenda to take shape. In 2010, under the aegis of the Local Government Association Labour Group, around one hundred councils expressed interest in the idea of becoming a co‑operative council. A document, titled Co-operative Communities – Creating a shared stake in our society for everyone was published that same year. There is more focus now in terms of numbers, with twenty one councils signed up – still with the same political affiliation – but also more visible ambition.

Co-operatives UK is the recognised voice of the movement, so we have a natural concern to protect the integrity of co-operative action. So what would we say made for a co-operative council? I think it has to have more bite, to ensure genuine action rather than just rhetorical political positioning, with the following steps as a draft, outline set of criteria:

• the authority endorses the internationally recognised co-operative and ethical values as a basis for work that it takes forward as a co-operative council
• there is a Cabinet Member for co-operatives
• plans for local economic development, such as for jobs, investment and housing, include an explicit component focused on the development of co-operative enterprise, including credit unions
• there is an explicit recognition in commissioning of the added value that can come from co-operative and mutual enterprises
• commissioning staff have received training in co-operative models
• they are open to the potential of services that are being spun out services where appropriate being run on high quality co-operative models
• services that are spun out of direct provision encourage a co-operative or mutual form and protect assets through common ownership or a wider asset lock where they have been developed with taxpayer money
• it operates as a Fairtrade Town, recognising the value of this as a form of support for producer co-operatives overseas
• they encourage schools, where the national context allows this, to convert to co-operative schools, following the options now available for this
• they encourage agencies that act as partners locally, such as further education colleges and social housing, to consider co-operative and mutual models of governance
• they have given consideration / had a debate on sourcing utility services, including banking, energy and telephony from co-operative providers
• the authority operates as an employer with an appropriate partnership and form of consultation with trades unions.

There is no roadmap for this and these are suggestions only. But there does need to be a dialogue with the co-operative movement on this, to encourage action and to ensure that the co-operative identity as set out by the International Co-operative Alliance – of which Co-operatives UK is the domestic guardian – maintains its historic, hard-won integrity.

Come in, be co-operative – and act co-operative.