In public service, does size matter?

Steve Saunders from PwC sets delegates straight: growth is all about competitiveness   

At the University of Northampton, public sector spin-out platform, the Transition Institute, announced today that the university was to become a strategic partner for the Institute. Also, Professor Simon Denny, the man charged with enabling Northampton to become the UK’s first social enterprise university, is to join the Institute's board. 

Speaking on behalf of the Institute, its Chair, Allison Ogden-Newton, said, “We are delighted to welcome the creative input of Northampton, which is fast establishing itself as at the forefront of social enterprise development. Its energy and expertise will be a fantastic addition and helps us take the debate on the future of public services up a gear.”

Simon told the audience, "If the level of debate and contribution at today’s event was anything to go by, the university's decision to become a partner of the Institute is one it is unlikely to ever regret.”

This announcement came at the latest Transition Institute Camp on scaling up, where those who want to spin out services or want to bid for new service contracts can learn from the market leaders and industry experts, and share their experience and questions adding to developing research.

Steve Saunders, Director of PricewaterhouseCoopers (PwC), sparked a lively debate about preparing to thrive in an increasingly competitive market. He charged participants to think about why they think the service they provide is different, what they want to be remembered for and to really scrutinise where the market for that is.

Paul Jansen, consultant at Stepping Out, the specialist service for spin-outs, described this sector as a market that is in its infancy. He compared spin-outs to the motor industry in the 1930s where there was excitement for the novelty for a revolutionary form of transport, but where efficiency and speed had not yet been achieved. Paul made the point that we need to recognise the innovation sparked through independent service providers and told his audience about social enterprise, the National Migraine Centre which is a world leader in headache services that has developed therapies and treatments previously unheard of in the NHS. In that sense the services available at the centre are not spun out, but have achieved unique complementary status so common in social enterprise where innovation can be easier to develop than in the mainstream.

Owen Wilcox from TTP Law

Owen Wilcox, a partner at TTP Law, filled delegates in on the legal dos and don’ts of going it alone and illustrated his points with apocryphal tales of social enterprises that have failed, such as Secure Healthcare, which closed after only three years because it did not anticipate the potential impact of its contractual obligations and started with an inappropriate corporate structure. Owen took delegates through the treacherous waters of TUPE and asset transfer and pointed them to early adopters looking at the secrets to their success.

Working with Sabina Khan, advisor to the Institute, delegates discussed and analysed the Institute's latest research Scaling up your business: expansion models for spin-outs, written by Dan Gregory. The enthusiasm of delegates derived some insightful observations that came from their considerable experience in the field.

Delegate Richard Catherall of Katarsis Ventures contributed to the debate by making the point that outsourcing authorities often go for scale thereby missing vital potential. “Local authorities like large things sometimes simply because they are big, which doesn’t acknowledge that an opportunity of spin-outs are to spin services apart. The focus is often around the spin-out and in actual fact it’s an opportunity for the parent body to change. It’s not just about the egg, it's about the chicken … which came first incidentally."

All of the comments made at the event were captured and will be reflected in the final version of the research available on line at the Transition Institute.

Fab piece in the Guardian today by Jane Dudman on our Transition Institute which launches tomorrow

Transition Institute supports managers spinning out public servicesNew social enterprise body will support innovative public services delivered by former public managers


The Transition Institute is a way to bring together bodies being spun out of the public sector. Photograph: James Worrell/Time & Life Pictures/Getty Image
In his Public Manager column in the Guardian on 4 May, Craig Dearden-Phillips investigates what it is like to lead a service out of the public sector.
This is particularly apposite, given the recent admission by the government that it is scaling back its plans to privatise swaths of the public sector for fear of appearing to be in favour of private companies excessively profiting from the taxpayer.
The emphasis is now firmly on services being run by employee-owned, third sector or mutual organisations and Thursday 5 May sees the launch of a new body designed to respond to this agenda and provide support for budding public sector entrepreneurs.
The Transition Institute is a new, independent centre for research jointly run by Social Enterprise London and the National Endowment for Science, Technology and the Arts (Nesta). The aim is to highlight and facilitate innovative new public services.
Allison Ogden-Newton, chief executive of Social Enterprise London, says the new institute is a way to bring together bodies being spun out of the public sector with support organisations, to enable them to collaborate and raise the quality of debate about new ways to deliver public services.
"The UK is ahead of the rest of the world in advancing the discussions around independently-run public services and first in setting up an institute to study these new models and support those who want to get involved," says Ogden-Newton. "It's a brave new era and we are thrilled to be working with Nesta to establish this groundbreaking institute."
She says the aim will be to "help give direction and establish common principles in order to support emerging leaders".
Mark Johnson, managing director of TPP Law, which specialises in advising public sector spin-outs, says there is a need for a central bank of resources, expertise and information for public sector managers if employee-led mutuals are to take off and adds that the new institute will play a "vital role" in collating and disseminating that knowhow.
One example of a social enterprise delivering a service formerly run within the public sector is Living Well, which provides support and guidance for people living with HIV and AIDS. Until recently it was a successful service run by Hammersmith and Fulham Primary Care Trust (PCT), but the organisation's ability to develop into new service areas was stifled by financial barriers, chiefly by not being able to carry financial surpluses into the following year.
Following a period of research, staff came upon the idea of forming a community interest company and 'spinning out' the service from PCT control. James Miller, who has led the process and will manage the new social enterprise, says he is enormously excited at the potential of what can now be achieved. "We are already looking to deliver contracts beyond our PCT, putting in bids for corporate sponsorship and making links with large national charities," he says. "Running our own organisation really gives us the freedom to innovate, it's enormously exciting." Miller stresses that Living Well has developed in close partnership with the PCT.
Miller's enthusiasm mirrors the finding by Dearden-Phillips that being part of a social business engenders an increase in productivity, innovation and energy among staff.
But Dearden-Philllips also warns that few councils are yet looking seriously at creating spin-outs - there is no sign as yet of the first trickle of spin-outs turning into a flood, he points out. His conclusion is that there needs to be more expertise in local authorities about how to nurture spin-out business. There are also some real financial issues that face potential spin-outs, particularly about how pensions will work, and how to finance spin-outs. "Above all, there is a real need for leaders - hundreds of them," he comments.

This content is brought to you by Guardian Professional. Become a Public Leaders Network member to get our weekly update direct to your inbox.