Public service spin-outs in the UK: towards a theoretical understanding of the spin-out process

Since the election of the Labour government in 1997 and its vision of the ‘Third Way’, the UK government has been keen to support social enterprise and to utilise the third sector in welfare delivery. Over the past few years the policy environment in the UK has sought to encourage public sector workers to ‘spin-out’ the services that they deliver into social enterprises. The research reported in this paper draws on semi-structured interviews with eleven representatives across four local authorities (LA) in the UK that are spinning out a public service into a social enterprise. The services being spun out operate across four different sectors, which allows the research to identify the common experiences and barriers in spinning out. The analysis is underpinned by a theoretical model of public/third sector collaboration by Takahashi and Smutny’s (2002), later adapted by Cornforth et al (2013). We present an alternative version of this framework based on public sector spin outs. In doing so, the research identified that there are significant barriers facing public services that seek to spin-out as social enterprises and the challenges that this brings to LAs in relation to managing the process. Issues around the sustainability of the ‘business case’ of the spin-outs proved to be the main problem, along with the difficulties of maintaining service provision during the transition phase