Edward Davey MP: Winning liberties

From a speech by the Lib Dem Treasury spokesman, at the Royal Society of Arts

It's time to be asking questions about the future of the state. We can move the focus away from how a service is paid for towards how the service is provided and how we get the best quality service.

It's not just about cash. If we can free public services from political, centralised interference, then through those freedoms we can get better service. Public services and the public sector need more challenging liberties. Rather than having to win them from Whitehall, they need to win them from the community they serve.

Mutuals have already been running public services in Britain and abroad in many ways and shapes and sizes. Often they can provide community involvement, employee participation, and a much greater dedication to the service, so I think we should be experimenting more with them.

We should map out ways of how existing providers, both public sector and private sector, could be transformed into mutuals. These mutuals would take the bulk of their revenues from taxpayers under a contract, but they would have much greater freedoms. They'd need a new legal identity, one idea being what I'm calling a public-benefit corporation. That would have financial freedom as it would be based under company law, but assets could only be transferred to another public-benefit corporation, preventing any carpetbagger problem.

You could see NHS trusts or colleges transferring to public-benefit corporation status but only – and this is key – if they have local agreement. It shouldn't be done through Whitehall fiat because mutualisation, if it's to work, has to be bottom-up, not top-down.

We want a pluralist model of a decentralised state, where the civil service is reformed and is at the cutting edge of making the deals, and has the option not just of going down the public or private route but going down the mutual route.