Co-operatives UK and the Trades Union Congress have alleged that several spin-outs of mutuals across the public sector have proceeded without full support from staff.

In a joint statement this week, they argue that government plans to outsource public service provision to independent employee-led mutuals should be subject to a ballot of employees.

To date, around 70 public service mutuals have been formed, controlling public expenditure of over £1bn.

But while the TUC and Co-operatives UK say there have been some examples of good staff engagement, they are concerned that not enough public sector mutuals offer employees a genuine voice in the formation or the running of the new business.

For example, it claims that a civil service pension scheme manager was formed as a private business without a ballot of staff on the transfer and operates without the accountability that would make it a true mutual.

In that example, employees hold just 25 per cent of shares in a trust, with 35 per cent being held by the government and 40 per cent owned by private investor Equiniti, led by former employees of outsourcing firms Serco and Capita.

The TUC and Co-operatives UK have released best practice guidelines setting out the conditions that should be in place to ensure that public service mutuals are based on employee support and offer genuine employee ownership and representation.

TUC General Secretary Frances O'Grady said: “Increasing numbers of employees are leaving the public sector through the government’s mutualisation programme, often against their will.

“The mutuals that are being formed often don’t meet the democratic and open criteria of genuine co-operatives. In fact, many are simply privatised services under the cover of mutuals.

“These new entities will give controlling stakes to investors rather than workers and allow important public institutions to be taken over by large for-profit providers.

“We hope that this guidance ensures that where public service mutuals are created, they are done so with explicit employee support and genuine ownership and representation in any new organisation.”