“There is no longer this amorphous third-party organisation called ‘they’. ‘They’ are now us.”

Richard Kearton, chairman of Anglian Community Enterprise, is describing how life has changed since its staff decided to leave the National Health Service and turn themselves into a non profit-making social enterprise providing health and social care to the people of North East Essex.

“Staff aren’t used to having that empowerment, to having a direct line to the managing director,” adds Mr Kearton. “They are used to the NHS where nobody’s responsible and nothing gets achieved in short order”.

The culture shift experienced at ACE underpins one of the government’s big ideas: that lifting the state’s monopoly on the provision of public services will drive innovation and productivity, helping to make taxpayers’ money go further at a time of historically tight public spending.

Francis Maude, minister for the Cabinet Office and the programme’s principal government cheerleader, has spoken of an “aspiration” that a million public sector workers should eventually be operating in mutuals.

He tells the FT: “We put it out there, not really as a target but just to make it clear that in our minds this is not a niche activity, this is not a few quirky pioneers deciding to do things in a different way. This is increasingly going to be a mainstream way of public services being provided.”

A government task force to promote mutuals, led by Julian Le Grand, a professor of social policy at the London School of Economics and former health adviser to Tony Blair, points to evidence that staff motivated by a sense of freedom and control perform better than those responding to externally imposed deadlines and targets.

But, with public sector mutuals still in their infancy, it has drawn heavily on co-ownership models in the private sector. Critics believe the read-across may be less automatic than the government assumes.

Nick Seddon, deputy director of Reform, a pro-market think-tank, says: “The winning fusion of structure, culture and incentives has come about organically in companies like John Lewis and Arup, over many years, but quick-fix flat-pack designs rolled out by the Cabinet Office will struggle. Turning public bodies into mutuals is also problematic – I worry that you will not get the cultural change if you just change the name plate above the door.”

Thus far, there are only 21 “pathfinders” blazing the trail, concentrated in a handful of Whitehall departments.

At ACE, the most powerful evidence that the new approach has released a burst of entrepreneurial vigour lies in the roster of contracts it has won since becoming a mutual – beating both the NHS and private providers to secure them.

Lynne Woodcock, ACE’s managing director, says mutualisation has “made us much better at costing the services”, a big advantage in a competitive market place.

She testifies that peer pressure to raise performance has also become a stronger force since the inauguration of ACE. Absenteeism rates have almost halved in the year since staff took control.

Lucy Booth, a matron, bears witness to this claim of a new, more go-getting mindset. “We have been competing as an NHS provider, struggling for tenders, winning and losing those tenders. Now we are on our own we have to win,” she says.

But not all staff are seething with the spirit of enterprise. Ms Booth recalls that a colleague’s sole concern had been whether she would retain her NHS staff discount at Dorothy Perkins, the clothing store. “We were able to tell her ‘yes, she would’ – we are still providing an NHS service,” adds Ms Booth.

Mr Seddon argues that, by favouring the mutuals model over others – a bigger role for private companies, for example – the government has engaged in “the public sector equivalent of picking winners”. At the other end of the spectrum, trade unions have warned that mutuals could become a Trojan horse for outright privatisation.

Mr Maude predicts that the model will evolve over time. “We no longer have the simple binary choice between being delivered by the public sector or being totally outsourced to a for-profit commercial provider. There’s a whole mixed economy in between.”