The government has privately admitted 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.
A leaked memo of a meeting between business chiefs and the minister for the Cabinet Office, Francis Maude, says there will be “no return to the 1990s” and wholesale outsourcing. Maude is preparing a white paper on public services – delayed since February – setting out the future direction of public services, which is expected to contain plans to match private sector companies to charities and volunteer groups to run public services.
Labour accused the government of being in retreat after the fierce opposition to plans to bring in private providers to the NHS and forestry. But Downing Street played down the reports. “We were never planning wholesale privatisation. It was perhaps interpreted as such but that was never the plan,” a spokesperson said.
In February David Cameron promised to end the “state’s monopoly” on the public sector, by removing the necessity to legislate for individual cases of privatisation and end the presumption that the state will provide services. Private firms were identified amid voluntary groups, charities and social enterprises as central to those plans. A white paper was expected to follow shortly after Cameron’s intervention but is now nearly four months late.
But the memo, prepared by the Confederation of British Industry after a meeting between its director general, John Cridland, and Maude, says: “The minister’s messages were clear cut … the government is committed to transforming services, but this would not be a return to the 1990s with wholesale outsourcing to the private sector – this would be unpalatable to the present administration.
“The government was not prepared to run the political risk of fully transferring services to the private sector with the result that they could be accused of being naive or allowing excess profitmaking by private sector firms.”
The memo, obtained by the BBC and marked “private and confidential” suggests that instead private sector investment will be more limited to joint ventures with not-for-profit groups.
Jon Trickett, the shadow minister of state for the Cabinet Office, said: “The government is forever making large ambitious statements and not thinking through the detail. They don’t have confidence in their ideas. The experience of the NHS and forestry has demonstrated that they can’t deliver the grandscale projects they set out to do. They are in ideological and political retreat.”
An aide to Maude said: “We’ve always said we’re committed to bringing in new models to the public sector – charities, social enterprises and mutuals. These have been shown to reduce costs. The coalition agreement says this. This is no change in policy at all. There has perhaps been a different expectation within the outsourcing market. There will still be outsourcing as there has been for many years but we are committed to looking at these new models.”
Meanwhile, eight senior health figures are to meet in Downing Street on Wednesday to discuss reforming the NHS with Paul Bate, Cameron’s recently appointed advisor on health and adult care. They include an ex-NHS chief executive, Nigel Crisp, who is now a peer; Sir Robert Naylor, head of University College Hospital London, which has won awards for the quality of its care; and Sir Ian Carruthers, another ex-NHS chief executive who now runs the service in the south-west of England.
They will be joined by a clutch of health policymakers who think the NHS needs to undergo major reform, albeit not necessarily of the sort controversially proposed by Andrew Lansley, the health secretary. They include Dr Jennifer Dixon, director of the Nuffield Trust health think-tank; Bill Moyes, the ex-chief executive of Monitor, which regulates foundation trusts hospitals in England; and Professor David Kerr, a cancer specialist who last year switched from advising Labour on health to helping Lansley.
The heavyweight group is completed by Mark Britnell, an NHS high-flyer who quit in 2009 to join management consultants KPMG and is often tipped as a future NHS chief executive, and Nigel Edwards, the acting leader of the NHS Confederation, which represents 95% of the service’s employers.
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