Cabinet presses the reform button again

Public services should be tailored to people's needs and decided at local level, under plans agreed in Downing Street

The Cabinet agreed yesterday to press ahead with a new round of reforms to public services as Gordon Brown tries to fight back after seeing off an attempted coup by Labour MPs.

A blueprint for economic recovery and "personalised" state-funded services tailored to people's needs, will be unveiled by the Prime Minister the week after next. "Building Britain's Future" will cover all areas of government, as Mr Brown answers critics who claim he has not offered a forward-looking "vision" two years after succeeding Tony Blair. The plan was discussed at a three-hour "political" meeting of the Cabinet yesterday – without civil servants present. One minister said: "The key is to go down the personalised route, giving greater access to education and health and tailoring this to individual needs.

"We are talking about real and radical reforms, but not boldness for its own sake, which would be stupid."

The Brown blueprint will "embed and advance" New Labour's reforms since 1997. One radical option being considered is to put core entitlements on a statutory footing while devolving as much other work as possible to local government.

The upside is that Labour would finally make good its repeated promises to decentralise power from Whitehall. It could also enable Labour to scale back its plethora of public service targets, which critics say distort priorities by forcing frontline staff to "tick boxes" rather than improve services.

The downside is that it would provoke criticism for creating a "postcode lottery", with different standards of services in different areas.

The document is expected to promise more apprenticeships and college places for school-leavers, a major housebuilding programme, extra investment in clean, green energy, and a new "innovation fund" to back the industries of the future. Mr Brown will argue that reforms are needed to ensure Britain emerges strongly from the recession, and extend opportunities to all. But the decision to embark on a new round of reforms less than a year before a general election will be greeted with scepticism by commentators who believe the big issue is how to cut public spending to balance the nation's books.

Labour's blueprint will draw a "dividing line" from the Tories by rejecting cuts in vital public investment and national infrastructure. A row between Labour and the Tories erupted this week as they accused each other of planning to cut most Whitehall budgets by 10 per cent.

There were also reports yesterday of tension between the Chancellor Alistair Darling and the Schools Secretary Ed Balls – who had hoped to succeed Mr Darling at the Treasury in last week's reshuffle. The tension was reported to be about how open Labour should be on the need to make savings. Mr Darling wants to acknowledge the need for a squeeze, while Mr Balls is itching to launch a full-scale assault on "Tory cuts".

Brown allies resent long-standing criticism by arch-Blairites that he is an obstacle to reform. After what No 10 described as a "very positive" cabinet meeting yesterday, the Prime Minister called in the Blairite Transport Secretary Lord Adonis for one-to-one talks on the reform agenda.

Plans to devolve power are being pushed by Blairite ministers including Liam Byrne, the new Chief Treasury Secretary. But some Labour insiders are sceptical.

Matthew Taylor, chief executive of the RSA think-tank and Tony Blair's former head of policy in Downing Street, said: "Labour's reform plan won't be taken seriously, nor will it deserve to be, unless it involves a profound shift in the way policy is made at the centre. I would find it impossible to believe in any plan to decentralise power that did not commit to a substantial reduction in the number of government ministers."

He added: "There are far too many ministers, all of whom think it is their job to generate initiatives. Ideas are allowed to be developed and launched without any reference to those at the front line, change management and the time it takes is not treated seriously, there is complete lack of realism about how far the centre's intended messages actually reach."

1. IT'S TOO LATE

After 12 years in power, a sudden rush of new reforms would raise the question: why on earth didn't Labour implement them before now? Time for legislation and implementation is running out because a general election must be held by 3 June 2010.

2. THERE'S NO MONEY

Reforms might improve savings in the long run but normally cost money in the short term. With the public finances facing a massive black hole, there seems little scope for "front-loading" spending. The pressure will be for spending cuts.

3. THE BROTHERS WON'T ALLOW IT

Trade unions contribute up to 90 per cent of Labour's funding at present. With Labour Party membership and big donations falling, the unions will try to use their muscle to block unpalatable changes – notably when the party draws up its election manifesto.

4. BACKBENCH REVOLTS

Labour MPs are in a fractious state after pulling back from a coup to topple Gordon Brown. They are set to win a delay over Lord Mandelson's plans to sell a 30 per cent stake in the Royal Mail and could rebel against other proposals.

5. HOW RADICAL IS THE CABINET?

Blairites Lord Adonis, Andy Burnham, Tessa Jowell, Ben Bradshaw and Liam Byrne were promoted in the reshuffle. But Brown and allies such as Ed Balls were never great fans of some of the market-based reforms on Tony Blair's agenda.