The Government will unveil today watered-down proposals to devolve more power over public services to local communities and John Lewis-style "mutual" companies.
The Open Public Services White Paper had been intended as a cornerstone of the Government's localism agenda, removing power from Whitehall and handing it back to local communities. But amid fears in Downing Street that the measures could be portrayed as "back-door privatisation" and suffer a similar fate to its NHS reforms, the White Paper will now not lead to specific legislation opening up public services to outside providers.
Instead the theme of the proposals will be expected to be pushed forward by individual departments – such as Michael Gove's free schools initiative and plans to give local people more control over planning applications.
In a speech launching the White Paper in East London today, David Cameron is expected to restate his desire for local communities to have more power over decisions which affect them. He will say: "Total public spending increased by 57 per cent in real terms from 1997 to 2010. But on no measure can we claim that things have improved by more than 50 per cent.
"It's about ending the old big government, top-down way of running public services... The old dogma that said Whitehall knows best – it's gone."
But Tessa Jowell, Labour's Shadow Cabinet Office Secretary, said all the Government had done so far was hand more power to the private sector. "The Government has lost its way on public services. Its reforms have, so far, failed to put power in the hands of service users and sought to strip services of their democratic character by elevating markets beyond their appropriate role," she said.