Steve Richards: There will be a row in Brighton. But it won't be the right one

The political season opens as the last one ended, with a row over the Government's plans for the private sector. Trade union leaders head for this week's TUC conference in Brighton warning that ministers are "playing with fire" and that the Government is "heading for disaster".

Behind the scenes, ministers have been meeting with TUC officials in an attempt to calm everybody down. At the same time some of the more naive Blairites look forward to a row, but not too much of one. Their ideal clash would be one that shows they mean business, but not such a humdinger that it leaves an impression of an administration in disarray.

This is crazy. There are plenty of issues worth arguing about. Inevitably when a government is attempting to meet its worthy objective of reviving public services there will be, and should be, some meaty disagreements. There is no easy route forward. There are bound to be fall-outs. But this is the wrong row, a silly row, a row that makes no sense at all.

Last week's education White Paper illustrates why. The Government proposes that private firms should be given the chance to bid for control of failing schools and to run any new school proposed by the local education authority. It will be up to the Secretary of State, Estelle Morris, to decide which bid is successful. In theory, these measures should encourage local innovation, while the threat of competition should force local education authorities to raise their standards.

But this was an experiment tried once before by none other than that arch-Thatcherite, the late environment secretary, Nicholas Ridley. What happened to Ridley's policies is instructive. For his policies had a rather basic problem. They did not work.

In 1988 Ridley proclaimed a "housing revolution" in which private landlords would be free to bid for council housing. The potential owners could come from anywhere in the private sector, including individual landlords, private housing associations and religious bodies. Ultimately, Ridley was to decide on the successful bidder, bypassing the incompetent councils. He declared boldly that simply the prospect of competition would transform standards in the public sector, while encouraging local innovation on a "revolutionary scale".

Look around now, in the streets of urban or rural Britain, and you will notice that Ridley's revolution did not happen. In fact, nothing happened at all. This was not the fault of the private sector. The first cause of the failure was that Ridley, while being a rampant free-marketeer, was also a fanatical centraliser. His plans were too bureaucratic and remote to meet local needs around the country. How was he to judge on the best bids flowing in to his department in Whitehall from Sunderland or Bournemouth?

The other problem was that Ridley's ideas did not address the main issue, which was the shortage of accommodation. His plans were aimed at injecting some life into the management of existing houses, but there were nowhere near enough properties to meet demand, however dynamic the management. Ridley was not inclined to find the money to build new homes.

Thirteen years later, Whitehall is still calling the tunes. Ms Morris will decide on which bids for schools will succeed. Thirteen years later, the barrier to the success of other reforms for schools is the relative underfunding for education. However innovative the ideas, no school can function without teachers, in the same way there was no point in Ridley having a housing policy without any houses.

These are the questions that will determine the success or otherwise of the Government's bid to revive Britain's public services: how to decentralise, and how much higher does the level of public spending need to be?

Unlike Ridley, the Government does at least acknowledge the importance of these questions. Belatedly, spending is going up, although Britain still lags well behind most other EU countries, largely because the Government has failed miserably to put the case for higher taxes. If there is an economic downturn it will have to make the case or cut spending.

In a tentative way ministers are beginning to suggest that they need to give more power away, especially in England. Some even suggest this will be a defining theme of the second term. They also admit privately that they do not know how to do it – how to devolve power in a country that has been starved of local democracy for decades.

Sadly, one of the Government's few initiatives in this area – the introduction of mayors – is not faring especially well. Most of the referendums on whether or not voters want a mayor have been lost. Several more areas will be voting on the question next month on a wave of indifference or hostility. Ironically, only Ken Livingstone is making a go of it, although he does not have enough power to change much.

Compared with these issues, the Government's plans for the private sector are a side-show, as ministers are starting to admit. In a revealing article in The Independent last week, Conor Ryan, the influential former adviser to David Blunkett, wrote: "Even the most optimistic of the education firms doubts that more than a couple of dozen schools will be privately managed by the next election ... Indeed, far more failing schools will be turned around by other successful schools." So now we know. Now we have some specifics. As far as education is concerned, the row has been over 24 failing schools.

In another newspaper, the education minister Margaret Hodge daringly wrote last week: "We must continue to assert our belief in the central importance of public institutions controlling public services. To rely solely on the yardstick of what works is to deny any moral underpinning to the public realm." This is a different sort of mood music from that coming out of Downing Street immediately after the election. For ministers, that is the only advantage of a debate where mood music is all. It is easier to change the notes than it is to change a policy. The current unfocused argument will fade after a few fireworks at the TUC conference this week and Labour's gathering next month. With good cause, there will continue to be disagreement over specific policies, such as the ill-conceived partial privatisation of the London Underground and Air Traffic Control. But these should not divert us from the more central issues.

Britain's public services are over-centralised and under-resourced. That is why Nicholas Ridley's reforms did not work. That is what the Government and its critics should have a proper row about in the second term.