The coalition government has rowed back from its radical plan to allow private industry to run schools, hospitals and council services, such as parks and adult care. Publication of the White Paper ‘Open Public Services’ has been delayed since March 2011 and it is now going through another re-draft stage to reflect the latest thinking. The plan to extend the delivery of services to third sector organisations, including charities and mutuals, run by former public service employees, is expected to go ahead.

According to BBC News the government has privately admitted it is scaling back its plans to privatise swaths of the public sector, with an estimated value of £79b, 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.

Making public services more efficient by changing ownership is at the heart of the government’s reform programme. The Comprehensive Spending Review published in October 2010 set out the ambition for the future of public services, focused on shifting power away from central government to the local level – to citizens, communities, and independent providers. A consultation document published in November 2010 described the intention to set proportions of specific services that should be delivered by non-state providers including voluntary groups. In February 2011 David Cameron went much further by saying that his vision of public services was that providers from the private and third sectors will be given a level playing field to compete with any public body.

The explanation for the u-turn that it would be unacceptable for private companies to profit from the taxpayer may not be the whole story. In March 2011 the Unite union published a report claiming that the Conservatives and the Liberal Democrats are at odds over how to create their respective visions of the Big Society and the new localism. At the centre of the debate between the coalition partners is how the breaking up of public services will benefit service users, the taxpayer, and employees.

The final version of the White Paper is likely to retain its title of Open Public Services because ownership change will continue to feature, but in a much scaled back way. One possibility is that independent providers will be given an equal share with providers from the third sector. This would have a significant impact on the scale of ownership change and on the speed at which it is implemented.

Another effect of the u-turn will be the need to look beyond ownership change for improving efficiency. The 16 Community Budget pilot schemes, which focus on families with complex needs, now one month old, are likely to become the focus of attention as the way to bring transformational change. This new model of public service delivery involves bottom up service design and allows multi skilled teams to work across organisational boundaries to find innovative solutions.