PRIVATE firms and charities will be able to demand the right to run almost every public service – from schools and day centres, to libraries and leisure centres – under radical Government plans unveiled yesterday.

An ombudsman will rule on whether companies and voluntary groups have been “unfairly precluded” from tendering for contracts held by local authorities, for example.

The idea is modelled on the plans to allow any willing provider to run NHS services, in legislation that triggered a storm of protest that forced Prime Minister David Cameron to retreat.

Unveiling the Open Public Services White Paper, Mr Cameron said the Government was “releasing the grip of state control and putting power in people’s hands”.

But ministers were put on the back foot by confidential documents that showed civil servants had warned the plans would work only if existing, unsuccessful services – such as schools and hospitals – were allowed to collapse.

And they were accused of risking a repeat of the Southern Cross fiasco, on the very day that the operator of 752 care homes announced it was shutting down.

Tony Lloyd, a Labour MP, said the Government had failed to answer the question of what happened to the users of a vital service in the event of market failure.

Brendan Barber, the TUC general secretary, said: “On the day Southern Cross’ failure underlines just how dangerous introducing the profit motive into public service can be, people should be very afraid at what these proposals could mean.”

But Cabinet Office Minister Oliver Letwin described Southern Cross’ collapse as a “legacy issue left over from the last Government”, insisting mistakes had been learnt.

And he ducked questions about the civil service, warning that existing services would have to fold.

Tessa Jowell, Labour’s Cabinet Office spokeswoman, said: “The education of children and the treatment of the sick should not be traded as if healthcare and education were chocolate bars or washing powder.”

The White Paper also promised:

• To give the public a new, legally-enforceable right-tochoose services;
• To allow parish and town councils to take control of parks, speed limits, parking and licensing – although not involving alcohol;
• To allow providers to make profits in some areas – although not in health care.