ONTD Political

David Cameron has unveiled plans to shake up the "old fashioned" delivery of public services by ending the state's "monopoly" over provision and paving a wider path for private companies, charities and mutuals to play a part.

The prime minister promised to "release the grip of state control and [put] power in people's hands" as he unveiled his long-awaited pubic service reform white paper and claimed that the current delivery of public services is "failing on fairness".

In a speech in east London, Cameron said that while public services were centralised "with all the right intentions", the impact had been "incredibly damaging" to users. This was because the "old fashioned top-down take-what-you're-given culture ... is just not working for a lot of people".

Under the plans, communities will be allowed to set up neighbourhood councils to commission services on a hyper-local level, individuals will get more personal budgets to buy their own services and the use of payment by results will be expanded to encourage markets to develop across the public sector.

Cameron cited as an example his own past experiences trying to get the right wheelchair for his late disabled son, Ivan, before adding that he was still hearing too many stories from others that the right wheelchair only arrives once the child has almost outgrown it.

As another example, the prime minister seized on children who qualify for free school meals who are "half as likely" to get five good GCSEs as their better off peers.

"The last time they counted, just 40 people who had had free school meals were going to Oxbridge – out of 80,000," said Cameron. "We've got a welfare state that doesn't deliver welfare, that doesn't get people back into work but traps them in poverty instead.

"So let me tell you what our change looks like. It's about ending the old big government, top-down way of running public services … releasing the grip of state control and putting power in people's hands. The old dogma that said Whitehall knows best – it's gone. There will be more freedom, more choice and more local control. Ours is a vision of open public services."

Cameron first laid out his plans to roll back the boundaries of the state to allow private providers to deliver more public services in February, but it is widely understood that the plans contained in the white paper have since been downgradedas result of an internal battle with the Liberal Democrats.

The Lib Dems have sought to ensure that any outsourcing and market-driven reforms maintain a strong degree of accountability, prompting a Downing Street source to describe the resulting document as "more greenish than white".

Cameron made clear he intended to see the changes through.

"I know there are those who thought we might be pulling back or losing heart for the task ahead. So let me assure you of this: we are as committed to modernising our public services as we have ever been. I'm not going to make the mistakes of my predecessors … blocking reform, wasting opportunities and wasting time. This is a job that urgently needs to be done, and we are determined to see it through."

Confidential documents obtained by the Guardian under the Freedom of Information Act reveal that ministers have been privately advised to allow schools and hospitals to fail if the government is to succeed in its overhaul of public services.

They reveal research by civil servants warning that markets are susceptible to failure, and that costs could in fact rise unless a true market is created by allowing public services to collapse if they are unsuccessful.

It opens up the potential for schools, hospitals, social care systems and nurseries to fold without the government stepping in to prop them up – a revelation described as "appalling" by Labour.

The documents obtained by the Guardian were prepared by civil servants as part of an internal government review into the consequences for democratic accountability of the coalition's localism, big society and outsourcing reforms that are integral to today's white paper.

source