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Cameron delays his privatisation plan again

Plans to open up all public services to private providers are put on hold.

Tony Blair famously declared: "I can only go one way, I've not got a reverse gear". But as the coalition's first year taught us, David Cameron certainly has. The backlash over the government's NHS reforms means that Cameron's entire public service reform agenda is in doubt. His radical pledge to open up almost all of the public sector - bar national defence and the judiciary - to private and voluntary providers may never be implemented.

I noted earlier this month that the government's white paper on open services, which was due to published in the spring, had been delayed in the face of opposition from the Lib Dems and scepticism from the Treasury. At the time we were assured that the white paper would finally be published in mid-July. But Francis Maude, the minister responsible for the reforms, tells today's Times (£) that the paper now won't appear until the autumn.

It's not hard to see why Cameron has retreated again. The pledge to open up the NHS to "any willing provider" proved toxic for Andrew Lansley's reforms. The pledge to do the same for the entire public sector could inflict yet more damage on the Tory brand. As my colleague Rafael Behr observed in his column recently, "One fear at No 10 is that the public hears the words "Conservative reform" and understands "mass privatisation".

The government's inertia reflects a growing division between George Osborne and Steve Hilton on the pace of reform. Hilton, Cameron's chief strategist, is determined to push ahead with the reforms to prove that the government is in control of the policy agenda ("Everything must have changed by 2015," he once remarked. "Everything"). But Osborne, who is focused on securing a Tory majority in 2015, is more cautious and is desperate to avoid another politically damaging row. In an illuminating piece on the Hilton-Osborne relationship, the Times's Sam Coates notes that senior Tories suggest there is now a "50-50 chance" of an increasingly disillusioned Hilton leaving Downing Street within the next six months.

It's unlikely that the reforms will be abandoned altogether but rather, like Lansley's NHS plans, that they will survive in a diluted form. The Lib Dems, to their credit, are determined to avoid anything that resembles privatisation. The near-collapse of Southern Cross, the company responsible for 750 care homes, was a timely reminder of the limits of the market. But Tory MPs are only likely to see this as further evidence of Cameron's diminished ambition.