Owen Jones: Imagine if Virgin ran our hospitals

If the Tories wanted to tell opponents of NHS privatisation (that's most of the country, by the way), to commit an obscene act on their own person, appointing Jeremy Hunt as Secretary of State for Health was a pretty effective means of delivering the message. Here is a man who, throughout the Murdoch scandal, proved an instinctive champion of corporate power. A pamphlet he co-authored in 2005, Direct Democracy: An Agenda for a New Model Party, called for the NHS to be de-nationalised and replaced with a national insurance model. It is even rumoured he attempted to remove the moving NHS tribute from the Olympics Opening Ceremony.

And it gets much, much worse. The new guardian of our health pushed for his constituency's own NHS Trust to be taken over by Virgin Care in a deal worth £650m. When Hunt was appointed, some mocked that he was about to hand the NHS over to Rupert Murdoch; it turns out Richard Branson is one likely beneficiary. If anyone was wondering what the future of the NHS looks like under this Government, look no further than the backyard of the Secretary of State for Health himself.

The Tories never had the courtesy to put the privatisation of our NHS to the electorate at the general election. Neither did they consult voters about plans unveiled in July 2011 to open virtually all public services to private companies. And there is good reason for this. Thatcher's children may be ideological zealots, but they are not stupid: they know there is no popular support for privatisation. As even Thatcher's own chancellor, Nigel Lawson, once remarked, the NHS is "the closest thing the English have to a religion".

A new report published by the Fabian Society this week underlines just how entrenched opposition is to selling off our services. YouGov tested support for a number of arguments: overall, those in support of the state were significantly more popular than those against. 64 per cent were convinced that "services like health and education should not be run as businesses" because "they depend on the values and ethos of the public good"; just 17 per cent dissented. Despite the oft-repeated falsehood that Britain has run out of money, 48 per cent believed that, "despite recent economic problems, the UK is a rich country and that means we can afford decent public services."

When right-wing arguments were offered, they were soundly rejected. For example, just 29 per cent agreed that, "when the government provides more than the basics it holds back businesses and stops the economy growing". There was overwhelming agreement that "public services are essential for business to succeed and incomes to grow," a solid rejection of the mantra that the public sector is somehow leeching off the real "wealth creators".

But what is so striking about the report – entitled No Right Turn – is that, above all, it poses a challenge to Labour. "Our conclusion is that public opinion does not support calls by some for the Labour party to adopt a middle way on public service debates that cedes ground to the right," argue the report's authors Natan Doron and Andrew Harrop.

Labour's opposition to the Tories' privatisation offensive remains hobbled because – in truth – New Labour laid the foundations for it. A commercial directorate was set up in the Department of Health under Tony Blair; and privately run independent sector treatment centres were introduced by the last government. Hinchingbrooke became the first hospital to be taken over by a private firm last year, but the deal was kick-started by the Labour Government. Under New Labour, billions were wasted on overpaid private consultants in the civil service; air traffic control was privatised outright; and Gordon Brown forced through the disastrous Public Private Partnership on the London Underground.

The biggest privatisation disaster was undoubtedly the Private Finance Initiative (PFI), originally unveiled by John Major's government but massively expanded under New Labour. Under PFI, private contractors pay for construction costs, leasing the finished project to the public sector for up to 30 years. The attraction was a financial con: PFI contracts take borrowing off the Government's public sector balance sheet. They are expensive because borrowing is twice as expensive for the private sector as it is for the Government.

The long-term cost to the public purse is shocking. Not long after the last election, it was reported that the NHS would end up paying £65bn to private contractors for hospital building, even though completion cost just £11.3bn in total. Back in May, the House of Commons Public Accounts Committee found that "the current model of PFI is unsustainable," because the contracting process was so expensive, and the risk was transferred to the public sector even as investors enjoyed high returns.

If Labour is to mount a credible opposition to Tory privatisation, it needs to draw a thick line under its own past. In a speech last week, Ed Miliband acknowledged: "The ideas of the last three decades will not solve the central economic challenges we face". We need, he said "a new agenda". A rejection of the dismantling of our public services must be at its heart.

Part of the challenge is that advocates of privatisation stole words such as "reform" and "modernisation". Their opponents could be dismissed as conservatives, anti-reformers, dinosaurs, and so on. But an alternative to New Labour and Tory privatisation does not have to mean top-down, bureaucratic statism. That was a model pioneered in post-war Britain by that stalwart of the Old Labour right and grandfather to Peter Mandelson, Herbert Morrison.

There is another model: putting services under the control of both users and workers. If our railways were back under public ownership – as most voters, including Tories, want – elected representatives of passengers and rail workers could sit on the management board. Democracy is the alternative both to privatisation and bureaucratic statism.

As the recent failure of G4S to provide security in the Olympics underlined, the "private is best" dogma is kaput. But the era of failed free market fundamentalism will not end unless Labour rejects its own history of privatisation. A break with the past is not just necessary – it would be popular, too.