The reaction to health secretary Alan Johnson’s decision last month to scale back the private sector’s involvement in providing NHS services was reassuring in its predictability if nothing else. On the one hand, a warm welcome from the BMA and, sensing that they might be on a roll, a call for a cap on the use of the private sector by Unison. On the other, expressions of deep disappointment from the CBI and the slightly melodramatic labelling of it as a ‘black day’ by the Reform thinktank.

While these reactions may be revealing about the politics of public sector reform, at this stage they tell us rather less about the realities of the issue itself. Johnson rightly stressed the importance of a pragmatic rather than ideological approach, ensuring at all times that value for money for the taxpayer is at the forefront of ministers’ minds. And, while scrapping six schemes, he gave the go-ahead for three new independent sector schemes for diagnostic treatment and noted that patients are increasingly gaining the right to opt for treatment in private hospitals; the numbers doing so doubled in the month leading up to the announcement.

Nonetheless, two notes of caution should be sounded. First, we should recall the original twin purposes of involving the private sector: not only to increase capacity (and thus ensure speeded-up, free at the point of delivery treatment) but also to act as a spur to help drive up performance in some NHS hospitals. Below a certain level, the ability and willingness of the independent sector to become involved in delivering NHS services is bound to be impeded; the effects of such a move would not be positive.

Second, there is the broader political message that Johnson’s announcement, alongside the review of academies and the alleged watering down of the Freud review’s proposals for involving private firms in getting the hardcore unemployed back into work, sends out. While each of these developments is individually justifiable – the investigation into academies is, after all, looking into whether they are truly helping the most disadvantaged – Labour needs also to guard against any overall impression which suggests it is slowing or, worse, going cold on the reform agenda.

This is not, though, a case of reform for its own sake. Rather, as culture secretary James Purnell argued in his address to the Progress annual conference last month, in all the public services, you can date the serious improvements exactly to the moment the government’s reforms kicked in. And, Labour must never forget, as Purnell also suggested, that reform has always been necessary to get consent for investment. Get on the wrong side of that equation, and the party could end up paying a heavy electoral price.

But Labour’s public service reformers must also examine the way they have made their case within the party. Few joined the Labour party to advocate the causes of contestability, purchaser-provider splits and diversity of providers. And the problem has not simply been the passion-killing technocratic language. The mantra of ‘what works’ has too often suggested that reform is lacking in values, a problem that has been compounded by the frequent confusion of means and ends. Instead, reformers should have made clearer that a desire to empower those with the least rested at the heart of their agenda for public services.

Perhaps most important of all, it may also be time for Labour to stop getting hung up on debilitating debates about the relative merits of public versus private versus voluntary. Sweden, much lauded by the opponents of public service reform, has, for instance, never confused the public interest with publicly owned provision, allowing a range of providers – public, private and third sector – to offer services which are not simply tax-payer funded, but which have also contributed to a far greater degree of equality than that achieved in Britain. The funding and delivery of services is, moreover, focused much more heavily on the local level than is the case in the UK.

Thus, as Geoff Mulgan of the Young Foundation has recently argued, our focus should be on what he terms ‘collectivism in its micro form’: how we can ensure that individuals and communities get real control over the local services in their area. He suggests that large national organisations, whether they be of the public, private or voluntary varieties, can seem equally faceless, bureaucratic and disempowering as far as citizens are concerned. And a mix of solutions – vastly strengthened local government; new neighbourhood councils; a much greater use of co-operatives and new forms of community ownership of local services; and, yes, where appropriate greater individual choice and voice – will need to be found to overcome this challenge.

Ministers are right that reform must be pragmatic rather than ideological – and that goes just as much for the public as it does for the private and third sectors. But its direction – towards services which are not simply of a high quality, but over which individuals and communities feel real ownership and control – must never be in doubt.