The government must end the "contracting-out culture" in public services, a former Cabinet minister has warned.

Speaking to party members on Tuesday night, former transport secretary Stephen Byers claimed that the current approach had seen ministers "washing their hands" of responsibility.

The Labour Party should begin a debate on the roles of the state and the market in the provision of public services, he said.

Ministers must not shy away from an increased private sector role, Byers insisted, and should portray such a move as vital for securing the party's goals of social justice, rather than as a betrayal of its values.

But, he warned, the present strategy had entailed the government avoiding its responsibilities.

"It is an approach to public services which has failed because it was about government washing its hands of responsibility and handing it over to the private sector who operated in the interests of their shareholders and not the public interest," he said.

"This does not deny a significant role for the private sector but puts it on a totally different basis.

"So in health the private sector operates under the NHS umbrella and due to initiatives like the new diagnostic and treatment centres are now making a significant difference.  Not privatisation but the private sector working for the public good."

Byers argued that Labour must finally "nail the myth" of a "secret plan" to abandon the principle of universal public services.

"Labour must not shy away from radical reform," he said.

"For many the issues will be difficult.  But with reassurances about the limits to the market and the role of the private sector, I believe we can achieve a progressive consensus about the way forward."