Liberal Democrat leader and Deputy Prime Minister Nick Clegg today addressed the Guardian Public Services Summit – the full text of the speech can be read below.

The questions that confronted me, when I came into government, were these:

How can we reinvent and strengthen our public services at a time of anxiety and stretched resources?

And how can we preserve the public sector ethos as we move to a more plural, diverse and personalised way of running our public services?

There will no doubt be some sceptics in this room about whether those things are possible.

It is a Guardian event, after all, and I think scepticism is in the drinking water over there.

Many of you have been through reconfigurations, redesigns and redeployments so many times you’re probably sick to the back teeth of them.

And you probably groan at the prospect of further reform. But change in the circumstances of today is not a luxury its essential if we want to ensure the best days for our public services are ahead of us. In fact pressure on spending in public services without change would produce the worst out come of all.

We can’t just wait and hope for the best when children are still being let down, and when the poorest are being let down the most.

We can’t just wait and hope for the best when health inequalities are rising

And we can’t just wait and hope the best when, because of the deficit, there simply isn’t the money to paper over cracks and inefficiencies any longer.

We have to modernise our public services.

And we can make them better if we do.

We are coming out of a phase in our history when commitment to public services was measured solely by annual increases in expenditure.

But I believe that completely misunderstands what our public services are for;

It misunderstands the ethos that underpins them…

The ethos of those – and I am proud that so many of them were liberals – who laid the foundation stones of our welfare state.

People like William Beveridge, who set out the idea of a National Health Service.

Beveridge’s report said the Department of Health should, and I quote, “supervise” the new health service, not run it.

I dread to think what he would have thought of Labour’s attempts to coordinate everything from 10 Downing Street down to the books children read. Beveridge said the whole of the welfare state “must be achieved by co-operation between the State and the individual”…

Imagine how he would have celebrated the concept of personal budgets and co-production – services designed and run by those who use them.

And Beveridge urged the reformers of his age – and us, through the still powerful words of his report – not to be limited, for a second, by what he called “sectional interests”.

What would he have said about a teachers’ union that tried to stop charities and parents and teachers themselves from opening new schools for our children?

Liberals have always argued for diverse provision in our public services.

Gladstone’s Education Act 1870 which introduced free primary education established the new schools needed independently of government, with their own school boards.

Government paid; the people provided:

A system which persisted until 1902 when the Conservatives forced the standardisation of schools under local authority control.

And Liberals argued for local government to have a role in the NHS right from its founding, for fear that a fully centralised system would put too much power in the hands of central government instead of the professionals and the patients.

The logic of Andrew Lansley’s reforms is precisely to reverse this imbalance: to put power within the NHS in the hands of those who understand patients, the GPs, in those who are accountable to patients, the local authority.

Permitting and encouraging flexibility and diversity rather than trying to micromanage the whole system from an office in Whitehall.

I believe history has borne out the judgements made by Liberals in the past about diversity, decentralisation and flexibility

An event like this summit rightly celebrates what is great about our public services.

But we must also be honest about their shortcomings.

of equity.

of standards.

Failure to be properly responsive to the individual citizens they serve.

And, let’s be honest, a failure of affordability.

Equity, first.

I am passionate about social mobility and equal opportunities.

And I will never accept the idea that it’s ok for children from poorer backgrounds to do worse at school than their wealthier classmates.

I will never accept the idea that it’s ok for a child born in the poorest part of my city, Sheffield, to die more than a decade before a child born just across town.

Public services are the key to unlocking the potential of every child and yet too often they have entrenched or even worsened inequalities.

Health inequalities and the gap in achievement between poor children in different parts of the country actually worsened under Labour.

So we have to build incentives into the way we pay for or set tariffs for public services to ensure the neediest are given extra help.

That’s the philosophy behind the Pupil Premium which will put more money into the schools which take on children from disadvantaged background.

It’s a philosophy built into our NHS reforms which will give incentives to GPs and to Local Authorities that improve the health of the people they serve.

And it’s built into policies from the New Homes Bonus which will offer more money for councils which build affordable homes than those which build private sector homes…

To the work programme which will offer bigger payments and earlier referral for those who are the hardest to help.

The next failing is standards.

We are a wealthy nation; why do we allow our public services to fall behind?

British people deserve world-standard public services – and I mean all British people, not just those who can afford to opt out.

The UK has one of the worst mortality rates amenable to healthcare among rich nations

If we can change that – change the way public services operate so they are under constant challenge to innovate and improve…

Then not only will we be able to narrow the gap between rich and poor, we will be able to raise standards for all.

Third: unresponsiveness.

Whether it’s the benefits system, trying to negotiate with the council over social care or trying to get into a good local school…

I have lost count of the constituents I’ve met who have torn their hair out trying to get an answer or to speak to a human being.

We are so empowered in our day to day lives…

And yet the day you need to deal with the government you come up against a brick wall of uncomprehending bureaucracy.

The computer says no approach is there for a reason of course.

To help you meet targets, to help you ration costs that national rules prevent you from getting under control, to ensure you fit with criteria and standards imposed from above.

But to the people you serve they make no sense at all.

Why can’t I register with any GP I want?

Why can’t the school down the road that everyone wants to go to expand so there’s space for my children?

Why do I have to give the same pieces of information to five different agencies just to get the help I’m entitled to?

Huge strides have been made, of course – individual budgets in social care, one-stop shops for council services, more chances to choose your school, your hospital or your place to live.

But we can and must do more, harnessing choice and flexibility as the catalyst for better services.

The final failure in our public services is the hardest to talk about, but I do believe we need to be honest about it:

Affordability.

You probably agree with me that the challenges of equity, standards and responsiveness pre-date the credit crunch and the deficit.

But I believe affordability was a problem too.

Not because I don’t believe in public spending: far from it.

My party supported the increased investment in our NHS from 2002.

We stand by those decisions.

No: affordability was a problem because whether you believe in the deficit reduction package or not, the truth is we cannot have an NHS which only works when it gets 6% extra every year as it did under Labour.

Labour doubled public spending; you can do that once when the coffers are full but the solution of throwing money at a problem isn’t a solution for long.

We have to have public services that thrive in the bad times as well as the good.

Changing our public services means opening them up, as Beveridge, Gladstone and Lloyd George would have wanted.

Power should be decentralised.

Government should pay for services, not always seek to run them.

People and professionals should be in the driving seat.

I set out these principles in my first big speech as leader of the Liberal Democrats, back in 2008.

There’s usually nothing worse than quoting oneself, but if you’ll forgive me, I think what I said then captures a lot of the spirit of what we’re trying to achieve now, in government.

“The state must intervene to allocate money on a fair basis, to guarantee equality of access in our schools and hospitals and to oversee core standards and entitlements. But once those building blocks are in place, the state must back off and allow the genius of grassroots innovation, diversity and experimentation to take off. Whitehall should get out of the business of the day to day running of public services in Britain. There is no liberal reason why those who deliver public services must always work directly for the government – so long as we are absolutely clear about the principles under which those services operate.”

These principles aren’t plucked out of thin air.

They’re based on a liberal distaste for the idea that officials in Whitehall always know better than the people on the ground.

And they’re based on the evidence, from Europe and beyond, of what really works – from the decentralised health system in Denmark to the per pupil funding system in the Netherlands.

Don’t believe the cardboard cut-out versions of what the public sector ethos is, or that it is the sole preserve of those who are directly employed by the government.

The government doesn’t have to issue your pay cheque for you to be a public servant.

What matters is that public services are delivered by people who understand the needs of the people they serve…

And are free at the point of use.

You must be freed from the dead hand of Whitehall to innovate, to use your judgement, and to deliver in the way you know best.

Many of the people I’ve spoken to in the public sector are positive about the opportunities ahead, the freedom from targets and bureaucracy, the chance to run your own department and design your own ways of working, the chance to do what you trained for and make a difference.

But you’re also anxious about the cuts that are coming.

And anxious about the claims that what the govt is doing is privatising for ideological reasons.

I recognise that we need to be better at explaining what we’re all about.

Because I am not just committed but devoted to our public services, as is this government.

Yes, we have to deal with the deficit, but this is not an assault on the size of the state.

By the end of this Parliament we will still be employing 200,000 more people in the public sector than in 1997.

We will still be spending as much as Labour spent in 2006, and rightly so.

My philosophy is simple:

Unlike the Conservative governments of the past, I believe you have to fund public services well.

But unlike the Labour governments of the past, I believe public sector monopolies almost never spend that money best.

In our public services, we need diversity of provision…

Because no one person and no one organisation has all the right answers.

So, as we modernise public services in the years to come, I will take a hard line against monopolies because they stifle innovation…

New and alternative providers – from the private, community and voluntary sectors – have a vital role to play in our public services.

But I will also take a hard line against the kind of blanket privatisation which was pursued by governments in the past…

Because replacing a public monopoly with a private monopoly achieves nothing but reduced accountability.

And I will take a hard line, too, against any attempts to replicate Labour’s mistake of skewing the market against public sector providers…

Effectively bribing private companies by offering them more money to do exactly the same job as you.

That was wrong.

We will not repeat Labour’s rigged market in the NHS with higher tariffs for private providers.

I categorically do not believe that private providers are inherently better than public sector providers, and I would not support an approach to reform that implied that they were.

So while we are opening up diversity of provision there will be no for-profit providers in our publicly funded schools system.

That is why we will publish all the big contracts government signs with business to make sure there are no secret soft deals.

That is why we have designed a “Community Right to Challenge” to allow communities and charities to trigger a procurement exercise for local public services…

But we will not extend that right to challenge to businesses.

And let’s be clear – moving from a monopoly to diverse providers doesn’t mean closing you down and bringing in someone new to do your job at half the salary with half the training as it did sometimes in the past…

It means putting you in the driving seat.

Under our Right to Provide, tens of thousands of public sector workers will be able to turn your department, your ward, your team into an employee-run coop, with a contract to your parent public service.

And run things the way you know best.

I believe, if we open public services in this way, we will secure the biggest prize of all for all those who work in public services: Freedom.

No more targets: just accountability direct to the people you serve.

The opportunity to innovate, to do things differently, to experiment with the ideas you’ve had instead of being told by civil servants in Whitehall that it isn’t the way things are done.

The right to run your own department, control your budget and do your job in the way you want, following your understanding of what people need and your skills and professional training.

The chance to do what you got involved in public services for: to serve the people and to make their lives better in the way only you can.

The next few years will be hard, I know.

But that’s a prize worth fighting for.