Okay, I know UK government has a specialty in not being able to decide what it actually wants
The UK government actually wants to pass public money on to their mates (and their own future careers) in private business.
Handing over public services to private business is an excellent way to do this: the big boys take huge salaries and bonuses, the business goes down with huge debts, and the tax-payer is forced to bail them out so that public services can continue. None of this is the fault of the government, of course.
The losers are the many small sub-contractors and the employees, none of whom are big enough to be heard. PFI, of course, went one step better, guaranteeing future income for years in advance, as well as a big contract now. Don't get me started on rail franchising...