In the debate over government’s devolution plans to move more power from central to local government, no one seems to have spotted that they could lead to the creation of sub-regional markets of public services, ready to be privatised.

Just as the previous government reorganised the NHS to create commissioning and separate provider organisations, leading to further outsourcing of public services, so devolution will ultimately disrupt the traditional organisation of council services, potentially bundling them into parcels suitable for outsourcing.

Devolution will relaunch the previous government’s attempts to privatise more public services – with this government’s offer to local government potentially leading to several unintended consequences.

Combined authorities lose the local touch

Government since 2010 has been increasingly distant in its relationship with individual local authorities, prompting councils to come together to advocate or access resources. Local authorities are joining forces within combined authorities, particularly when negotiating a devolution deal with government. The claim is that this enables them to deliver better, cheaper services, with the new emphasis on boosting growth and productivity.

There is a question mark, however, over how far these combined authorities will be able to realise growth, or make local public services more productive and efficient. Spreading local authorities around different sub-regional groupings to influence policy and funding is not always the most effective way to deliver improved, integrated services, as they become too distant from local people.

By organising their own combined authority, local councils are also taking the risk away from central government over the potential turmoil that might be created by a top-down reorganisation of local government. This enables central government to claim that it’s “localism” in action and avoid blame if things go wrong.

Mayors and more layers of managerialism

By making devolution dependent upon their being an elected mayor with oversight over new combined authorities, the government is attempting to demonstrate a sort of democratic legitimacy built into its devolution agenda.

But the current devolution plans – devolving centralised activities around health, transport and welfare to regional coordinating bodies of individual local authorities (often very different in political colour, nature and needs) – just create greater complexity and promotes further managerialism. Greater Manchester authorities, for example, are currently tangled up in a web attempting to develop all kinds of sub-regional apparatus to govern, design and deliver existing local services.

Further fragmentation of public services

Existing local services are funded by a range of bodies, including local authorities, the NHS, housing associations, fire and rescue, and the police. Meanwhile, central government departments extend their reach directly into local areas, delivering their own national programmes. This creates further complexity to the mix of local provision, delivering services sometimes to the same person or household but often in a largely uncoordinated, ineffective and inefficient way.

The picture is also complicated by the various different tiers of local government across the country. So far, no government has taken on the challenge and risk of disrupting the way public services are organised within the existing local government structure.

The failure of different providers of services to join up and share information has been highlighted repeatedly over the years; some efforts have been made, such as the integration of health and social care, but it’s often an arduous and unenviable task. Perhaps local government needs to lead and deliver on collaborative but incentivised ways to join up and integrate local public service provision, before they can take on additional devolved services.

Paving the way for the private sector

Though many public services have already been privatised, the greatest problem for the current Conservative government – and those like the Confederation of British Industry who seek further privatisation – has been the scale at which it is feasible to provide profitable contracts for private sector providers. Private sector returns are more easily achieved by delivering a wider range of services over an area bigger in population than a typical local authority. By packaging together the range of public services across a sub-region, a private sector provider will be able to present more successful bids on the basis that they can redesign and integrate services.

This may lead to increased productivity and efficiency in local government. Central government administration would also get smaller, realising efficiency savings. But benefits for local citizens may depend on the nature of the contract and service unless this carefully accounts for the private sector’s profit motive.

Adam Fineberg is an adviser on public service design and provision.

Sign up for your free weekly Guardian Public Leaders newsletter with news and analysis sent direct to you every Thursday. Follow us on Twitter via @Guardianpublic