The idea is that the public still get the services for free, but they are run more efficiently. The Tories seem to be going further than even Margaret Thatcher dared. Actually, it's Labour policy. Tony Blair declared there should be no ideological hurdle to getting private companies in to provide public services in whatever way. Not as much as it first appears.
Many companies already help to run schools, with things like payrolls.
The NHS already subcontracts out 100,000 operations a year, as well as catering, cleaning, drug-making and hospital building, to private companies. Labour has already privatised many failing state schools without public outrage. But in some ways it is going further than ever before. The Government has plans for certain NHS medical centres to be actually run and operated by private companies. Not really - if they hadn't developed these policies already, they wish they had.