Written by David Jamieson, MP for Plymouth Devonport and a member of the Commons Select Committee on Education, the report has the status of a discussion document, but if approved by David Blunkett could form the basis of Labour policy.
It also incorporates several concerns Mr Jamieson has voiced over the extent to which private schools are increasingly absorbing public money without having to account for their quality.
The report includes seven examples of boarding schools whose teaching standards, pastoral care and accommodation were all judged execrably poor by inspectors. Four are still open, and there may be hundreds more examples of bad practice which have never been exposed because of "lax and vague" inspection arrangements.
The report notes that the private sector absorbs Pounds 234 million a year in taxpayers' money: Pounds 118 million from the Assisted Places Scheme, Pounds 107m from the Service Families' Boarding Allowance and nearly Pounds 9m from Foreign Office grants. With the Tories' proposed expansion of assisted places, this would rise to a third of a billion a year.
Labour's pledge to phase out assisted places and spend the money on cutting class sizes would take "approximately six or seven years" to phase in, so "in the meantime, value for money must be ensured".
The Office for Standards in Education plans to inspect only three of the 2,300 independent schools this year, and the chief inspector, Chris Woodhead, has said that they will only be inspected "where there is reason to believe that a school gives cause for concern".
Mr Jamieson points out that while most of the reputable public schools belong to the Headmasters' and headmistresses' Conference and the Girls' Schools Association which operate their own inspection system, those that do not can escape any form of inspection for decades, and if they do get inspected the school is under no compulsion to make the inspectors' report public.
One of Mr Jamieson's concerns is that service families are being misled into thinking that schools on the Ministry of Defence's "admissible schools list" are vetted; in fact, says the report, all the school has to do is ask to be listed.
Standards of care of pupils and living conditions are also a cause for concern, because while maintained boarding schools have to be inspected by the local social services department, independents are able to opt out of this and select their own inspectors.
Under a Labour government, the report recommends, all independent schools should be inspected by OFSTED as often and as rigorously as maintained schools, and reports and accounts should be published for parents and the local community. The cost of this should be met partly by the schools themselves.
Criteria for inclusion on the MOD's list of approved schools should be rigorous so that service children are not disadvantaged and public money is spent wisely.
The report ends with case studies of seven schools. Three have been closed, mainly because of scandals in the media.
The four that remain open include Finborough School in Suffolk, whose OFSTED report found that 50 per cent of lessons were unsatisfactory, GCSE and A-level results were below the national average, and much of the school's prefabricated accommodation was shabby.
The principal, who owns the school, declined to make the report available to parents because he did not agree with what it said.
At Rodney school in Nottinghamshire, inspectors found under-achievement and low expectations among pupils, a poor library, "hazardous" electrical appliances and "grossly inadequate" baths and lavatories.
Quantock School in Somerset placed several advertisements in Navy News, using a quotation from a glowing "OFSTED report" that OFSTED has denied writing.