Blair and Treasury split over NHS private clinics

The Treasury is worried that Tony Blair's £500m plan to allow more NHS patients to be treated by private companies is ill-conceived.

The Treasury is worried that Tony Blair's £500m plan to allow more NHS patients to be treated by private companies is ill-conceived.

The Prime Minister has put the private sector at the centre of his reforms of the NHS, with proposals to double the number of patents treated by healthcare companies to 500,000 a year.

He has instructed the Department of Heath (DoH) to invite companies to bid for the contracts to run the so-called treatment centres, which will cost £500m.

But the Treasury is alarmed that Mr Blair has announced the plan without having first developed a proper business plan for the centres.

The Treasury refused to comment. But a source with close links to it said: "The treatment centres are clearly being rushed though because of the looming general election. The Treasury is very concerned that no business case has been made.

"No one has done an analysis of how the centres will impact on the NHS trusts and whether there is sufficient appetite in the private sector for these centres."

A DoH spokesman admitted: "A full business case has not been undertaken at this stage."

Mr Blair announced plans for the treatment centres in October in a speech at a think-tank conference. The news appeared to catch many DoH officials unawares.

The Government hopes that treatment centres will cut waiting lists for non-emergency operations, such as hip and knee replacements.

Phase one of the programme is already under way, with 34 centres under construction, mainly in the south-east of England. The centres, run by consortia from the US, Canada and South Africa, will treat 250,000 patients a year, according to the DoH.

There are concerns that the second wave of centres will not attract sufficient interest from the private sector. In particular, some banks are wary of funding them because the size of the investments is relatively small.

However, BMI Healthcare, one of the country's biggest private medical companies, which lost out in phase one, is planning to bid for phase two of the treatment centre project. A spokeswoman said: "We expect to bid aggressively for future NHS work." Bupa is also expected to bid.