Unhealthy state of affairs: As two health authorities are accused of mismanaging huge sums, Tim Kelsey calls for openness and accountability

THE Commons Public Accounts Committee, the parliamentary public expenditure watchdog, meets today to consider evidence that two health authorities - Wessex and West Midlands - lost several million pounds on efforts to privatise their computer services. These are the two cases that have so far come to light. Evidence of serious mismanagement at Wessex was revealed last week after an investigation by the Independent and the magazine Computer Weekly. There may be more.

We are often proud of the discipline and probity of our public bodies. But scandals, both in the health service and in local government, are beginning to suggest that probity can no longer be taken for granted. In Eastern Europe, the quest for economic prosperity and the rush to privatise are blamed for suffocating the very thing that is being sought - local democracy. In its place there is political nepotism, mismanagement and secrecy. We should not be complacent.

Tory political imperatives are making the NHS, the largest public service, which employs 1 million people and has a budget of pounds 36bn, particularly vulnerable. The public spending review announced this week is likely to increase private-sector involvement in the management of public services. There is talk, for instance, of leasing expensive hospital equipment from private firms.

Theoretically, the intrusion of the private sector should liberate health service managers to concentrate on what they do best: provide health care. In practice, the speed and pressure of privatisation is fostering mismanagement and waste.

There is an urgent need to enforce accountability and increase the opportunity for public scrutiny of health service management. At present, most of those who head the regional and district health authorities are chosen directly by the Government from commerce. The chairman of the Wessex Regional Health Authority, Sir Robin Buchanan, is an accountant with a long career in business. Like many of the other appointees, he has close Conservative associations.

Sir Robin and Sir James Ackers, former chairman of West Midlands Health Authority, took to their jobs a preoccupation with profit that appeared to some to conflict with the obligations of public service. Some of Sir Robin's actions betray his private-sector background. The unpublished district auditor's report - which was leaked to this newspaper and Computer Weekly - criticises him for overstepping his authority and he himself has admitted that he often acted ultra vires.

In business, confidentiality is critical; in public service, accountability is essential. During Sir Robin's chairmanship of Wessex, secrecy has enveloped the authority. Members of the health authority, who are, in effect, the non-executive members of the board, were surprised that they were often kept in the dark by management during important contract negotiations.

The problem is not just at Wessex. The culture of secrecy is spreading throughout the health service. The Government has said it will protect whistle-blowers who act in the public interest. But this protection is limited. Staff can still be disciplined for breaching confidence. The publication of the auditor's report has prompted senior officers in Wessex to start what one staff member described as a 'witch hunt' to find the person who supplied us with a copy of the document. In fact, the source was outside the authority.

The lack of accountability is matched by almost total failure to provide for proper accounting of expenditure. No internal auditing was carried out at Wessex and it is still not clear how much money went astray. This would be intolerable in the private sector.

The Commons Public Accounts Committee and the National Audit Office exist to enforce the accountability of these public bodies. But it is the Government that has the greatest responsibility - and the greatest power to ensure proper scrutiny. It is not showing much enthusiasm. Virginia Bottomley, the Secretary of State for Health, was shown a copy of the confidential district auditor's report on Wessex, but took no action. Sir Robin remains chairman. Calling into question the judgement of Sir Robin does of course call into question that of Mrs Bottomley. He is also chairman of the NHS Supplies Authority, one of the key components of government strategy for the NHS.

Mrs Bottomley must act quickly to restore the credibility of local NHS management, and enforce a consistent commitment to accountable and open management. It is not just her NHS reform programme that is in jeopardy, it is the patients. In Wessex as much as pounds 63m may have been wasted. Who knows how many beds in local hospitals could have been saved?