NHS care is 'not for sale', says Milburn

The Health Secretary, Alan Milburn, today tries to defuse the row between theLabour Party and its union backers over Tony Blair's plans to bring private finance into public services by insisting that NHS clinical care "is not for sale".

Speaking exclusively to the Independent on Sunday, Mr Milburn said unions who had threatened to withdraw financial support for Labour could be given "no veto" over the plans, but added: "The core NHS principles are not up for sale – care will still be based on clinical need, not the ability to pay, and services will continue to be free at the point of use."

The dispute with the unions and Labour traditionalists will be fuelled tomorrow by a report by the Institute for Public Policy Research, the respected left-wing think tank. It strongly supports allowing private firms to run public services as a way of achieving Labour's election pledges to deliver better services in its second term of office.

However, the 285-page report, Building Better Partnerships, is highly critical of the way the Government has adopted private finance for public schemes in running the national air traffic control service (Nats) and the London Underground. It says that not-for-profit trusts would have been better options.

Those conclusions will be seized on by Labour critics of "creeping privatisation". Ed Davey, a Lib Dem treasury spokesman, said: "This report challenges every aspect of New Labour's addiction to private finance."

John Edmonds, the general secretary of the GMB, yesterday warned Mr Blair that there would be a "row" over his plans. Unison, the public service union, voted to review its £1.3 million donation to Labour's coffers, and Frank Dobson, Mr Milburn's predecessor at the Health Department, expressed concern. One Labour MP told the IoS it would be "the flashpoint" for Mr Blair's second term.

In his clearest statement since he signed a pact with the private sector, Mr Milburn said: "There can't be a veto on reform but let's be very clear about this. This is not some sort of privatisation of clinical services. There are some very clear boundaries around it and the test for us is whether or not it is in the interests of NHS patients."

Private hospitals could help the NHS meet demand and reduce waiting times for treatment while the NHS tackled the shortage of doctors and nurses, Mr Milburn said.

He laid out four areas were where the private sector would be allowed into the NHS:

* Operations in private sector hospitals on NHS patients paid for by the NHS, such as cataracts and gallbladders.

* Getting private sector management to run stand-alone NHS surgery centres – "health factories" – specialising in high-volume procedures.

* Extending private finance from major hospital building to improving GPs' surgeries, to mental health and social services, and to the provision of radiology equipment.

* Using private sector management and expertise in running NHS information technology systems, and NHS buildings.

Mr Milburn said: "There is a commitment in the manifesto to forge a new relationship between the NHS and the private sector, but it is not open-ended. That means these four areas are the areas where we will be focusing attention in developing the new relationship between the NHS and the private sector.

"There are those on the left who argue that this is the thin end of the wedge and those on the right who want it to be the thin end of the wedge. It is neither. Unless we put some boundaries around the relationship, we will end up playing into the hands of the right, who advocate the abandonment of core NHS principles."

Mr Milburn rejected the IPPR report's argument that finance could be raised more cheaply by the Treasury than the private sector. He insisted that by passing the risk to the private sector, the NHS would no longer have to pick up the bill for hospitals and surgeries that were late and over budget.

"We got a mandate at the election for higher public spending but we also got a mandate for reform," he said. "There is a danger in the current debate that there will be a backlash which will take us backwards to the argument that the only answer for public services is more and more cash."