Half of £2bn NHS cash injection spent on outsourced private care providers labelled a 'disgrace'

Research shows £901 million of cash earmarked for front-line services spent on external providers

Campaigners at a Hands Off Our NHS demonstration in December (Press Association)

The scale of NHS spending on care provided by private companies has been labelled a “disgrace” after it was revealed half of £2bn allocated to the the NHS before the 2015 election was used to treat patients outside the health service.

Last year £901 million of the cash earmarked for front-line services by George Osborne was used to buy care from private and other non-NHS providers, according to the Financial Times.

Research by the Health Foundation showed £800 million was spent on purchasing the same kind of care from NHS trusts.

The think tank said the figures showed NHS providers have not had the capacity to deal with rising demand – with campaigners saying outsourcing was a “neither fit nor acceptable” way to plug funding gaps.

“The process of privatising the NHS has already begun,” wrote campaign group NHS Million on Twitter in response to the news.

In his 2014 Autumn Statement, Mr Osborne said the money for NHS England would “support the day-to-day work of our incredible nurses, doctors and other NHS staff”, describing it as a “down-payment on the NHS’s own plan”.

Alan Taman, speaking for campaign groups Keep Our NHS Public and Doctors for the NHS, said there had always been some level of outsourcing by the health service “where it was the best use of public money to do so,” such as for cataract operations.

“But what is neither fit nor acceptable is the systematic use of outsourcing as a way of addressing chronic shortfalls in service triggered by years of under-funding,” he said.

Mr Taman said health bosses could be resorting to private suppliers because of staff shortages and legislation designed to encourage competition between health sector providers.

“Desperate NHS managers [are] farming out the services they can no longer provide fully – to firms whose principal motivation is profit, not the best use of public money to give the fairest health system, and who cannot possibly be as fully coordinated as the NHS was set up to be.

“Example? Something goes wrong with your private procedure. What do they do? Send you straight back to the NHS to clear up the mess... What a complete travesty.”

The Health Foundation report also found that £1 in every £8 of local commissioner's budgets in England is now spent on care provided by non-NHS organisations.

Claims that the NHS turned to private providers as it could not cope with overwhelming demand itself comes as head of NHS England Simon Stevens prepares to deliver a progress report on his five-year reform plans, reported the Financial Times.

Shadow health secretary Jonathan Ashworth said: “The public will rightly be alarmed that £900 million was spent treating patients in the private sector when our frontline services remain in desperate need of increased funding.”

“Labour always warned that the Tory NHS reorganisation that no one wanted would mean taxpayers money flowing to the private sector and away from the NHS frontline. It's a disgrace and Labour will reverse this Tory privatisation agenda.”

Anita Charlesworth, director of research and economics at the Health Foundation, said rising demand for emergency care meant “NHS providers haven't had the capacity to deliver planned care and patients had to be diverted outside the NHS.

“NHS hospitals were left squeezed by sharply rising drug and staff costs with little additional funding.The result was big deficits that had to be covered by raids on investment budgets.

“The health service needs to plan better for emergency demand, fund emergency care fairly and make sure it gets the best possible price for care provided outside the NHS.”

The Department of Health said the report simply showed the NHS was judging how best to deliver care and and spends less than 10 per cent of its budget on independent providers.

A spokesman said: “This report simply shows the NHS is making clinical judgments about delivering high-quality care for patients.

“The truth is that for many years the independent sector has made a contribution to helping the NHS meet demand, now amounting to less than eight pence in every pound the NHS spends."

Theresa May told Parliament last month the NHS “is not for sale and it never will be” in response to concerns the health service could form part of a post-Brexit trade deal between America and Britain.

Labour had warned a rushed trade deal between the UK and US could become “a Trojan horse for NHS privatisation”, with insurers and private health companies given the opportunity to provide NHS services.