Health reforms are ripe for exploitation, says think-tank

Legal loopholes in the Health and Social Care Bill could leave health services open to exploitation by profiteering outsiders, and to misinterpretation by politicians and interest groups keen to capitalise on its uncertainties, according to independent policy experts.

The Bill is permissive, not prescriptive, allowing a variety of interpretations to be put upon it by critics and supporters – as well as those keen to profit from the opportunities – said Nick Goodwin, a senior fellow at the King's Fund health policy think-tank.

There is nothing in the legislation that allows GPs to charge for NHS services, as Labour claims, but GPs are already permitted to charge for items outside their NHS duties – such as providing insurance medicals and travel vaccinations – and these might be extended.

The threat of hospitals going bust is real, with Imperial NHS Foundation Trust, the largest in the country, declaring a £40m overspend last week. But no government could allow a trust on that scale to go under – creating the "nightmare scenario" that the Government might have to bring failing foundation trusts, which have greater freedoms but are subject to market forces, back within the NHS and underwrite their losses.

The problem was highlighted yesterday by a war of words between the Government and Labour over the precise meaning of key clauses in the Bill.

Ed Miliband, the Labour leader, launched an attack claiming to expose five "hidden dangers" which he said the legislation contained. Speaking at a press conference in London he said the Bill, the longest and most complex in the NHS's history, was a "Pandora's box", detailed scrutiny of which was only now revealing the full implications for patients.

A dossier issued by Labour outlined the five dangers:

* GPs getting new powers to charge for services

* hospitals being fined up to 10 per cent of their income if they were found to be breaching EU competition law

* hospitals being allowed to go bust, leaving patients without vital services

* longer waiting lists as the caps on the number of private patients treated in NHS hospitals are lifted

* less accountability in relation to NHS services.

According to Labour, Clause 22 of the Bill hands to GP consortiums the power currently in the hands of Andrew Lansley, the Health Secretary, to "make such charge as he considers appropriate".

That drew a flat denial from Mr Lansley, who said GPs would not be allowed to charge for services, which would require separate legislation. He accused Mr Miliband of "deliberately misleading the public" and the Conservative Party followed up with a point-by-point rebuttal of the Labour leader's speech.

Labour hit back last night, saying that Clause 22 should be dropped if the Government had no intention of allowing charges to be introduced.

Mr Goodwin said on most of the claims both parties were partially correct. "It has been a feature of government Bills for some time that policymakers have deliberately tried not to define everything. But that leaves a lot of legal loopholes to be exploited.

"The Bill is permissive rather than prescriptive. But as it is rewritten it will need to become more prescriptive. When it comes down to the legality of certain moves that needs to be closely defined or it leaves people scratching their heads about what they can and cannot do." He added: "The problem is that the Government wants every single NHS trust to become a foundation trust – and that is not appealing where their existing business does not cover their costs. If problems are happening at Imperial, goodness knows where else they are happening."

Hospitals are not permitted to give priority to private patients – the primary legal purpose of foundation trusts was to provide services to NHS patients – but they are to be allowed to expand their private provision, which could have knock-on effects, he said.

The Bill seeks to improve accountability by exposing all providers – NHS, private and voluntary – to scrutiny by local councils, but the wording is unclear, Mr Goodwin said. On the extension of EU competition law to the NHS – that is, the extent to which to open it up to outside market forces – Mr Goodwin said the Bill was unclear because foundation trusts were "a strange legal entity".

Mr Miliband dismissed the Government's "listening exercise" on the Bill as a "public relations exercise" but said the problem was one of principle rather than PR. "This Bill is in intensive care. I would kill it off," he said.

Mr Lansley replied: "Ed Miliband is deliberately misleading the public. It is wholly inappropriate for him to use the NHS as a political football like this. Now it is attempting to rewrite history for cheap political ends. Labour has no vision for our NHS except to cut the budget. Its constant scaremongering on the NHS has to stop."

Health reform: claims, counter-claims – and the truth

Labour claims GPs would have the right to charge for services.

Tories claim Any charges for NHS services must be introduced by (further) primary legislation.

King's Fund says No provision to introduce charges is contained in the Bill. GPs can already charge for vaccinations etc.

Labour claims There is nothing to stop hospitals going bust.

Tories claim The continuity of services would be secured should an organisation fail.

King's Fund says NHS trusts are going to come under greater pressure – and the Government may have to underwrite key trusts it cannot allow to fail.

Labour claims Hospitals would be allowed to give priority to private patients.

Tories claim NHS trusts' primary duty is to NHS patients.

King's Fund says Foundation trusts can expand private provision – which could affect NHS services.

Labour claims Hospitals would be subject to EU competition law (prey to market forces red in tooth and claw).

Tories claim The bill does not extend EU competiton law.

King's Fund says The wording of the Bill is extremely unclear, legally.

Labour claims There would be less accountability in the NHS.

Tories claim All NHS, private and voluntary providers will be exposed to scrutiny by local councils.

King's Fund says There will be more scrutiny but without the legal force to back it up.