Ministers deny extra NHS cash is being wasted

The Government was pressed into denying yesterday that the billions of pounds being poured into the National Health Service were being wasted.

The Prime Minister was challenged in the Commons over a leaked report by Michael Barber, the head of his delivery unit, warning there was an "immense risk" that the NHS would fail to take advantage of the Government's record boost to the health budget.

Tony Blair said: "The delivery unit does not say the position is worse in the National Health Service, it says rightly that we have to make sure that when we are putting this extra money in it is used well and wisely – and it is. The money is not being wasted. It is going into the National Health Service. The extra money is providing new buildings, new equipment, more nurses, more doctors."

The Prime Minister told the Tory MP Peter Luff, who raised the issue, that the Tories were trying to run down the NHS and claimed they would cut its budget as part of a 20 per cent reduction in public spending.

Sources at the Department of Health played down the leak but admitted there was a riskin devolving 75 per cent of the health budget to new primary care trusts. One said: "There would be a greater risk in doing nothing. We have tried to run the system centrally since 1948 and it doesn't work."

The British Medical Association said some consultants had complained that the new money had not yet reached their hospital or unit, while others said the cash was being swallowed by old debts. "At primary care level, primary care trusts often find they have little room for manoeuvre to make changes that are important to the local community because almost all their funds are swallowed up trying to meet multiple, centrally imposed targets," a spokesman said.

In a Tory-led Commons debate last night on plans to create foundation hospitals, which will be given more freedom from Whitehall, Frank Dobson, a former health secretary, said the move would set up a two-tier health service and would "blur the distinction" between the Tories and Labour over health. He urged Alan Milburn, the Health Secretary, to ignore "Maoist" advisers and their "obsession with continuous change".

He said: "To give financial and other advantages to some hospitals can only be at the expense of neighbouring hospitals because there is no surplus [of skilled staff]. The best may get better as a result but it can only be at the expense of the rest."

Some Labour MPs underlined their unhappiness at the policy by abstaining at the end of the debate. Conservatives claimed that more than 47 Labour MPs failed to vote in the vote backing foundation hospitals.

An Opposition amendment calling on the Government to allow all hospitals to bid for foundation status was defeated by 144 votes to 381, a government majority of 237.

A government motion welcoming the principle of NHS Foundation Trusts was backed by 282 votes to 150, a sharply lower majority of 132.