My right honourable friend the Secretary of State for Health (Alan Johnson) has made the following Written Ministerial Statement.

The independent sector is playing an important and increasing role within the NHS, providing high-quality treatment and choice for patients, and innovation, dynamism and contestability for existing National Health Service providers. Alongside the hard work of staff and in every organisation, the use of the independent sector is an integral part of our success in delivering dramatic falls in waiting times for patients. That is why we have taken a number of measures to make better use of the independent sector:

in the first wave of the independent sector treatment centre (ISTC) programme we established 23 fixed site ISTCs, a mobile ophthalmology service, a mobile MRI scanning service, a chlamydia screening service and six walk-in centres. This investment worth over £1.4 billion has provided nearly 800,000 elective procedures, diagnostic assessments and episodes of primary care to NHS patients and is helping to reduce waiting times in those areas. I am today providing further information on each first-wave scheme, including the contract value, volume of activity, case mix by volume and utilisation rates, and in future these data will be published annually;

there has been rapid growth in patients choosing to be referred to the 129 independent sector hospitals currently registered under the extended choice scheme. The value of activity has doubled in the last month alone. From April 2008, all patients referred for an elective procedure will be able to choose to go to any hospital in England which meets NHS standards and price. This already applies for orthopaedics and from December will cover general surgery, gynaecology and cardiology; and

we are procuring additional GP services through the fairness in primary care initiative from a range of providers including the independent sector, and as announced last month we will be inviting bidders for further primary care contracts as we roll out new GP-led health centres and extra GP surgeries in deprived areas. In addition, we are offering primary care trusts the opportunity to use independent sector expertise in developing their commissioning function.

As I said to the Health Select Committee in July, independent sector procurement will have to meet the local needs of patients and offer sound value for money for taxpayers. Where it meets these requirements we will increase the role of the independent sector in the provision of NHS services.

The department has therefore undertaken a thorough revalidation of all the schemes currently being procured nationally through the ISTC programme to ensure they meet these objectives.

The director-general of the commercial directorate has advised that I proceed with the procurement of the following schemes:

PET CT North Diagnostics (additional CT scans);

PET CT South Diagnostics (additional CT scans);

Renal (provision of dialysis treatment);

Hampshire and Isle of Wight Electives (Southampton element);

Greater Manchester (B) Clinical Assessment and Treatment Services;

Avon, Gloucestershire and Wiltshire Electives;

Essex Electives;

Hertfordshire Electives;

Greater Manchester (A) Clinical Assessment and Treatment Services; and

London North Electives.

I am pleased to announce that three of these—PET CT North, PET CT South and the Renal scheme—have been approved to move to financial close. The department will conclude decisions on the remaining schemes no later than the end of March 2008.

However, the director-general has concluded that the following schemes should not proceed as they were unlikely to provide acceptable value for money as the local NHS has successfully improved capacity to meet patients’ needs. These are:

North East Yorkshire and North Lincolnshire Referral Assessment Diagnostics and Treatment Service;

North East Diagnostics;

South East Diagnostics;

Norfolk, Suffolk and Cambridge Electives;

Cumbria and Lancashire Clinical Assessment and Treatment Service; and

Hampshire and Isle of Wight Electives (Lymington element).

In addition, the director-general has advised that the contract with Care UK for the provision of diagnostic services in the West Midlands should be terminated because of an unacceptably low rate of use (5 per cent utilisation to date), and a very low prospect of the utilisation increasing which represents poor value for money to the taxpayer. In short, a significant increase in productivity by local NHS providers has substantially reduced the need for the capacity provided by this scheme with waiting times for most diagnostics reduced from more than one year to currently three weeks on average.

The reduction in the overall size of the procurement does not represent a change in policy. As I have stated before, we will continue to use the independent sector. However, as I said to the Health Select Committee, we will now move towards greater local procurement of services. This will enable primary care trusts to take procurement decisions quickly on behalf of their patients rather than waiting for a prolonged process run from Whitehall. We believe that this will be a more effective route for increasing the quality of the role which the independent sector is able to provide in the NHS

To support this move I am announcing today the establishment of an independent sector procurement forum as a means for independent and third sector providers to advise the department on policies and practices related to local procurement of clinical services in order to ensure a level playing field. The forum will draw on a range of expertise and experience, including Ivan Bradbury of InHealth Netcare and Sir Ian Carruthers of the South West Strategic Health Authority. The forum will be advisory and act as a channel for the market to communicate and advise the department on PCT procurement policies and practices.

We remain committed to choice, to empower patients and drive improvements in the quality of care. For choice to be truly effective, and for all providers to be able to compete fairly, it is essential that all patients are aware that they can now choose the hospital they are referred to. In the run-up to the start of free choice, we will raise public awareness of choice through, for example, NHS Choices and other means, as well as encouraging local providers to inform patients about the local choices available to them, and publishing a code of promotion to help guide them in this. To ensure fairness we will also:

publish clear competition principles and simple rules for commissioners and providers to apply consistently for all those that provide services on behalf of the NHS, including social enterprise and third sector organisations as well as the independent sector;

establish a competition panel to provide independent advice on competition issues to SHAs, which they would be expected to follow working closely with their PCTs. The panel will only consider issues where action to resolve issues have been exhausted; and

seek to open up membership of the Clinical Negligence Scheme for Trusts (CNST) to many non-NHS providers of NHS care.

Our approach to the independent sector is pragmatic, not ideological. Where independent sector providers offer good value for money, innovation, and high-quality patient care, we will continue to bring them in to work as part of the family of NHS providers.