The claim

“Will he confirm that this Bill makes healthcare subject to EU competition law for the first time in history?”

Ed Miliband MP, Prime Minister’s Questions, March 16, 2011

Cathy Newman checks it out

When Ed Miliband started challenging David Cameron on the finer points of EU competition law, the Prime Minister looked baffled. He wasn’t alone. Just why was the Labour leader talking about competition law, and just what did this have to do with the Government’s NHS reforms?

Well, according to Mr Miliband, the overhaul of the health service would introduce a market free-for-all which would see private companies undercutting NHS providers, and starting a race to the bottom. So you’d get the cheapest operation from the private sector, but not necessarily the best. Does he have a point, or is he scaremongering?

The analysis by Emma Thelwell

The Government’s NHS reform plans would see the £80bn NHS budget handed to GPs and hospitals to spend as they see fit. So can we expect to see GPs divvying up the budget with patients’ best interests at heart?

Not necessarily, says Labour.

Mr Miliband and his colleagues warn that many GPs won’t want to run the NHS budget – and will turn to the private sector to do it for them.

To give private providers a level playing field, competition law will in future apply to the NHS. So, Labour believes, consortia of GPs won’t be allowed to use their trusted local hospital without tendering first, in case a private company sues them for being anti-competitive.

The risk is that some big private corporations will undercut the NHS providers – putting the emphasis on cost rather than quality.

As Mr Miliband put it in PMQs, the Health Bill “creates a free market, free-for-all and threatens the existing NHS services”. He identified three clauses in the draft Bill covering competition, the Competition Commission and co-operating with the Office of Fair Trading.

“Can the Prime Minister explain what that’s got to do with healthcare,” he challenged.

The Prime Minister said there would be safeguards in place to stop price competition and the “cherry picking” of the best (ie cheapest) NHS patients by the private sector. But he was left slightly tongue-tied when Mr Miliband accused him of subjecting healthcare to EU competition policy for the first time.

Thankfully for Mr Cameron, he’s not the only one left flummoxed. It’s a bit of a legal mess.

The Department of Health insisted to FactCheck that: “The Health and Social Care Bill does not introduce any new competition law or extend current UK or EU competition legislation.”

FactCheck found out that the NHS already has a Procurement Guide – introduced by Labour – which aims to make sure it complies with EU procurement rules.

At the moment the NHS also has its own competition policy – also brought in under Labour. The Bill would move it away from being sector specific, and make it subject to the same competition rules every other sector faces.

But, an insider told FactCheck, the Bill does make clear that if two big healthcare organisations want to merge they would need to go to the Office of Fair Trading. This would be the first time the NHS would be officially subject to OFT rulings.

Cathy Newman’s verdict

Ed Miliband was at his nerdiest at Prime Minister’s Questions today. But, although he could have expressed himself more clearly, he does have a point.

The NHS reforms offer a big opportunity for the private sector. And while that’s something that started under Labour, even some Conservative MPs – and many Liberal Democrats – feel that the Coalition has taken it to a whole new level.

If the health service is subjected to full-blown competition law, cost could take precedence over quality. And that’s not something MPs from across the Commons are very comfortable with. Several Ministers have told me they’re worried about the Bill.

David Cameron and his Health Secretary have so far dug their heels in. But for how much longer?