Preferred provider policy: unions jilted, Burnham jolted, competition wins the day

The speech which triggered the dispute promised existing NHS providers would be given preference over alternatives, even if it meant a worse service for patients.

The DH’s move to stop the cooperation and competition panel’s investigation was an admission that the preferred provider policy could not survive legal scrutiny

Poor services would be given not one, but two chances to improve, Mr Burnham promised TUC general secretary Brendan Barber.

That policy change effectively dumped competition as a mechanism for NHS improvement. It contradicted an explicit commitment in the 2005 manifesto on which Labour was elected, and was criticised by three former Labour health secretaries. It undermined years of painstaking work by Labour to build strong relations with the voluntary sector, put the Department of Health on a collision course with its own cooperation and competition panel, and raised the spectre of breaching European procurement law.

The Cabinet expressed concern. Labour’s manifesto team feared it could undermine its ideas around John Lewis-style mutual ownership of public services. The voluntary sector and powerful supporters of competition counter-attacked.

Then Gordon Brown intervened. In an extraordinary move he wrote to the main voluntary sector lobby group to promise, in effect, that his health adviser will make sure Mr Burnham provides procurement guidance which they support. The words “preferred provider” will probably remain, but the guts of the policy are being ripped out.

There have been various attempts to spin all this as a misunderstanding - that the original speech was not a substantive policy shift. That is disingenuous. No-one who heard the speech could doubt it was supposed to represent a change of direction. The subsequent letter to Brendan Barber confirmed this.

The DH’s move to stop the cooperation and competition panel’s investigation of the test case of Great Yarmouth and Waveney - which had banned independent sector organisations from bidding for its community services - was an admission that the preferred provider policy could not survive legal scrutiny.

Competition is just one lever for service improvement. It is not universally applicable; sometimes it may do more harm than good. But there are many examples of where it has forced managers and clinicians to raise their game.