An economic study previously interpreted by officials as showing that the “majority” of market distortions worked against the private sector has been reinterpreted by the Department of Health.

The original Health Bill impact assessment in January referred to research by consultants KPMG showing that private sector organisations’ costs were 14 per cent higher than those in the NHS.

This was mainly due to the state subsidised pension scheme that NHS organisations could offer staff.

The impact assessment explained: “The majority of the quantifiable distortions work in favour of NHS organisations.”

The findings were used to add to the case for greater competition in the health service.

However, the revised impact assessment published last week uses the same KPMG analysis to conclude that “it cannot necessarily be the case that costs incurred by private acute providers are higher than their NHS equivalent”.

The evidence currently available is incomplete, it says, and it is “not possible to state with any certainty whether the current distortions systematically favour any particular groups of providers”.

In the months separating the first and most recent impact assessment, the government has softened its approach to competition – reflecting public hostility to the policy.

This has resulted in plans being dropped that would have allowed price competition in the NHS and have given Monitor the duty to “promote competition”.

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