Health minister Earl Howe has told NHS North West to break up a four year “framework” deal between the region’s specialised commissioning group and mental health service providers.

The under secretary of state for quality backed the conclusion reached by the Cooperation and Competition Panel in November that an exclusive four year deal was “inconsistent with” competition rules.

The panel launched an investigation of the contract following a complaint by private provider Hanover Healthcare.

In a 29 March letter to NHS North West, Lord Howe told the strategic health authority to “review the operation of the North West Specialised Commissioning Group framework for medium and low secure mental health services and take action to ensure that the arrangements are acting in the best interests of patients and the taxpayer”.

Following the panel’s recommendations, he said it should establish a “mechanism” to analyse the market at least every two years, and “acquire the relevant services from providers whether or not they are admitted to the framework agreements”.

It should run “mini-competitions” between providers on the framework “where it is considered that this could provide better value or quality” and where the transaction costs would not be disproportionate.

He also called for the NWSCG to “ensure transparency and publish details of contracts on its website and keep accurate records as per the panel’s recommendation”.

But he warned this must be done “being mindful of commercial confidentiality and the information should not be presented in such a way that could allow agreements between providers that are not in patients’ or taxpayers’ interests”.

The group must also consider the findings of the panel and any “relevant advice” from other competition authorities when setting future framework contracts, and make a public statement that it will do so, possibly on the NHS North West website, he added.

Lord Howe’s letter added there was “no question of the value of framework agreements generally as a tool for commissioners”.

It stated: “The panel’s report does not say that framework agreements are anti-competitive, but rather that the level of exclusivity in this case was not acceptable.”