Nurses were on the march last weekend against plans to transfer their jobs to the private sector in a scheme that looks set to proceed despite government assurances that clinical staff would not be transferred out of the NHS.

Health secretary Alan Milburn recently sought to reassure the unions by clarifying four areas in which the private sector will have a role - providing elective surgery, running treatment and diagnostic centres, managing NHS IT systems, and improving primary care, mental health and social services premises.

But around 17 nurses at Kington Cottage Hospital, Herefordshire, appear to have fallen through a loophole because reprovision of the hospital is not being organised through the private finance initiative, which would specifically exclude the transfer of clinical staff.

Herefordshire primary care trust chief executive Paul Bates said: 'I think It is best described as a partnership with the independent sector for providing a range of services which happens to involve . . . a replacement of an existing hospital. It was a decision of Herefordshire health authority to tender for the service.'

Nursing home group Blanchworth Care will run the scheme and build a new hospital, and staff will transfer to the company under TUPE (Transfer of Undertakings Protection of Employment) provisions, Mr Bates said.

'Blanchworth will provide all the services that were provided in the cottage hospital. They will also provide beds for Herefordshire council to purchase and also provide their own private nursing home beds.'

He rejected the idea that the PCT was a pathfinder for government policy: 'The ideological issues are not ones we want to enter into.'

A Department of Health spokeswoman defended the plan.

'These schemes are a case of the local NHS adjusting to common practice in intermediate care around the rest of the country.'

She said such moves did not indicate a policy shift which could see acute providers being bought and run by the private sector.

'Large, acute hospital changes - such as diagnostic and treatment centres - are about investing in the future of the NHS. We are very clear that the doctors and nurses involved in those changes will continue to be employed by the NHS.'

She added that the nurses were being offered the option of continuing 'to work in the NHS elsewhere'.

But local Unison officials say the area offers few opportunities.

Unison national officer Stephen Weeks said the proposal to transfer nursing jobs was 'at odds with government initiatives in other areas in terms of retaining staff in the NHS'.