The National Audit Office is to investigate the Department of Health's decision to cancel a large swathe of its independent sector treatment centre programme.

The review will also look at the decision to introduce ISTCs into the NHS and will analyse the role of the commercial directorate, which negotiated the deals, and its reliance on external consultants.

In November the DH cancelled seven planned independent sector schemes after it decided that to go ahead with them would no longer be value for money.

The private sector providers whose contracts have been cancelled or substantially changed are now claiming millions of pounds in compensation from the DH for the curtailed schemes (news, page 6, 14 February).

The NAO is expected to examine how much the cancellations have cost the taxpayer and whether the government has damaged its relationships with private healthcare providers as a result.

It will also look at why to date only 84 per cent of the capacity of ISTCs in operation is being used.

Seven of the remaining ISTC contracts are still being considered by the commercial directorate and a decision on their future is expected next month.