A legal adviser to the Labour Party has rejected claims it would have to ‘dismantle’ the commissioner-provider split in order to remove the effect of EU procurement rules on the NHS.

Lawyer Hamish Sandison, who is advising the party’s health team, denied it would require a major upheaval to soften the effect of 2006 European procurement rules on NHS commissioning. He said it could be achieved simply by repealing regulations enacted by the current coalition government.

The intervention follows NHS England’s rejection, on the basis of the EU rules, of Labour’s call for a moratorium on competitive NHS contracting, as revealed on hsj.co.uk last week.

NHS England chief executive Simon Stevens wrote to shadow health secretary Andy Burnham in response to the latter’s call for the suspension of signing “any further contracts for NHS clinical services”, except where there was urgent clinical need, until after next year’s general election.

Mr Stevens’ letter, released under the Freedom of Information Act, said: “We are, as appropriate, required to observe European procurement regulations, originally introduced in 2006, and related UK law.

“In everything we do we are also required to exercise our functions effectively, efficiently and economically. As a result, we are advised that a blanket contracting ban would not be permissible.”

Simon Stevens

Simon Stevens wrote to the shadow health secretary in response to calls to stop signing more clinical contracts until the election

A leading lawyer and competition expert told HSJ they agreed with the interpretation taken by NHS England. They argued that exempting the health service from the rules would require substantial organisational change, including removing the split between commissioners (also known as purchasers) and providers.

Under this view, EU procurement rules would provide a significant barrier to Mr Burnham’s policy of limiting competition and making NHS organisations the “preferred providers” of services.

However, a legal statement provided to HSJ by Mr Burnham’s office made clear it rejected these views. The statement was written by public procurement lawyer Mr Sandison, a partner at law firm Field Fisher Waterhouse and chair of the Society of Labour Lawyers, who, the party said was “informally advising” it on the issue.

The statement said: “There is no need to dismantle the present system of clinical commissioners and providers in order to take the NHS out of the EU’s competitive tendering rules.”

Mr Sandison said the Treaty for the Functioning of the European Union “provides that the EU shall ‘respect the responsibilities of the member states for the definition of their health policy and for the organisation and delivery of health services and medical care. The responsibilities of the member states shall include the management of health services and medical care and the allocation of the resources assigned to them’.”

Andy Burnham

There is no need to ‘dismantle’ the commissioner-provider split, said an adviser to Andy Burnham

His statement said Labour could “rely on this provision to remove clinical commissioning from the scope of EU procurement rules in England, as is the case in Wales and Scotland”.

The lawyer said the regulations made by the current government last year under section 75 of the Health Act 2012 “brought [NHS clinical contracts] within the scope of EU procurement rules for the first time”, and Labour could “repeal these regulations” to remove the effect.

His views were at odds with a leading NHS competition and procurement lawyer. This legal source suggested to HSJ that exempting the NHS from the impact of EU law would potentially require removing the commissioner-provider split, patients’ entitlement to choice of provider, and the payment by results system.

The lawyer said these policies meant there was “competition between providers for patients [which] means the competition authorities are thinking there is competition here, these organisations are operating in an economic market… therefore they must follow the EU procurement regulations”.

To: Andy Burnham

From: Simon Stevens

We are, as appropriate, required to observe European public procurement regulations originally introduced in 2006, and related UK law.

In everything we do we are also required to exercise our functions effectively, efficiently and economically. As a result we are advised that a blanket contracting ban would not be permissible.

Andrew Taylor, a competition expert and the founding director of the Cooperation and Competition Panel, which was set up by the previous Labour government to advise on cases, also said the impact of EU procurement rules was “caused by the purchaser-provider split”.

Mr Taylor said: “[Clinical commissioning groups] are not providing the services themselves and therefore services they are commissioning are subject to the EU procurement regulations. If a government repealed section 75 of the [act], CCGs would still be obligated to follow the EU regulations but providers that wanted to challenge CCG decisions would have to do so through the courts, rather than by complaining to Monitor.”