05 October 2006 | Paul Snell

Outsourcing NHS Logistics and a large part of purchasing to a private firm will reduce prices by 14 per cent, according to a government minister.

Health minister Andy Burnham made the statement at a fringe meeting at the Labour Party conference last week. He was referring to the 10-year deal signed with German logistics company DHL and its subcontractor US healthcare company Novation. They are taking on work previously done by the NHS Logistics Authority, and a large chunk of the buying done by the NHS Purchasing and Supply Agency.

But at the same meeting John Wilkinson, director-general of the Association of British Healthcare Industries (ABHI), which represents suppliers, said he feared smaller companies could be forced out of the market.

"We must be sure that the terms of the contract hold the new body accountable for ensuring fairness and quality."

Burnham said DHL's performance would be closely scrutinised.

The ABHI added that it had "grave concerns" about the degree of power wielded by DHL and Novation as a result of the deal, saying it "could create a dangerously anti-competitive environment".

As reported (Web news, 22 September), Unison has dropped its calls for a judicial review into the deal after receiving further legal advice.

A union spokesman told SM: "Unfortunately, we received more legal advice which says the chances of going forward are pretty slim."

More than 800 NHS Logistics staff took part in two 24-hour strikes last month to protest against the outsourcing.

Delegates attending the party conference voted in support of a Unison motion calling on the government to rethink its move toward privatisation in the NHS.

SMoct2006