HOSPITALS could be fined tens of millions for “anti-competitive” practices under plans to open up the NHS to private firms, the government was warned yesterday.

Labour raised the alarm over clauses in the controversial Health Bill that will make NHS organisations answerable to competition law, in the same way as the gas, electricity, water and rail industries.

The party said hospitals would be forced to take out insurance policies and hire expensive lawyers to ensure contracts were not open to legal challenge – diverting cash from care.

And breaches would be punishable at the same level as industries regulated by the Office of Fair Trading – a fine of 10% of annual turnover.

For Royal Liverpool and Broadgreen NHS Trust – with a £400m-plus turnover – that would mean a £40m fine if it was found to have “colluded” with GPs to prevent a private firm competing for a contract.

Competition in general was a bad idea, said Derek Machin, the British Medical Association’s Merseyside spokesman.

The consultant urological surgeon at Fazakerley Hospital said: “If the NHS becomes covered by competition law those commissioning services, the GP consortia, will have to throw services open to be run outside the NHS, to private companies.

‘‘We think the whole thing is a process of taking the NHS out of public control. The NHS is running reasonably well, you need to build on this, not start to rebuild the structure every few years like successive governments have done.”

Furthermore, Labour said a simple discussion between GPs and their hospital about improving care could be challenged by a private health giant with expensive lawyers.

The accusations put David Cameron on the back foot in fierce exchanges in the Commons, where Ed Miliband warned a “free market free-for- all” may wreck services, adding: “You can't trust the Tories on the NHS.”