Tories say Labour wasted £300m on using private providers to cut NHS waiting times

The decision by Labour to bring private providers into the NHS wasted hundreds of millions of pounds of taxpayers' money, according to Andrew Lansley, the Conservative health secretary.

The former government refused to disclose the amounts paid for the controversial "independent sector treatment centre programme" (ISTC), claiming it would "jeopardise the ability of the [Health] Department and the NHS to secure the best value for money".

But Lansley has calculated that it would have been £300m cheaper if the NHS had carried out the work private contractors provided, such as cataract operations. Lansley said he was not against using independent sector providers but insisted they must compete on a level playing field and provide value for money. This week he will lay out plans for Monitor, the body that currently oversees foundation trusts, to become the economic regulator responsible for all NHS care by 2013. It will be expected to ensure value-for-money.

The minister accused Labour of signing "wasteful preferential contracts". But critics say the figures raise serious questions about the coalition government's own health plans.

Paul Evans, director of the NHS support federation, a campaign group, said: "The question is, does a profit-led health service, which is what we are heading towards, deliver the best quality, equity and value for the public?" Evans argued that today's findings provided an insight into the "murky world of a market-led health service, where deals can be made between companies using public money and we don't see the contracts until the money has already been spent".

Dr Keith Brent, deputy chair of the British Medical Association's consultants committee, said doctors had been arguing for years that the ISTC programme was not delivering value for money. "We disliked the way in which the market was rigged," he said. "For example, giving them guaranteed contracts even if they did not carry out the work. We know a large number of places where the work carried out was nowhere near [the amount contracted]. If there are to be providers other than the traditional NHS providing care paid for by the taxpayer then it is essential there is a level playing field."

Brent said the BMA would engage with Lansley's plans, but added: "We understand the arguments that introducing a competitive instinct increases efficiency but… it risks fragmenting the system and leaving patients with more chronic [conditions] in limbo."

ISTCs have been deeply controversial since the NHS began using them in the early years of Tony Blair's premiership to reduce waiting times. They started treating patients in 2000 after the government decided to allow NHS funds to be given to private contractors to provide medical services, especially elective surgery. Since then around two million patients have had an operation, diagnosis or primary care consultation at an ISTC instead of at their local hospital or GP's surgery.

Some 96% of patients rated their care as "excellent" or "very good". But its quality came into question when a coroner recorded a verdict of misadventure aggravated by neglect on a patient, Dr John Hubley, who died while undergoing gall bladder surgery in January 2007 at the Eccleshill NHS Treatment Centre, an ISTC in Bradford, Yorkshire. The centre was "woefully inadequate", the coroner concluded.

Andy Burnham, the shadow health secretary, said: "Labour brought new capacity into the system to meet the historic 18-week waiting-time target. The government has already scrapped this target, leaving patients with the familiar old Tory choice – wait or go private."