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Tory sell-offs denounced as 'Arthur Daley economics'

THE Conservative government was guilty of "Arthur Daley economics," a minister claimed yesterday as new criticisms emerged of financial practices before the general election.

Ian McCartney, the trade and industry minister, said a damning National Audit Office report on water privatisation was an indictment of 18 years of Conservative rule.

"The Tories were caught practising Arthur Daley economics and flogging off the nation's assets as if they were at a car boot sale. It is no wonder they were kicked out of office," he said.

As Mr McCartney issued his statement, a further NAO report criticised the pounds 1.25m purchase in 1990 of an NHS information system. The system's author was employed to develop it despite owning a firm which went then made pounds 850,000 profit from it over five years.

Sir John Bourn, the head of the NAO, says in the report that the deal had created a potential conflict of interest for Dr James Read.

Dr Read, a GP based in Leicestershire, had spent a great deal of his own time and money developing Read Codes, a computer-based thesaurus of clinical terms and synonyms designed to allow doctors to communicate with one another more easily.

In 1988, the codes were chosen for adoption across the NHS and in December the following year Dr Read agreed to sell them for pounds 600,000 - a figure which then rose to pounds 1.25m two months later.

Dr Read then became the first director of the new NHS Centre for Coding and Classification, which developed the codes. His firm, Computer Aided Medical Systems Limited, was given exclusive rights to distribute and support them.

Sir John's report is particularly critical of the way the NHS executive handled the issue. It had finally decided to replace Dr Read as director of the centre only in December 1996, after the NAO investigation into the case had begun.

"In particular we believe [the executive] should make it clear that the NHS should not employ people to develop or promote goods or services in which they have a financial interest," the report said.

Last night, the NHS executive said it would respond fully to the criticisms at a hearing of the Commons Public Accounts Committee on 23 March. It remained fully committed to Dr Read's system as a standard vocabulary for the NHS, it added.

The Conservative administration came under further fire yesterday from Tony Blair after an NAO report warned that more than pounds 300m was missing from a pension fund set up following the privatisation of the water industry.

"It is extraordinary that as a result of Conservative privatisations literally hundreds of millions of taxpayers' money was lost - money that was squandered, money that could have been spent on better services," the Prime Minister said.

"The very fact that they behaved so badly when privatising some of our essential public services is the reason why they must never be allowed back in charge of those services again."