Shirley Williams is an experienced and influential politician whose power to persuade has to some extent swayed the fate of the health and social care bill. But on the evidence of her speech to the Lib Dem spring conference last weekend, she seems to misunderstand the meaning of the law she is so enthusiastically assisting on to the statute book.

Let's examine the "myth" and the "lie" she accused me of in her speech. It's about what the bill does to the NHS public ethos. Williams was "extremely angry", she said, when I pointed out that she had just led her people to vote for allowing up to 49% of all NHS facilities to be used for private practice. She told her followers: "There has never been a right for hospitals to offer 49% of the places for private patients. The so-called 49% is a myth." And there was more about nailing "lies", saying of me: "Either she just didn't look at the detail ... or she did look at the detail and decided that tribalism should trump truth." She added: "I want to see Polly Toynbee in the Guardian's Corrections and Clarifications column."

No correction, Shirley, but a reiteration of the truth about this bill and deep regret at your failure to understand how you are assisting the Tories' project to commercialise the NHS. Let's look at this 49%. Nick Clegg signed up to Andrew Lansley's original bill, which allowed unlimited private work to be done in NHS facilities. When that caused an outcry, Lansley had to limit private provision by NHS foundation trusts to no higher than 49%. This applies to all NHS services, as everything becomes a foundation trust by 2014 – hospitals, mental health, community services, diagnostics and ambulances.

Here is the relevant paragraph – clause 161, goods and services: "(2A) An NHS foundation trust does not fulfil its principal purpose unless, in each financial year, its total income from the provision of goods and services for the purposes of the health service in England is greater than its total income from the provision of goods and services for any other purposes." Clear away the fog, and that says the only obligation on a foundation trust is to ensure its NHS work is greater than its private work. That allows its private business to rise to anything up to 49%, unlikely but permitted. Don't take my word for it, since every health expert I double-checked with yesterday confirms it. Mike Farrar – head of the NHS Confederation, member of the government's Future Forum on the bill – says it was discussed there in detail and, yes, 49% is the cap intended.

Shirley Williams went on to claim: "Labour never had any kind of cap at all – 49%, 80%, 100% – no cap of any kind." But that's not so. (Let's not call it a lie, but a misunderstanding). Ask Professor Chris Ham, head of the King's Fund, who worked in the Department of Health when Labour set its tight cap. "It was the price Labour paid to rebels for creating foundation hospitals," he confirms. Labour's cap stopped any growth in private work by banning foundation trusts from taking on private work at a proportion exceeding that of 2003 (on average 2%). Here it is – NHS Act 2006, section 44, private health care: "… the proportion of the total income of an NHS foundation trust which was an NHS trust in any financial year derived from private charges is not greater than the proportion of the total income of the NHS trust derived from such charges in the base financial year" (ie 2003). In clause 164 Lansley's bill strikes out this old cap: Shirley's Lib Dems voted against Labour's amendment trying to reinstate it.

The bill's driving ideological purpose remains at its core – to commercialise the whole of the NHS. Concessions at the periphery to Lib Dems have not changed that intent. Why else would the Conservatives stick to such an unpopular bill so tenaciously? The 49% question is a minor aspect, but since Shirley Williams focused on it, let's examine it as a good example of the puny concessions made. Williams boasts that any hospital increasing its private practice by more than 5% must now satisfy its own governors that its plans would not "to any significant extent" interfere with NHS services: but convincing its own governors is hardly a serious check. She boasts that all profits must go to the NHS, with separate accounts: but that was never in doubt as trusts are not-for-profit organisations. Bupa is not-for-profit too.

Whatever convinced Shirley Williams to U-turn, it was a shame that she put herself on the line in so bad a cause: "I would not be standing here, and I would not have stuck with the bill, if I believed for one moment it would undermine the NHS." But virtually every royal college says it will. There is no self-interest in the professions' opposition: GPs are supposed to rule the roost in this bill. What they see clearly on legal scrutiny is that competition and commercialisation will now drive the NHS, not collaboration.

Under EU competition and procurement laws there is no holding back the right of "any qualified provider" to cherry-pick any service. No clause has, or ever can, declare that EU law will not apply when legal opinion says of course it will. The NHS loses its exemptions and once that competition door is opened there is no closing it again. The Netherlands has found exactly this. Overseeing competition in the NHS as chair is Lord Carter, with an £800,000 salary from a private health company, joined by two directors who are McKinsey privatisation experts.

NHS chiefs who may see no problem with private providers, express great fear over fragmentation: it was integration of services that drove recent cancer and heart treatment improvements. Clinical commissioning groups will have no legal duty to provide comprehensive services: they can pick and choose what services to provide in each locality. Yet competition rules will often prevent them choosing the local trusted services they may think best for their patients.

A flurry of minor concessions seems to have blinded Shirley Williams to this bill's unchanged nature. Its purpose remains what it always was: the Conservative charter for commercialising the NHS; the end of the NHS as a national service. The Lords' last chance to amend and delay it is next Monday, while the government resists legal orders to publish its Risk Register. If anyone doubts the scale of change, a second NHS hospital this week put itself up for takeover or private sale, after Hinchingbrooke was called a "one-off". That's just the start..

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