NHS bosses stand accused of endangering patients, “flagrant” lawbreaking and intimidating a leading hospital trust over their controversial privatisation of cancer scanning services.

Oxfordshire councillors have warned that cancer patients in Thames Valley will receive a poorer service because NHS England has decided to take a contract for PET-CT scanning away from Oxford university hospitals (OUH) trust and hand it to the private firm InHealth.

They have heavily criticised NHS England’s behaviour and judgment over the contract in an unusually strong letter to the health secretary, Matt Hancock. He now has to decide whether to back NHS England’s decision, which has sparked an outcry from MPs, patients and doctors, or risk legal action from InHealth by ordering a rerun of the tendering process.

A cross-party group of MPs from Oxfordshire has also ramped up the pressure on Hancock in a separate letter which voices their fears that letting the private firm take over the service will mean cancer care is weakened, because PET-CT scanning is integral to treating patients.

Councillors on Oxfordshire county council’s joint health overview and scrutiny committee (HOSC) raised a series of serious concerns in a withering letter they sent to Hancock on 7 May invoking their legal powers to refer the matter to him for a final decision. In it they claim that patients will receive an inferior service in future because InHealth staff will not attend multi-disciplinary team (MDT) meetings of NHS staff, which play a key role in ensuring someone gets the best treatment.

“Whilst this [MDT meeting] can happen remotely, the committee was not convinced of this alternative approach and feels strongly that deviation from the existing ‘one-team’ approach would lead to a poorer outcome for patients,” says the letter, which the Guardian has seen.

The councillors, who are mainly Conservatives, also claim that performing PET-CT scans on suspected cancer patients in mobile units InHealth plans to set up in Swindon and Milton Keynes will give less accurate results than those from fixed scanners in hospitals such as the Churchill in Oxford. That could produce a “two-tier service” in which patients scanned in Swindon and Milton Keynes “while benefiting from easier access, could have a poorer outcome given the combination of machines that are calibrated differently, potentially producing less accurate results, a lack of doctors on site to deal with any health problems that may arise, and radiologists only communicating remotely with clinicians”.

But the councillors reserve their strongest criticisms for NHS England’s alleged failure to fulfil its legal duty to consult the HOSC soon after it decided to put the PET-CT service in the Thames Valley out to tender. It accuses the organisation of presenting it with a fait accompli by not letting the HOSC analyse the bids and offer its view, which constituted “flagrant disregard” for the obligation, under the Health and Social Care Act 2001, to consult the council.

“The committee believes that as a result of the approach NHSE has taken, having already arrived at a decision and showing such arrogant disregard for discharging statutory duties and engaging in due process, all local steps to try and resolve this matter have been exhausted,” the councillors say.

The councillors also castigate NHS England for threatening to sue OUH for raising its concerns that InHealth becoming the provider would risk patient safety, which the Guardian revealed last month. “The committee has been made aware that this is not the only incidence and that there may be a wider pattern of intimidation. The stifling of legitimate discussion by appropriate bodies about the nature of the proposal runs against the normal approach to consultation,” they state.

Local MPs endorsed the HOSC’s concerns. Victoria Prentis, the Tory MP for Banbury, who co-ordinated the letter from local Tory, Labour and Liberal Democrat MPs, said: “You can’t have a health service that says it’s open and transparent and then not do that. I’m confused why NHS England didn’t consult the HOSC. Why didn’t they speak to them? That’s extraordinary.”

Anneliese Dodds, the Labour MP for Oxford East, which includes the Churchill hospital, said: “This excoriating letter sums up the many problems with NHS England’s decision to award Oxford’s cancer scanning services to a private company, and then backtrack and try to create a ‘partnership’ between that company and the NHS, after it was faced with massive local and national opposition.” Cancer specialists at OUH had been “sidelined” by NHS England, she added.

An NHS England spokesperson said: “This letter contains a number of obvious and major factual errors. But the NHS won’t let that prevent partnership working to expand PET-CT services for patients not only in Oxford but also for the first time by opening new and far more convenient services for patients in Swindon and Milton Keynes.”

NHS England denies threatening to sue OUH for libel, even though its lawyers’ letter to the trust – which the Guardian has seen – raises that possibility.