After 11 years of stealthy privatisation in the health service, it is little surprise that doctors are up in arms over polyclinics - themselves a cover for commercialisation. The NHS, for so long an international model for a universal, public-owned and public-controlled service, is now the world's laboratory for privatisation.

Labour's 1997 manifesto promised: "Our fundamental purpose is simple but hugely important: to restore the NHS as a public service working cooperatively for patients, not a commercial business driven by competition." But from the outset, New Labour had four targets in its sights: ending public ownership and control of the NHS; developing a large for-profit private sector using Treasury and NHS funds; creating a flexible workforce for that sector; and changing the public's resistance to markets in healthcare.

Today 90 NHS foundation hospitals operate outside direct government control in an increasingly commercial environment. At the same time, the government has continued to divert NHS funds to the private sector. Since 1997, its private finance initiative programme has been used to sell and liquidate hundreds of NHS hospitals and clinics. But the 76 planned and 33 operational PFI hospital schemes are not under public control - they are leased back from the private sector under 30-year to 60-year commercial contracts.

The high costs to the NHS of servicing the annual PFI debt charges and absence of proof of value for money are well documented. However, until recently the true scale of the profits has been hidden from view with "commercial confidentiality" exemptions being invoked in response to freedom of information requests. The recent release of the Royal Infirmary Edinburgh and Hairmyres hospital contracts in Scotland and their analysis by Jim and Margaret Cuthbert show shareholders will reap dividends of £168m on an equity stake of £500,000 for the infirmary, and £89m on an equity stake of £100 for Hairmyres hospital - rich rewards for so little risk. The estimated fees, additional interest charges and shareholder dividends amount to more than three times the cost under public procurement. In other words, the taxpayer gets one PFI hospital for what three public hospitals would have cost.

Meanwhile, PFI- and deficit-driven hospital closures, including the loss of more than 13% of NHS beds in England since 1997, have seen waiting lists soar. The Department of Health has turned NHS shortage to advantage, advocating further commercialisation to bring in additional capacity, and pouring £5bn into the controversial independent sector treatment centre programme. Its corporate owners have yet to provide the DoH with any meaningful data on beds, staffing, performance, quality of care or value for money. But the absence of data hasn't stopped the CBI publishing spurious claims about quality of care, productivity, length of stay and value for money. Nor has it stopped the government using public money to extend new contracts to the commercial sector.

The commercialisation of services leads to the blurring of boundaries about the funding and responsibilities of care; once NHS services have moved into the commercial sector there will be no limits on what the private sector can charge for: boutique care for those who can pay, and small-print restrictions for those who cannot. The debate has already begun with proposals to introduce co-payments or top-up charges for those who can afford to pay for care not provided by the NHS.

Politicians, meanwhile, unite in the fiction of an unaffordable NHS. We are never told about the impact of the market or how the huge injection of cash into the NHS is being diverted into marketing, billing, invoicing, chief executive-level salaries, profits, shareholders' returns and bank dividends. Nor is the public told how budgetary controls that made the NHS the most cost-efficient health system in the world are being dismantled in the rush to market.

Public and staff protests have gone unheeded, and judicial reviews have merely delayed the market process. The mechanisms for public accountability are being stripped out. Voters face a dilemma: the temptation is to punish Labour at the ballot box, yet the Conservatives' health proposals, published last October, advocate the abolition of the secretary of state's unqualified duty to provide a universal health service. While Scotland and Wales are trying to forge a new path, taking steps to dismantle their markets, the English electorate is between a rock and a hard place.

· Allyson Pollock is director of the Centre for International Public Health Policy at Edinburgh University

allyson.pollock@ed.ac.uk