If you thought that the controversies over proposed NHS reform were over, think again. The Times (£) today reports that in the latest amendment to the health and social care bill, NHS foundation hospitals could be free to earn half their income from private patients.

When autonomous foundation hospitals were created seven years ago, it was with the condition that they were limited to the same proportion of private income as they had before becoming foundation trusts -- on average about 2 per cent. The new amendment, however, would allow hospitals to retain their NHS status as long as the "majority" of their income is from public sources. This would allow up to 49 per cent of a hospital's income to be from private patients.

If passed, this would be a serious step forward in the stealth privatisation of the NHS, and has already triggered anger among Liberal Democrats. At the party's spring conference in March, it voted against moves to introduce greater competition, subsequently winning some concessions. At the time, some commentators suggested that the changes may be merely cosmetic, and this latest amendment appears to confirm that view.

Ministers have dismissed these fears as scaremongering. "This does not represent privatisation of the NHS -- it simply gives to foundation hospitals the same freedoms non-foundation hospitals have had for years," said Andrew Lansley, emphasising that hospitals will have the same legal duty to provide services to NHS patients.

It is certainly true that voters retain a deep distrust of Tories on the NHS, and that any move will be greeted with suspicion. However, in this case it is not displaced. This isn't privatisation in the same ilk as that of the 1980s, when state owned companies like BT were sold off, but it is a huge step up for the role of the private sector. Not only is this process very difficult to reverse once it has begun, but as we have seen clearly with dentistry, it can have devastating consequences for public sector service, leading to a two-tier service and a choice between longer waiting times or paying to go private.

Writing in October, my colleague Rafael Behr pointed out:

You can't credibly insist that there will be no privatization of the health service when the core concept of the reforms is to promote more competition and more private sector involvement...

The only way to actually persuade people that the Lansley plan is any good would be to sell the first principle of increased marketisation in health care but, implicitly, the Tories have accepted that such an approach is toxic to their political reputation.

This amendment will renew questions over the Tories' motivation for undertaking these NHS reforms. The coalition's NHS headache is far from over.