The head of NHS Shared Business Services has said the health service wastes more than £1 billion a year by not effectively managing procurement.

John Neilson, managing director of NHS Shared Business Services, said over £1 billion was being wasted by NHS trusts who are paying different prices for identical equipment.

In an interview with The Times, Neilson said: "It’s scary. We actually have multiple prices being paid for the same item in the same trust, in the same month."

And he said a host of other equipment such as computers were being bought at needlessly high prices – wasting around 12% of the NHS’s purchasing budget.

The health service spends around £13 billion a year on buying equipment. "If you talk about 12% of that, it takes us into the low billions," Neilson told the Times.

He went on to claim that millions could be saved by outsourcing more NHS administration overseas to countries such as India.

NHS Shared Business Services is a joint venture between the Department of Health and private sector outsourcing specialist Steria, which provides back office business services, including payroll, finance and procurement, to NHS trusts.

In June 2010, the organisation said it was on track to deliver £250m of savings to NHS trusts over 10 years.