Health Secretary Andrew Lansley has announced that the Social Enterprise Investment Fund (SEIF) is to receive at least £10 million in additional funding to allow staff throughout the NHS to set up as independent organisations to run the services they deliver.

These mutually-owned organisations ("mutuals") and social enterprises for the NHS will be the first to be set up through the Right to Provide initiative announced last November by Cabinet Office Minister and Paymaster General Francis Maude for all public-sector workers. They will exist separately from the Service and be contracted to provide care and services for NHS patients.  

Announcing the measures yesterday at the social enterprise conference, VOICE 11, in Docklands, London, Mr Lansley said: "for too long, staff and patients have seen their local services dictated by Whitehall officials who have never seen the work they do day-to-day."

"I've heard from many NHS staff over the years that they could run their services better if they were given room to breathe and felt their voices were heard. I want as many of them as possible to come forward now and take more control of the NHS and care services they provide. By giving staff real control of their services and patients real choice over who they receive care from, we're restoring the balance of power," he added.

Francis Maude praised the Department of Health for "taking a really positive lead devolving power to people on the front line who know how things can be done better."

"There's a huge pent-up frustration in the public sector because innovative ideas have been stifled by top-down control. Every time I visit existing public-sector mutuals I'm impressed by the enthusiasm staff show for improving their service," he said, adding: "evidence shows that productivity rockets when staff take a stake in their business."

The government stresses that these measures are not designed to make it easier for private providers to enter the NHS, pointing out that some of the most successful examples of this approach have come from within the NHS. For example, City Healthcare Partnership in Hull provides services to more than half a million people, including reducing emergency admissions, and any profit it generates as part of this are made available as grants to fund local voluntary projects to improve health and wellbeing.

The move was welcomed by Michael Dixon, chairman of the NHS Alliance, who described the social enterprise model as "the right bridge between cooperation and competition in the NHS."

Speaking at a meeting at the King's Fund yesterday, Dr Dixon argued that whereas private companies may have to manage the pressure of being more accountable to shareholders than patients, the social enterprise model provides a number of safeguards. Moreover, co-ownership of local services by frontline professionals and, in many cases, local people, will ensure that providers, staff and patients work together and have joint responsibility to use resources cost-effectively, "co-producing" as much as possible. 

"This will be crucial in the new world where improving personal health, community health and the ability of patients to self-care may be the difference between an NHS that is sustainable or not," said Dr Dixon. The social enterprise model provides the "link between goodwill and altruism of previous systems and commitment to good business practice and cost efficiency with the new," he added.

• The SEIF was set up in 2007 to stimulate the role of social enterprise in health and social care. Before yesterday's announcement of the new injection of at least £10 million, it administered funding totalling £100 million.