NHS IT spending will reach £12.4bn

Spending on the giant NHS IT modernisation project is likely to reach £12.4bn by 2014, according to the National Audit Office (NAO).

This includes £6.2bn for the main fixed-price IT contracts, £382m for new projects, £239m on additional services and £1.9bn on other expenditure by NHS Connecting for Health (CfH) on centrally managed projects and services.

Another £337m will go on replacing core contracts that expire before the end of the 10-year period to 2014, and £3.4bn in expenditure by local NHS organisations on IT and training.

The NAO said the programme - the UK's biggest ever IT project - has the "potential to generate substantial benefits for patients and the NHS". And it said by buying IT goods and services centrally it has already saved £4.5bn.

It also praised the way NHS CfH struck deals with suppliers, saving £600m by maintaining "competitive tension".

The report said: "The speed of the negotiations and the inclusion of a sound balance of incentives and penalties within the contracts have put NHS Connecting for Health in a strong position in its relationships with suppliers, and one that is stronger than previous government procurement practice."

And it added: "NHS Connecting for Health has adopted many of the key lessons of prior public IT failures."

But there are still problems - the NHS Care Records Service is running late, and take up of Choose and Book is much slower than initially planned.

The NAO said NHS CfH must still faces three main challenges to successful implementation. It must make sure there are no further delays to the rollout of systems; make sure that NHS organisations play a full part in implementing the programme's systems; and win the hearts and minds of NHS staff.

It added the NHS should tell staff how the project will affect them and when so that setbacks and changes of priority do not cause a loss of confidence.

Health minister Lord Warner told silicon.com: "We accept there are some areas where we could make faster progress. We should have worked harder at the beginning at staff engagement."

Director general of NHS IT Richard Granger added: "If this was easy it would have been done years ago. Computerising the NHS is something that has proved elusive for several previous programmes. We have not repeated the mistakes of the past."