Watchdog criticises delays over '£20bn' NHS computer system

The multibillion-pound upgrade to the NHS's IT systems has fallen well behind schedule, with electronic patient records to be delivered two years late, according to a report compiled by the National Audit Office. However, the watchdog soothed fears that the project was billions of pounds over budget.

The NAO said electronic patient records - the main justification for the upgrade - would be fully delivered from late 2007 after pilots in 2006. That is two years later than planned. The online booking system has also been delayed, along with other key services that the upgrade enables. Yet the report claims the entire implementation of systems will be complete by 2010, in line with initial expectations.

The financial impact of the delays will be borne by the companies involved in supplying the technology. Accenture has already booked a £260m loss on its involvement in the project. The UK software company iSoft has been forced to restate its accounts and adopt a new accounting policy as a result of the delays, a move that forced out its chief executive and endangered the future of the company.

The Health minister, Lord Warner, said medical staff should have had more say when the project was initially developed, but remained confident of its success.

"In hindsight, there was more we could have done in consultation. But I'd stake my reputation that, in the long term, this project will pay for itself," he said.

Chris Shapcott, the director of health value for money studies at the NAO, said "substantial progress has been made in many areas". But he warned a shortage of IT skills available to the NHS was "an immediate risk to the timely implementation of the programme". The watchdog also said there was a lack of engagement with medical staff about the upgrades, specifically when the contracts were awarded.

However, the report dispelled fears that the 10-year upgrade will cost £20bn. The total gross cost of the project, before factoring in cost savings made as a result of the technological improvements, was set at £12.4bn. That figure includes the original £6.2bn in contracts awarded in 2003 and 2004, a cost that has risen to £6.8bn as a result of additional services being needed.

The minister recently suggested the full cost of the programme could top £20bn. The NAO said this figure relates to total NHS expenditure on IT over the next 10 years.

The watchdog said quantifying the cost savings of the IT upgrade was uncertain as the project is in progress. Mr Shapcott said it was too early to tell if the £12.4bn spend will provide value for money. Cost savings will emerge as older systems are replaced with more efficient technology.

However, Mr Shapcott said it is difficult to quantify other cost savings such as the quality of service and ensuring patients get the right medicine.