NHS faces £700m legal action over IT project

The NHS is facing an unprecedented £700 million legal action from a Japanese computer firm over a failed project to store electronically the health records of millions of Britons.

Fujitsu's contract with the NHS was terminated in May after negotiations between the company and health officials broke down. The Independent has now learnt that the Japanese firm is seeking to recoup the bulk of the £896m it would have been paid for the entire computer system.

Neither the company nor the NHS was prepared yesterday to comment on the precise details of the compensation figure, but sources close to the negotiations said Fujitsu was ready if necessary to go to court to press its £700m claim. The development is the latest setback in the troubled history of NHS computing, which has been beset by cost overruns, defective systems and late deliveries. The cancelled contract was part of the £12.7bn Connecting for Health programme to modernise NHS computers and provide every patient in England with an electronic health record.

It it ran into difficulties when the NHS tried to renegotiate the terms. Health officials wanted Fujitsu to provide a more localised records system for southern and western England, but the company said this would increase its costs substantially and asked for more money up-front. When the NHS refused to stump up, Fujitsu walked away from the negotiations – which caused the Government to terminate the contract.

Now Fujitsu is gearing up for a major confrontation with the Government with what could be the biggest compensation claim against the NHS in its 50-year history. Asked whether it could end up in court, a company spokesman said: "At the moment we're in dialogue with the NHS and we hope to come to a satisfactory outcome."

It is understood that only a small amount of the £896m has been paid to Fujitsu in upfront costs for the computers and software development. Some industry analysts estimate the company has spent about £300m since it secured the contract in 2004.

Fujitsu's deal was one of the biggest of the four regional contracts awarded by the NHS as part of the 10-year Connecting for Health programme, which is already four years late in terms of its overall implementation according to a report by the National Audit Office (NAO).

By last March, Fujitsu had supplied just nine out of 41 acute hospitals in southern England, and the systems were working so badly that the company had not been paid for most of them, according to the NAO.

The Connecting for Health programme has already suffered the blow of having one of its other suppliers pull out in 2006. But the US company Accenture was only allowed to keep £110m of the £173m it had been given as part of development costs – which suggests that the Government might be prepared to dig in over Fujitsu's much bigger claim.

Public procurement contracts allow the Government to pay only minimum development costs until a computer system is up and running, a health service spokeswoman said. Fujitsu and the NHS were working closely to ensure a smooth transition for a replacement supplier for the computerised record system for south and west England, she added.

ebookA unique anthology of reporting and analysis of a crucial period of history
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Employment Solicitor

Highly Competitive Salary: Austen Lloyd: MANCHESTER - Senior Employment Solici...

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Commercial Litigation Associate

Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen