NHS computer project will cost £12.4bn

16 Jun 2006 View Comments
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The total cost of the 10-year National Programme for NHS IT is estimated to be £12.4bn, a National Audit Office (NAO) report concludes today.

The figure includes the initial £6.2bn spent on the fixed price contracts plus wider elements including £3.4bn by NHS trusts on local training and IT and £1.9bn on central expenditure including the running of Connecting for Health, which is responsible for the Programme.

In recent weeks a figure of £20bn has been bandied around as the total cost of the project, but the NAO report says this relates to the total amount the NHS will spend on IT over 10 years, not just on the National Programme.

'On 30 May 2006, the Minister of State for Reform (Lord Warner of Brockley) who is responsible for the Programme, was reported in the media as having said that the full cost of the Programme was likely to be nearer £20bn,' the report says.

'NHS Connecting for Health has told us that he was not referring solely to the costs of the Programme but to the total expenditure on NHS IT over 10 years,' it says.

Connecting for Health has focused on the £6.2bn cost of the fixed contracts for the project.

The NAO has revealed a further £6.2bn in operational costs. They include:

• £382m on new projects assed to the original cost scope of the Programme.
• £239m on additional services purchased beyond the original scope.
• £1.9bn in other central expenditure primarily on centrally managed projects and services within the Programme and the running of Connecting for Health.
• £337m on the estimated cost of replacing core contracts before they expire at the end of the 10 year period of the Programme.
• £3.4bn on expenditure by local NHS organisations on areas such as training and ensuring system compliance.

There have been some delays to the project but they have been reflected in the spending.

'Up to the end of March 2006, actual expenditure on the contracts let in 2003 and 2004 has been lower than planned, with £654m spent against expected expenditure of £1,448m, reflecting the slower than planned delivery of some systems and the successful operation of contractual provisions that suppliers will only be paid once the services are proven to be delivered,' the report says.

The report concludes that significant progress has been made, but challenges including keeping the suppliers in-check and ensuring NHS staff buy-in and support the National Programme, remain.

Sir John Bourn, head of the NAO said: 'Substantial progress has been made with the National Programme for IT.

'The Programme promises to revolutionise the way in which the NHS uses information to improve services and patient care. But significant challenges remain for the Department and NHS Connecting for Health,' he said.

Industry trade body Intellect says it is important the National Programme is given sufficient support, but warns that it could damage public sector IT successes.

'We are pleased with the NAO’s conclusion that the Department of Health and NHS Connecting for Health have made substantial progress, as we continue to believe that the NPfIT will bring significant benefits in terms of patient care and patient safety,' said John Higgins, Director General at Intellect.

'We also support the report’s conclusion that more needs to be done to ensure the Programme has the support of staff within the NHS.

'However, in appearing to applaud and recommend an excessive focus on low price, penalty-heavy contracts, the NAO report risks causing serious damage to the already fragile prospects for public sector success from its investment in IT.
'Best practice shows that open relationships are the best way to deliver the appropriate balance of risk and reward to customers and suppliers, and that is an essential ingredient for success,' Higgins said.

What do you think? Email us at feedback@computing.co.uk

Further reading:
NHS computer project needs backing of health staff to succeed
Accounting changes hit NHS supplier’s shares
Experts squabble over next steps for NHS IT
NHS IT chief meets criticism head-on

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