The National Programme for IT in the NHS: Progress since 2006 - Public Accounts Committee Contents

3  The costs and benefits of the Programme

18.  The estimated cost of the Programme is currently £12.7 billion (at 2004-05 prices) (Figure 2). Value for money has yet to be established. There remains considerable uncertainty around the estimate of £3.6 billion for local costs, principally because the figure is based on business cases compiled by Trusts in 2003-04. The Department carries out an annual survey to establish how much the NHS has spent on IT, but is not able to separate the amount that Trusts have spent on the Programme from spending on IT for other purposes. The Department considers that the figure of £3.6 billion is probably an overestimate and, as part of producing the next benefits statement for the Programme, is to carry out research at a sample of sites to generate more accurate data on local expenditure.[20]

Figure 2: Estimated cost of the Programme at 31 March 2008 (at 2004-05 prices)
£ million
£ million
Core contracts6,805.5   
Products added to the scope of the Programme 665.8  
Other central costs 1,599.0  
Total central costs   9,070.3
Local costs   3,585.9
Total   12,656.2

Source: Department of Health

19.  The Programme's contracts were based on the assumption that all Trusts would take the systems at some point. If the Local Service Providers do not receive the expected revenue for reasons solely due to the Department (for example, where a Trust decides not to deploy the system), the Department is obliged to make payments to the suppliers concerned. At 31 March 2008, £36.1 million had been paid under these arrangements, of which £29.1 million will be deducted from the charges if the deployments go ahead and £7.0 million is irrecoverable. Most of the irrecoverable amount relates to two Trusts which declined to take the Picture Archiving and Communications Systems being provided under the Programme.[21]

20.  We are not yet convinced that the Department secured good value for money by letting contracts which covered the NHS as a whole. It can direct NHS Trusts and Primary Care Trusts to take the systems, though the position on Foundation Trusts is less clear cut. While Foundation Trusts are not subject to direction, they are bound by Treasury rules which require them to take account of the impact of their decisions on the wider public sector finances. The Department considers that it would therefore be difficult for a Foundation Trust to put together a business case which involved rejection of the Programme's preferred systems. In any event, it expects all Trusts will want to take the systems when they see the prospective benefits. However, in the event that the problems with Millennium cannot be resolved or the Lorenzo system is not satisfactorily developed, it may be necessary to renegotiate or terminate the existing contracts with the Local Service Providers.[22]

21.  The Programme is intended to generate substantial benefits for patients and the NHS—both financial savings and wider benefits such as improvements in clinical safety and the quality of patient treatment—though there is no baseline against which to assess the benefits actually achieved. The Picture Archiving and Communications Systems for digital X-ray has helped to reduce diagnostic waiting times, although picture archiving systems were already being introduced in the NHS prior to the Programme.[23]

22.  Financial savings arise where Trusts no longer have to buy something or can buy it at a much reduced cost, such as the N3 broadband network and NHSmail. The first benefits statement for the Programme, for 2006-07, forecast estimated total savings of £1.1 billion over the 10 years to 2013-14, though the Department expects the total will prove to be considerably higher as more of the systems are fully deployed across the NHS.[24]

20   Q 27; C&AG's Report, paras 2.12, 2.24-2.26 Back

21   Ev 24; C&AG's Report, paras 2.32-2.33 Back

22   Qq 19-23, 67-68; C&AG's Report, para 1.14 Back

23   Q 74; C&AG's Report, paras 2.35, 2.39, 3.89 Back

24   Q 28; C&AG's Report, paras 2.37-2.38 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 27 January 2009