An ambitious but much-criticised programme to build an integrated computer network for the NHS so that doctors can easily access and update patient records is expected to cost £12.4 billion over ten years, the National Audit Office (NAO) said today.

Although that figure far exceeds the original cost estimates for the programme, it is significantly less than the £20 billion cited last month by the Health Minister, Lord Warner of Brockley - which the NAO said represented the likely cost of all NHS expenditure on IT over the period to 2014.

It also fails to take into account billions of pounds worth of savings and benefits that the NAO says the new system should produce.

The NAO report is critical of some aspects of the implementation of the NHS programme, the UK's largest single investment in IT and the most ambitious attempt to provide an integrated healthcare network in the world.

Parts of the programme - including setting up the national clinical record - are running more than two years behind schedule. Because of those delays, the NAO says that it is too early to say whether the overall project represents value for money for the taxpayer.

The NAO identifies "significant challenges" ahead - including getting both NHS organisations and staff fully on board the project. It said that the NHS needed to improve communication with its own staff, impose tighter controls on contractors and communicate its aims more effectively.

"There is support among NHS staff for what the programme is seeking to achieve but also signficant concerns ... that the programme is moving slower than expected, that clarity is lacking as to when systems will be delivered and what they will do," the report said.

But the report nevertheless praises the NHS unit, Connecting for Health, whose job it is to deliver the programme, for a centralised procurement policy that is estimated to have saved £4.5 billion. And it says that tight supplier contracts means that suppliers and not the taxpayer should pick up the cost of delays and overruns.

The National Programme for IT aims to improve the efficiency of the NHS by putting patient records onto a national computer network, allowing family doctors to book hospital appointments online and creating an electronic transmission system for prescriptions.

The total price tag comprises the core £6.2 billion contract and a series of other costs, including replacing contracts that expire before the end of the ten-year programme period.

Earlier this year John Bourn, Comptroller and Auditor-General, said that the project had become"a focus of dissension" in the NHS and that it had "not won the hearts and minds of those who are being required to use it."

Doctors have raised concerns over the privacy of patient records in the system, while there have been teething problems with the "Choose and Book" hospital appointments system.

The project received a further blow this week when iSoft, the firm charged with providing software, announced that its chief executive had quit in the wake of a series of glitches and profit warnings.

Nigel Edwards, policy director of the NHS Confederation, told BBC News the project was "largely on budget", with the predicted cost around £6.2 billion - but there had always been billions of pounds on top of that for annual IT running costs.

"This impression of an absolutely eye-wateringly large overspend is probably slightly incorrect," Mr Evans said.

"There's a degree of anxiety because, while the procurement was done really rather well, not enough attention was paid initially to really involving frontline clinical staff in finding out what they wanted and bringing them along with the programme."

Stephen O' Brien, the Shadow Minister for Health, said that the NAO report shed light on a programme that the Department of Health had always tried to shield from public scrutiny.

It said that although Connecting for Health boasted that more than 1,6000 prescriptions had been made through the new Electronic Prescription Service, that represented only 0.4 per cent of all NHS prescriptions.

Of the report, he said: "It is something of a curate’s egg, but that is of no comfort to the Government, as all the bad bits lead straight back to Patricia Hewitt and her Ministers. Political leadership has been woeful given the extent and risk of taxpayers’ money involved."

"Patricia Hewitt must take responsibility for delivery, starting with a zero based review of the whole programme, which the Conservatives called for at the last election."

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